Dan Gross at Slate connects with an uppercut to all that bushwa from the usual suspects about the need to keep the Bush tax cuts in place.
The bold and confident assertions made about the links between tax rates and economic growth, market performance, and prosperity are almost certainly wrong. Turn on CNBC or look at the Wall Street Journal op-ed page these days, and you'll learn that we must keep tax rates on capital gains, dividends, and income precisely where they are because shifting them to different levels will retard economic growth. Keep this in mind: The people who designed the current, unsustainable tax system promised us that lower marginal rates, and lower taxes on capital and dividends, would boost the economy, promote investment, create jobs, spur market performance, and raise everybody's income. They were wrong. (It's no coincidence that these same people also warned us that raising taxes in 1993 would kill market returns and the economy. They were wrong then, too. They're pretty much always wrong.) As I've pointed out, the years under the current tax regime have been a lost decade. Pick your metric—median income, employment, stock market returns, economic growth—the low-tax '00s sucked. Yet proponents of keeping the tax cuts persist in making the argument: To avoid a repeat of the past decade, we must have the exact same tax policies as we did for the past decade.
One of the lines we're already hearing is that if the Bush tax cuts on the wealthy aren't extended, it will amount to the largest tax increase in history. If that sounds familiar, it is. This was also claimed in 1993 and ever afterward about Bill Clinton who supposedly had imposed the "largest tax increase in history." Not only is this not true in absolute or percentage terms, it also conveniently missed the fact that individuals earning under $115,000 (that's $173,000 in 2010 dollars) didn't see their income taxes go up. Middle-class families (and everyone else) did have to pay an additional 4.5 cents per gallon of gasoline.
And what happened after those extra income taxes were imposed on upper-income Americans? The disaster predicted by Republicans? Not hardly. Twenty-two million new jobs. It can't be said that those jobs were caused by that tax increase. But it obviously wasn't an obstacle to their creation.
As so often has been the case in the past three decades, we on the left are once again reduced to fighting rearguard actions and nibbling around the edges of reform. That's what keeping tax cuts on the wealthy from being extended is all about. Nibbles. This needs doing of course. But the real fight, the one our political leaders should be pushing, is a revamp of the entire tax system that the supply-siders saddled us with from Reagan to Cheney-Bush. A key piece of that makeover should be restoring progressivity to the income tax code. That alone would help redress the worsening rich-to-poor ratio. Not the whole answer, obviously, but a piece of it.
The pernicious idea that broader societal prosperity comes from shoveling ever more wealth into the hands of the already-wealthy has been repeatedly debunked. But that never stops its propagandists from trying to cram this lie down our throats. Call it populism, self-defense in the class war, or whatever you like, but the only leaders truly deserving our votes are those who publicly, forcefully reject this lie, and give us action to match their words.