Study of 50 Years of Tax Cuts For Rich Confirms 'Trickle Down' Theory Is an Absolute Sham

[ZiprHead]

"Major tax cuts for the rich since the 1980s have increased income inequality, with all the problems that brings, without any offsetting gains in economic performance."

Neoliberal gospel says that cutting taxes on the wealthy will eventually benefit everyone by boosting economic growth and reducing unemployment, but a new analysis of fiscal policies in 18 countries over the last 50 years reveals that progressive critics of "trickle down" theory have been right all along: supply-side economics fuels inequality, and the real beneficiaries of the right-wing approach to taxation are the super-rich.

The Economic Consequences of Major Tax Cuts for the Rich (pdf), a working paper published this month by the International Inequalities Institute at the London School of Economics and written by LSE's David Hope and Julian Limberg of King's College London, examines data from nearly 20 OECD countries, including the U.K. and the U.S., and finds that the past five decades have been characterized by "falling taxes on the rich in the advanced economies," with "major tax cuts... particularly clustered in the late 1980s."

But, according to Hope and Limberg, the vast majority of the populations in those countries have little to show for it, as the benefits of slashing taxes on the wealthy are concentrated among a handful of super-rich individuals—not widely shared across society in the form of improved job creation or prosperity, as "trickle down" theorists alleged would happen.

"Our research shows that the economic case for keeping taxes on the rich low is weak," Hope said Wednesday. "Major tax cuts for the rich since the 1980s have increased income inequality, with all the problems that brings, without any offsetting gains in economic performance."

 

[Worldtraveller]

You forgot the 'Film at eleven!' zinger.

Really, is there anyone shocked by this still (other than the usual morons who are literally immune to reality)?

The only surprise to me is how many 'money' magazines, like Bloomberg, were willing to publish this in their pages.

 

[Trausti]

What’s the economic case for making taxes high? Is there an example of a country that taxed itself to prosperity? And are we saying that the mass offshoring of jobs in the 80s had no affect on income equality?

 

[ZiprHead]

What’s the economic case for making taxes high? Is there an example of a country that taxed itself to prosperity? And are we saying that the mass offshoring of jobs in the 80s had no affect on income equality?

https://www.oecd.org/tax/revenue-statistics-denmark.pdf

Tax-to-GDP ratio over time
Tax-to-GDP ratio compared to the OECD, 2019
In the OECD classification the term “taxes” is confined to compulsory unrequited payments to general government. Taxes are unrequited in the sense that benefits provided by government
to taxpayers are not normally in proportion to their payments.
* Australia and Japan are unable to provide provisional 2019 data, therefore their latest 2018 data are presented within this country note.
The OECD’s annual Revenue Statistics report found that the tax-to-GDP ratio in Denmark increased by 2.0 percentage
points from 44.4% in 2018 to 46.3% in 2019. Between 2018 and 2019 the OECD average decreased from 33.9% to
33.8%. The tax-to-GDP ratio in Denmark has decreased from 46.9% in 2000 to 46.3% in 2019. Over the same period, the
OECD average in 2019 was slightly above that in 2000 (33.8% compared with 33.3%). During that period the highest taxto-GDP ratio in Denmark was 48.5% in 2014, with the lowest being 44.4% in 2018.

Total US tax revenue equaled 24 percent of gross domestic product, well below the 34 percent weighted average for other OECD countries.Total US tax revenue equaled 24 percent of gross domestic product, well below the 34 percent weighted average for other OECD countries.

https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally#:~:text=Budget%20and%20Economy-,How%20do%20US%20taxes%20compare%20internationally%3F,average%20for%20other%20OECD%20countries.

 

[Trausti]

https://www.oecd.org/tax/revenue-statistics-denmark.pdf

Total US tax revenue equaled 24 percent of gross domestic product, well below the 34 percent weighted average for other OECD countries.Total US tax revenue equaled 24 percent of gross domestic product, well below the 34 percent weighted average for other OECD countries.

https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally#:~:text=Budget%20and%20Economy-,How%20do%20US%20taxes%20compare%20internationally%3F,average%20for%20other%20OECD%20countries.

That doesn’t show a country taxing itself to prosperity.

 

[Trausti]

Would you rather live in a country that has lots of billionaires or few? It seems the more billionaires the more prosperous. Haiti has like one but at least there’s low income inequality.

 

[ZiprHead]

https://www.oecd.org/tax/revenue-statistics-denmark.pdf

Total US tax revenue equaled 24 percent of gross domestic product, well below the 34 percent weighted average for other OECD countries.Total US tax revenue equaled 24 percent of gross domestic product, well below the 34 percent weighted average for other OECD countries.

https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally#:~:text=Budget%20and%20Economy-,How%20do%20US%20taxes%20compare%20internationally%3F,average%20for%20other%20OECD%20countries.

That doesn’t show a country taxing itself to prosperity.

Denmark is rated as having the happiest citizens of any country in the world. Their tax rate is almost twice the percentage of GDP than the United States. Their people are quite prosperous and happy. How else would you measure it?

 

[ZiprHead]

Would you rather live in a country that has lots of billionaires or few? It seems the more billionaires the more prosperous. Haiti has like one but at least there’s low income inequality.

Bill Gates walks into a bar. Suddenly on average, everyone in the bar is a multi millionaire. So everyone is prosperous.

This is logical to you.

 

[Trausti]

That doesn’t show a country taxing itself to prosperity.

Denmark is rated as having the happiest citizens of any country in the world. Their tax rate is almost twice the percentage of GDP than the United States. Their people are quite prosperous and happy. How else would you measure it?

Because they’re Danes. If you applied this model to a different country would you expect the same results? Hey, Haiti and Guatemala! Just do what Denmark does and you, too, will be prosperous!

 

[Trausti]

Would you rather live in a country that has lots of billionaires or few? It seems the more billionaires the more prosperous. Haiti has like one but at least there’s low income inequality.

Bill Gates walks into a bar. Suddenly on average, everyone in the bar is a multi millionaire. So everyone is prosperous.

This is logical to you.

I would rather live in a country that allowed people to be billionaires. And so would you.

 

[ZiprHead]

Would you rather live in a country that has lots of billionaires or few? It seems the more billionaires the more prosperous. Haiti has like one but at least there’s low income inequality.

Bill Gates walks into a bar. Suddenly on average, everyone in the bar is a multi millionaire. So everyone is prosperous.

This is logical to you.

I would rather live in a country that allowed people to be billionaires. And so would you.

There are plenty of billionaires in Denmark.

 

[Gospel]

Gasp I thought sayings like, earn your keep, pull yourself up by the boot straps & nothing in life is free meant that rich people would make it rain.

 

[Trausti]

I would rather live in a country that allowed people to be billionaires. And so would you.

There are plenty of billionaires in Denmark.

But taxation did not create Danish prosperity.

 

[Trausti]

Gasp I thought sayings like, earn your keep, pull yourself up by the boot straps & nothing in life is free meant that rich people would make it rain.

If your excuse is to blame rich people, you will always be poor.

 

[laughing dog]

What’s the economic case for making taxes high? Is there an example of a country that taxed itself to prosperity? And are we saying that the mass offshoring of jobs in the 80s had no affect on income equality?

None of your questions directly relate to the OP. None.

Unless you have a link to someone claiming a country can tax itself to prosperity, your question is truly a very stupid straw man.

 

[Gospel]

Gasp I thought sayings like, earn your keep, pull yourself up by the boot straps & nothing in life is free meant that rich people would make it rain.

If your excuse is to blame rich people, you will always be poor.

I agree. What made you bring that up though?

 

[ZiprHead]

I would rather live in a country that allowed people to be billionaires. And so would you.

There are plenty of billionaires in Denmark.

But taxation did not create Danish prosperity.

Prove it.

 

[Trausti]

What’s the economic case for making taxes high? Is there an example of a country that taxed itself to prosperity? And are we saying that the mass offshoring of jobs in the 80s had no affect on income equality?

None of your questions directly relate to the OP. None.

Unless you have a link to someone claiming a country can tax itself to prosperity, your question is truly a very stupid straw man.

.

Dude, the OP states that tax cuts lead to income income equality; ignoring any other cause. If we are agreed that high taxation does not create prosperity, then the OP is disingenuous.

 

[Shadowy Man]

The problem seems to be one of causation versus correlation. Trausti may be right that taxation won’t cause prosperity, but that’s not the thesis here. The Republicans have pushed the idea that tax cuts on the rich would actually cause prosperity, as the selling point to the average person, but it seems this paper is saying it doesn’t.

 

[Trausti]

But taxation did not create Danish prosperity.

Prove it.

Modernization and Convergence, 1870-1914

During this period Danish economic growth outperformed that of most other European countries. A convergence in real wages towards the richest countries, Britain and the U.S., as shown by O’Rourke and Williamsson (1999), can only in part be explained by open economy forces. Denmark became a net importer of foreign capital from the 1890s and foreign debt was well above 40 percent of GDP on the eve of WWI. Overseas emigration reduced the potential workforce but as mortality declined population growth stayed around one percent per annum. The increase in foreign trade was substantial, as in many other economies during the heyday of the gold standard. Thus the export share of Danish agriculture surged to a 60 percent.

https://eh.net/encyclopedia/an-economic-history-of-denmark/