A Tax System Stacked Against the 99 Percent

The New York Times blog has the Joseph Stiglitz piece A Tax System Stacked Against the 99 Percent

Research in recent years has linked the tax rates, sluggish growth and rising inequality. Remember, the low tax rates at the top were supposed to spur savings and hard work, and thus economic growth. They didn’t. Indeed, the household savings rate fell to a record level of near zero after President George W. Bush’s two rounds of cuts, in 2001 and 2003, on taxes on dividends and capital gains. What low tax rates at the top did do was increase the return on rent-seeking. It flourished, which meant that growth slowed and inequality grew. This is a pattern that has now been observed across countries. Contrary to the warnings of those who want to preserve their privileges, countries that have increased their top tax bracket have not grown more slowly. Another piece of evidence is here at home: if the efforts at the top were resulting in our entire economic engine’s doing better, we would expect everyone to benefit. If they were engaged in rent-seeking, as their incomes increased, we’d expect that of others to decrease. And that’s exactly what’s been happening. Incomes in the middle, and even the bottom, have been stagnating or falling.

Why do so many voters keep insisting on electing the people who are stacking the deck against them? Is it their sense of adventure in wanting to create a system where the odds are against them? Do they get extra pleasure when the system bloodies them a little less than their neighbors while heaping huge rewards on people they never get to see?

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