Thursday, December 22, 2011

Taxing the Rich

Republicans contend that lowering taxes on the rich will create jobs. This chart (from Centers for American Progress) shows job growth (Y-axis) related to the tax rate. Using 60 years of actual data it show that lower taxes tend to depress employment while higher taxes tend to encourage jobs creations.

The reason for this is not simple. Lower top tax rates allows wealth to concentrate unhealthily, creating a feeble economy. Also, the Republican argument against welfare works for the wealthy as well. When oligarchs don't have to work for their riches they tend towards idleness. Higher taxes act as an incentive for the wealthy to work for a vibrant economy so they can pay their taxes and still be stinking rich.

The lie that lower taxes are good for the country dates back to the Laffer Curve. Arthur Laffer started with the notion that a 0% tax rate will raise no taxes and a 100% tax rate won't either since people won't work for nothing. He connected those two data points with the simplest possible Bell Curve, slapped his name on it, and watched Ronald Reagan build an entire religion upon it.

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