In debate, Johnson Repeats Thoroughly Debunked Trickle-Down Myth That Cutting Taxes on the Wealthy INCREASES Revenues | Wis.Community

In debate, Johnson Repeats Thoroughly Debunked Trickle-Down Myth That Cutting Taxes on the Wealthy INCREASES Revenues

As Judge Judy says, Ron, don't pee on my leg and tell me its raining. 

We all know that Ronald Reagan's tax cuts on the wealthy led to the national debt tripling in size and Dubya's tax cuts ruining the budget surplus that Bill Clinton handed to him.

Oh, oh, oh... but, but, but revenues went UP during both the Reagan and Dubya years!  Yes, that's true, but you know what also went up? Everything. The biggest "everything" being the population of people paying taxes.  

The population during Reagan's two terms, for example, increased by about 20 million.  Plus, Reagan had the added built-in advantage of baby-boomers hitting the work force in full-stride and having a very large percentage of the population in the workforce and paying taxes.   

You see, tax revenues have gone up over every president's term.  The issue is if tax revenues went up as much as they should have or could have under a more responsible tax rate, and in both the Reagan and Dubya eras, the answer is clearly no.

Obviously there is a "sweet spot" in taxation. If taxes were 99%, no one would have an incentive to work, earn income and pay taxes, while if taxes were 1% there would be lots of incentives to earn income, but little tax revenue. 

While no one knows exactly what that "sweet spot" is, we do know that taxes during the so-called golden era of the U.S. economy between the end of WW II and the early 70s, that revenue streams were more robust when the income tax on the highest income bracket ranged between 60 and 92%.

Now, I personally believe that the "sweet spot" for the uber-wealth is slightly under 50%.

It was at 39.6% during the Clinton years and both the economy and deficit seemed to like it. 

But, even though its a fairly black-and-white issue that has can easily be checked in the historical record, trickle downers like Ron Johnson still keep selling it.  Hopefully Wisconsin voters won't buy it.

Published

October 22, 2010 - 9:29pm

Author