More unloading on Reagan. As I pointed out a while ago, Reagan has been dead a long time. Blaming Reagan for our current economic situation is like blaming McKinley for the Great Depression.
I am not dumping on Reagan personally. I do realize that he has been dead for a long time. I do follow the news. I have been repeatedly corrected that it is wrong to call the movement conservative economic policies that were instituted starting under Reagan either neoliberal economic policies or supply side economic policies. This is because to call them the neoliberal economic policies is defining the policies by the time that they were put into effect, the period of the backlash to the liberal policies of the post war period, which we are certainly out of now. And to call them supply side economic policies is incorrect because neoclassical economics always promotes supply side economics.
Unfortunately the bad economic policies that Reagan championed, Reaganomics, outlived him. These policies were based on intentionally creating income inequality to give the wealthy more of the nation's income. Because the rich have a greater propensity to invest this would result in more investment, creating more jobs and more economic growth. Except that all it did was to increase the income of the rich and decrease the incomes of everyone else. Business investment actually dropped as did economic growth. What increased were asset bubbles in the stock market, the commodities markets and, of course, the final massive one in home mortgages and the derivatives mortgage backed securities that very nearly sank the entire economy when it burst.
Taxes have been raised numerous times since Reagan left office, and the top rate now is nearly half again as large as the top rate under Reagan, ...
Let's see the numbers. Reagan and Congress initially lowered the highest marginal tax rate from 70% to 50%. The Tax Reform Act of 1986 sent the highest marginal tax rate ramping down to 28%, but it stayed there for less than a year during the Bush I administration, not Reagan's. The revenue loss and corresponding budget deficit were too great and Bush I was forced to raise it back to 40%. The Bush II tax cuts then lowered them to 35%. They have since gone back up to 38%. So yes, the Reagan administration lowered the highest marginal tax rates briefly to 28%, but after all of this the rate today is still about one half of what it was when Reagan was sworn in.
However, this is only part of the story. Reaganomics also raised the taxes on the non-wealthy. The regressive payroll tax was increased under Reagan, the largest single tax increase in history. It also lowered the estate tax, capital gains tax and eventually the tax on dividends was reduced to zero, all taxes paid by the wealthy. At the state and local level, fueled by Reaganomics' theory, income taxes, property taxes and business taxes were lowered and sales taxes were raised. Once again, taxes largely paid by the wealthy are lowered and regressive taxes were raised.
And this was not the limit to the policies that favored the wealthy. Policies were put in place to suppress the wages of the non-wealthy, the poor and the middle class. You didn't even address these. I don't mistake silence for acceptance. I would appreciate if you would address this issue too.
... but none of this affects Warren Buffet's strategy in any case. He can decide how much he will pay due to loopholes. The same was true in Reagan's day and well before Reagan's day.
Even allowing for your tendency to reality free hyperbole, this is a pretty wild assertion. Fortunately for our discussion it is not even close to a realistic assertion. That the rich have so many loopholes available to them that the highest marginal tax rate doesn't matter.
You have some hard work to do to even get us to give this any consideration. You would have to show that the revenue from the top earners didn't drop after the marginal rate was lowered. Even if the wealthy did as you assert, could use loopholes to reduce their taxes as low as they want why wouldn't they all reduce them to zero?
Like I said, you have a hard road here to support this assertion. I would recommend that you quietly drop it.
Meanwhile, the US has the largest corporate tax in the world, and we wonder why businesses are fleeing overseas.
I don't think that you meant to say the largest corporate tax in the world, we have the largest corporate income in the world, you would expect us to collect the largest amount of corporate income tax in the world.
However, as a percentage of GDP the corporate income tax has dropped to where today it is only about 25% of what it was in the 1950's.
I think that you meant to say that we have the highest corporate tax rate in the world, which it is except for Japan. And as long as we allow type S corporations, lawyers, doctors, dentists, engineers, architects, etc., to incorporate to reduce their individual income tax and we continue to charge all corporations the same tax rate we have to keep the corporate tax rate about the same as the highest marginal individual income tax rate.
But the effective corporate tax rate for what you and I think of as true, stock market listed, largely publicly held corporations is quite low because of successful lobbying on their part to lower their taxes. The effective tax rate on real corporations is so low at the European Union logged a complaint with the WTO that the low effective corporate tax rate was an unfair competitive advantage for American corporations.
The traditional route for corporations to reduced their effective corporate tax rates was to allow accelerated capital investment depreciation. This is why the new economy corporations like Google and Apple have to work so hard to reduce their corporate taxes, their revenues dwarf their capital investment.
As an indication of how low the effective tax rate is for traditional large corporations Obama's offer to reduce their tax rate to 25% if they gave up all of their pet loopholes was never taken seriously.
Obama's offer also included the prevision that the tax rate for corporations of highly paid individuals trying to lower their individual income tax was left at 35% + .
The income distribution in this country isn't affecting the economy.
An ever increasing number of economists would disagree with you.
Including the conservative IMF
“So, labor’s share of national income has dwindled, from around 66 percent at the turn of the millennium to around 60 percent today. The average Japanese worker has been dipping into his savings to finance consumption growth. But there’s a limit to how far he can do this. The savings rate as a percent of disposable income has declined from around 5 percent a decade ago to close to zero today…”
“For many years, nominal basic wages have been declining despite generally tight labor-market conditions. Real wages too have fallen despite solid productivity growth.”
This is the same decline in labor share that we have seen in the US, as I said in the post that you quoted.
The economy is affecting the income distribution.
The economic policies of the US are effecting the income distribution in the US by intentionally redistributing more of the nation's income to the already wealthy. That is what this discussion is about.
The reason for this is inflation. The rich can make money of inflation but ordinary people have a difficult time keeping up. The ones who get the benefits of inflation are the ones who get the money when it is first created. That would be banking and the financial sector. The losers are the ones who get it last. That would be the rank and file of the country. The workers.
Another pitch from far right field.
Didn't inflation exist before 1980?
So you don't believe that supply side economics, the economics whose sole purpose was to create income inequality to increase investment, that it didn't create the income inequality that we see today. That the income inequality that we see today is created by the wealthy who have figured out how to make money from inflation. Something that they hadn't figured out before 1980, the same time that the Reaganomic policies to intentionally increase income inequality were enacted and put into force.
Here are the elements of Reaganomics, Thatcherism, Hatcherism, supply side economics, neoliberal economics, etc. that were enacted by movement conservatives after 1980. Please tell me which of these economic policies have been reversed.
- The wealthy have a greater propensity to invest.
- Shifting income to the wealthy from everyone else will increase investment in the economy.
- This is shifting of income is increasing income inequality.
- This is done by decreasing taxes on the wealthy and increasing the taxes paid by everyone else.
- Income, property, inheritance, capital gains and taxes on dividends were all reduced. Taxes paid largely by the rich. Reagan administration.
- Payroll taxes, user fees and consumption taxes were increased. Taxes paid largely by everyone else but the wealthy.
- Wages were intentionally suppressed.
- Unions were suppressed.
- The minimum wage was allowed to drop relative to inflation.
- Free trade exposed the American workers to competition from low wages in other countries.
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