Ever since Reagan’s time, Republicans have argued that cutting taxes for the rich results in higher investment that “trickles down” to lower economic classes in the form of jobs and higher incomes (read background article here).
That’s a crock, and David Stockman, chief architect of Reaganomics, admitted it was (see article here). Last year, a “study by the London School of Economics … showed that the only significant effect of significant tax cuts to the rich was to increase income inequality with little benefit to unemployment or economic growth,” Reuters says (here).
Last night, President Biden told Congress, “trickle-down has never worked.” A Reuters poll released today shows 51% of U.S. adults agree, while only 26% disagree. Even many Republican voters agree, with 4 in 10 saying it’s a failed theory, while only 3 in 10 believe it, and it’s supported by even fewer Democrats.
It certainly doesn’t work at a time like this, when the world is awash with money, far more than businesses can use for investment, which is why they’re buying back their own stocks and increasing dividend payments to stockholders. That’s also why your bank savings earn nothing. What it takes to create jobs now, more than anything else, is to end the pandemic. In this regard, Republican behavior — refusing to wear masks or get vaccinated — isn’t helpful.
The poll also shows “a majority of Americans support measures favored by President Joe Biden to substantially redistribute U.S. wealth … including tax hikes on he wealthy and a higher minimum wage,” and his other economic policies also enjoy roughly two-thirds public support. These include paid family leave, free community college, and more IRS audits of wealthy tax dodgers.
I wouldn’t call raising the minimum wage “redistributing wealth.” It’s a taxpayer protection measure. The cost of labor should be borne by businesses, not the public. But when wages are so low that workers need government assistance to survive, then taxpayers are subsidizing employers’ wage costs. That’s the reality in America, and it’s time employers paid their own way, so you don’t have to pay it for them.