In reality, there’s no evidence that a tax cut now would spur growth. . . . Strenuous efforts by economists to find any growth effect from the 1986 act have failed to find much. The most thorough analysis, by economists Alan Auerbach and Joel Slemrod, found only a shifting of income due to tax reform, no growth effects: “The aggregate values of labor supply and saving apparently responded very little,” they concluded. . . . We saw another test of the Republican tax myth in 2013, after President Barack Obama allowed some of the Bush tax cuts to expire, raising the top income tax rate to its current 39.6 percent from 35 percent. The economy grew nicely afterward and the stock market has boomed — up around 10,000 points over the past five years.One class of people who haven't gotten the message is journalists who work for the corporate media. When Republicans say that cutting rich people's taxes will cause economic growth, they just take it for granted. This has become a truism in American political discourse, like, oh, saluting the flag. It is not true.
Marginal tax rates are much higher in most of Europe than in the U.S., and their economies grow just as fast, or faster, than ours. Cutting rich people's taxes does not cause capitalists to create jobs or raise wages. It just let's them keep more of their money and starves government of money it needs to solve problems and invest in our future.
The reason for this I have explained before. Investors only start enterprises or build up existing ones when there are potential customers out there with the money to buy their crap. And that is not rich people, who already spend all they want to. The way to stimulate growth is to put money in the pockets of low and moderate income people who will spend it, and the best way to do that is to invest in projects that will put them to work, such as health care, education, renewable energy development, research and public infrastructure. Mass transit is a good one! In times of recession, government can borrow the money. Right now, borrowing is cheap, but rich people also have far more money than they can possibly use and we can raise their taxes and put the money to work, thereby employing people and raising their wages. We could also cut taxes on low and moderate income people and yes, they would spend most of the difference.
Somebody please explain this to Chuck Todd.