2017-11-23 / Letters

Reagan tried ‘trickle down’; it didn’t work

To the editor:

The Republican tax plan is being sold as a way to give corporations and the wealthy the incentive to invest, thereby creating jobs and ultimately resulting in more tax revenue.

Does this trickle-down theory actually work in practice? No. It was tried in the Reagan years, but wages stayed flat and the anticipated revenues failed to show up. Pres. George H. W. Bush tried a tax cut on capital gains, such that investment income was taxed at a much lower rate than income from wages. Again the budget deficits grew. By contrast, Pres. Bill Clinton’s years were marked by low unemployment and smaller deficits. He was the last president to balance the budget.

Pres. George W. Bush got Congress to cut taxes in spite of fighting two wars, and the deficits ballooned. His eight years ended in a major Wall Street meltdown and soaring unemployment. No wage or revenue gains there.

The Obama years saw small increases in the taxes paid by the affluent, a slow but steady climb out of the deepest recession in many decades, and smaller deficits than racked up by Reagan or the two Bushes.

So do corporations and the wealthy need the incentive of tax cuts to invest in productive activity? No. They are awash in cash now, but we’re not seeing expanding investment in production. Wages remain relatively stagnant, no higher in purchasing power than they were in the 1970s.

Contrary to the supply-side theorists, it is demand, money in the hands of ordinary people, that creates the incentive to produce. The current tax plan actually increases taxes for many people who make $75,000 a year or less. Congressman Bergman should be ashamed to vote for such an obvious fraud.

Alice Littlefield
P.O. Box 87
Omena

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Ms. Littlefield is absolutely

Ms. Littlefield is absolutely correct that the real driver of economic growth is demand. The wealthy already control a huge percentage of total wealth in America. And interest rates are low, which favors borrowers. The chief restraint on growth is not lack of capital, or that the rich don't have enough money. It is that everyday Americans don't have enough money left over after paying for necessities.

Ms. Littlefield, Republicans

Ms. Littlefield, Republicans try this crap every chance they get. This is not about Tax Reform, it is about taking money from the middle class and the poor and giving it to the rich. Problem is the poor and the middle class are too stupid to figure it out.