Thursday, January 22, 2009
Why You Should Be Screaming for Higher Taxes
Thom Hartmann talks to Larry Beinhart on Air America Radio about why you should be screaming for higher taxes on the wealthy. Bienhart, famous for his book Wag The Dog, regularly blogs on Huffington Post.
By Larry Beinhart, Posted January 12, 2009.
Why are we so resistant to raising taxes? It's our nature. Nobody likes to give up their own money for the common good.
US economic growth has been strongest when our taxes have been high. During World War II, then under Truman, Eisenhower, and Kennedy, our upper marginal tax rates were between 88-92%. Read those numbers again. They are astonishingly high. Those were our strongest growth years.
I never expected to say this. Pelosi's right, Obama's wrong.
Do keep in mind that we are talking about higher taxes on the richest members of society, the very richest. So, unless you're among that elite group, don't panic for personal reasons.
Keep in mind, also, that we are speaking only of income taxes.
You have certainly heard, several thousand times, that tax cuts lead to economic growth.
That's not true.
Moderate tax cuts lead to a flat economy. (The Johnson tax cuts, usually misnamed the Kennedy tax cuts, lead to 16 years of virtually no growth.)
Large tax cuts are followed by a boom in the financial sector, a bubble, and a crash. Then a recession or depression with massive bank failures. This has happened three times, in the 1920s, under Reagan, and under George W. Bush.
During a depression or recession, the point where taxes are increased marks the point when the economy begins its recovery: 1932 under Hoover, Roosevelt's second round of tax hikes in 1940, the first president Bush's tax hike, followed by the Clinton tax hike. (There's one exception. Roosevelt's tax hike of 1936, which was accompanied by cuts in government spending.)