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Thursday, February 18, 2010

So when does "Rich people create jobs" kick in already?
Posted by Jill | 6:13 AM
How many times have you heard a caller to talk radio, usually some working guy who's just been laid off, or is afraid of being laid off, or who hasn't had a raise in five years, defend cutting taxes for the wealthy under the assumption that "rich people create jobs so we have to cut their taxes"? I know I've heard it just about everywhere, including on what little is left of progressive talk radio. It's at the heart of trickle-down economics, and it's been with us since Reagan told us that if we just wait for the kidneys and bladders of the richest of the rich to process all the extra money in their pockets given to them by tax cuts, it will "trickle down" on all of us in the form of golden pee.

Or something.

But the reality is far different, as Joe Conason points out.

Before angry voters restore Republicans to power -- in the name of "tea party populism" -- perhaps they should consider just how well right-wing rule worked out for them during the past decade. Last fall a Census Bureau study found that real median household income had declined from $52,500 in 2000, the last year that Bill Clinton was president, to $50,303 in 2008, George W. Bush's final year -- a period during which Republicans dominated Congress as well. Millions of those median households lost their health insurance (and, since the onset of the Great Recession, many of those same families have lost jobs as well).

So most of those middle-class Americans who flock to the tea party demonstrations were big losers during the Bush era. So who were the winners? According to David Cay Johnston, America's premier tax journalist, newly released IRS data shows that the country's very wealthiest citizens -- the top 400 -- marked enormous income gains while paying less and less in taxes. For purposes of comparison, Johnston notes that the bottom 90 percent of Americans saw their incomes rise by only 13 percent in 2009 dollars, compared with a 399 percent increase for the top 400.

In a single year, between 2006 and 2007, the income of those top 400 taxpayers rose by 31 percent -- from an average of $263.3 million to an average of $344.8 million per year. Meanwhile, Johnston writes, "Their effective income tax rate fell to 16.62 percent, down more than half a percentage point from 17.17 percent in 2006, the new data show. That rate is lower than the typical effective income tax rate paid by Americans with incomes in the low six figures, which is what each taxpayer in the top group earned in the first three hours of 2007." He also notes that the IRS data probably understates the income of the top 400, because of deferral rules enjoyed by hedge fund managers (at least three of whom earned $3 billion or more in 2007).

The Bush Administration spent the last decade funnelling more and more money into the pockets of the wealthiest Americans from the pockets of those who work for a living; who actually Do Something. Conservative tax policy offers favored tax treatment for inherited money and what is essentially gambling winnings from stock market gains, while pay-for-work is for schmucks. One in every six workers is unemployed. So when do these rich people start creating jobs already? And why do working stiffs continue to believe this nonsense?

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Anonymous joe in Oklahoma said...
well, said. needs to be said louder and more often. in more places.

Blogger merlallen said...
As I like to point out to people who don't listen anyway, GW Bush cut taxes on the top 1% and unemployment still exists today. they don't seem to get it.

Anonymous mandt said...
"So when do these rich people start creating jobs already?" ---Time to learn Chinese.