Mythbusting Conservative Tax Theory

For decades my friends on the right have told me that the best way to stimulate the economy is to lower taxes … particularly for those in the highest tax brackets; those who make the most money. The theory is called trickle down. Those who make the most money, if allowed to “keep” more, would invest in business and that investment would create jobs. The jobs would create income for more people who, in turn, would pay collectively pay more taxes thereby increasing government revenues. The money in the hands of the most wealthy would effectively trickle down to those with more modest means.

I finally got tired of hearing about it so I thought I’d do a little research to see if the numbers might support the proposition. I mapped the tax rate assessed against those in the highest tax bracket (and for the sake of comparison, I mapped the lowest tax rate, too). Then I looked up the unemployment statistics and mapped them as well.

I looked at the period from 1948 to 2009. The post-WWII years are universally recognized as America’s most productive years …. the heyday of our growth. I discount much of the so-called “growth” of the last 15 years or so on the grounds that it was a fantasy based on over valued real estate. The recent real estate “bust”, with home values plunging faster than anyone could track, foreclosures, and the implosion of the over leveraged financial sector is evidence of that fantasy. The value, labeled “growth” by my friends on the right was an illusion. It was a house of cards, propped up by a banking Ponzi scheme that “monitized” bad debt by bundling shaky mortgages sold on the premise that home prices would never go down and repackaged into financial instruments to conceal their flaws.

So, let’s look at the numbers.


Sources: IRS and US Bureau of Labor Statistics.

For the sake of this exercise, the Blue line at the top represents the highest marginal tax rate in effect during each tax year. One can read the tax percentage on the scale at the left of the graph. The Red line at the bottom similarly indicated the lowest tax rate and, again, the percentage can be read on the scale at the left of the graph.

The solid green line tracks the rate of unemployment from 1948 to the present while the green dashed line is the linear trend line of the unemployment rate through that period.

What I noticed is that there is a very high inverse correlation between the highest tax bracket rate and unemployment. What I mean by this is generally the lower that tax rate, the greater the rate of unemployment. As one tracks the tax breaks extended to the wealthy versus the unemployment trend line, one gets the distinct feeling that the conservative mantra of lower taxes equaling a stronger economy seems to fall apart assuming the rate of unemployment is any measure of economic strength.

The Liberal Elite

"They always throw around this term 'the liberal elite.' And I kept thinking to myself about the Christian right. What's more elite than believing that only you will go to heaven?"
-- John Stewart, The Daily Show

Kipling Understood War in Afghanistan

A scrimmage in a Border Station
A canter down some dark defile
Two thousand pounds of education
Drops to a ten-rupee jezail

- Rudyard Kipling

My comment: The more things change, the more they remain the same. Those who do not study history are doomed to repeat it.

Quote of the Day

"Rational arguments don't usually work on religious people. Otherwise, there wouldn't be religious people."
-- Doris Egan

My comment: It takes a certain genius to state the obvious ... and real genius to state it so succinctly.

I am a liberal because …

I posted the following in April, 2006. Now, with the bruhaha over Harry Reid's comments on the floor of the Senate about consevatives, I think its appropriate to re-post it. I would caution not to confuse "conservative" with "Republican". Today's Republican Party may be the home of American Conservatism today but it hasn't always been that way. Lincoln was a Republican when he authored the emancipation Proclamation but he was also a liberal.

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In a firefight with several conservative types, I woke up this morning and sent this off to a friend (a liberal) who edits a newspaper out in the world to get his/her feedback and maybe help me sharpen it up a tad:

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I am a liberal because I believe that every child should have a childhood filled with learning and school days and the endless days of summer while conservatives opposed the child labor laws which make that possible.

I am a liberal because I believe that women are equal human beings capable of independent thought while conservatives in the past opposed a woman's right to vote and now to have any say in her destiny.

I am a liberal because I believe no one should be the property of another while conservatives fought a war in this country to preserve slavery and the proposition that people should be property.

I am a liberal because I believe in equality under the law while conservatives worked to preserve "Whites Only" drinking fountains, lunch counters and restrooms.

I'm a liberal because I believe the richest nation on the planet should provide a safety net for its citizens; that it should protect those disadvantaged by social or economic factors or who have been subjected to the ravages of age from the starvation we see in so many other places in this weary world - while conservatives take the position of Cain, who, when asked by God, "Where is Able?" replied, "Am I my brother's keeper?"

I am a liberal because, in spite of failures along the way, liberals have never failed to look for new solutions to old problems while conservatives have never failed to embrace the causes of the problems and label them virtues.

I am a liberal because I believe that by working together we can make a better future while conservatives believe the best future we can hope for looks exactly like the past.

I am a liberal because, throughout history, liberals have consistently supported these ideals while conservatives have, with equal consistency, positioned themselves on the wrong side of history.

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In response, I received the following from my editor friend:

Perhaps you should share this with your liberal brethren, because they seem to be lost these days, unable to work up a moral high ground.

The real reason you're a liberal is that you're not afraid, not in the bone-weary sense that the right is. Fear of change, fear of "others" and fear of oneself create the state in which all things conservative can fester.

I have seen some extraordinarily liberal individuals turn into cowering conservatives when their sense of safety is shattered.

Right now, we have an entire nation of people whose fear outweighs their security. Somehow, the liberals have to push the notion that an open, free nation is not just our imperative, it's necessary if we want to become secure.

That ain't an easy sell. Good luck.

More: Why Right Wingnut Republicans Can't Govern

AND

• don't understand economics
• can't read polls
• can't balance a budget
• support deficit spending when they're in office
  
• can't understand the implications of climate change
• are afraid of the census
• don't get that "tax and spend" is actually "pay as you go"
• think that Medicare for All is a government takeover
• imagine funding war is good and while providing health care (at a fraction of the cost) is bad

My comment: You'd think they'd get it after getting debunked time and time again. No poll has ever represented 120% of the respondents. Only 100% of the people who answer a given question can represent all the people who answer the question. But in Fox-Conservative la-la land, 120% of respondents can answer a question.

Fact checking is a lost art on the right.