Business and Economy: Another economics myth
Column by Chris Graham
The takeoff point was the line from Joe Biden in a Sept. 18 interview on “Good Morning America” in which the Dem VP nominee said it is time for wealthy Americans “to be patriotic” in picking up more of the tab for the operations of the federal government that is itself about to pick up the tab to the tune of up to a trillion dollars for the failings of wealthy Americans on Wall Street. “Time to jump in, time to be part of the deal, time to help get America out of the rut,” Biden said.
The editorial slammed Biden: “(W)e now know the Democratic ticket believes this nation’s economic malaise can be corrected by confiscating even more wealth from its most productive citizens.” No doubt many Americans who we can call wealthy are quite productive, but then that would make the years of debate over estate taxes moot, wouldn’t it? “Already, the wealthiest 1 percent of filers pay 39 percent of all income taxes. The richest 40 percent of American households cover 99 percent of the income tax burden. These are the taxpayers who invest in companies, create jobs and spread wealth across a wider spectrum than any welfare program,” the editorial reads on. And we can also say misleads on.
Because, one, the insinuation there is that because the richest 40 percent cover 99 percent of the tax burden then they’re already paying almost all the freight. Which they aren’t. According to the nonpartisan Tax Policy Center, income taxes account for about 45 percent of all federal-government revenues. Which ain’t nuthin’ to sneeze at, sure, but the next-biggest share, at 35 percent, come in the form of payroll taxes, which is to say, from us.
Factor in what us little guys pay in sales taxes – which account for roughly 20 percent of state-government revenues in Virginia – and you start to get a bit of a more complete picture of how things work in our country.
The second mislead is evident in a quick review of economic history. Think back to the Roaring ’20s, which were fueled by tax cuts on the wealthy who turned their money not as much into investments into development and innovation as in more visceral forays into gambling in the stock market, which in the laissez-faire mood of the times was a sort of Wild, Wild West. Remember how those Roaring ’20s ended? With a Wall Street implosion that launched a Great Depression? Remember what got us out of the Great Depression? The New Deal of FDR, which focused on rebuilding the economy by putting money not in the hands of the wealthy, but in the hands of the working and middle classes who who would spend it and spur economic activity?
Where we are now is not much different than where we were back at the end of the Roaring ’20s. History tells us that we can’t afford, literally, to make the same mistake that we made back then, by continuing with failed economic policies that were supposed to but never did trickle down.
That the McCain campaign sent me this e-mail this morning tells me where they are on this. They want to play the class-warfare game that benefits their benefactors at the expense of not only the rest of us, but as the data would suggest, themselves and their own selfish economic interests as well.
Funny how it actually works out, isn’t it, that the best tax policy is not trickle-down, but trickle-up?
It’s time that we call an end to the failed social experiment that was Reaganomics and reinject some common sense into the way we run our government.