GOP Tax Plan Is Just More Failed "Trickle-Down" Economics

(Cartoon image is by Mike Konopacki at Huck/Konopacki Cartoons.)

The Republicans have been sticking to their "trickle-down" theory for decades now (assuring Americans that if we give more to the rich, it will trickle down and everyone will benefit). And their economic policy has worked -- for the rich, fattening their bank accounts. But it has not worked for the middle and working classes because none of that extra money given to the rich actually trickles down.

Now they have a new tax plan -- a plan that gives huge tax cuts to the rich and the corporations. Once again, they are telling us that the money will trickle-down to the rest of us (in the form of jobs and higher wages). They are lying. Trickle-down didn't work in the past, and it won't work in the future, because money doesn't trickle down in our economy -- it flows upward.

Here is what former Labor Secretary Robert Reich has to say about the newest version of trickle-down:

Trump and conservatives in Congress are planning a big tax cut for millionaires and billionaires. To justify it they’re using the oldest song in their playbook, claiming tax cuts on the rich will trickle down to working families in the form of stronger economic growth. 

Baloney. Trickle-down economics is a cruel joke. Just look at the evidence:

1. Clinton’s tax increase on the rich hardly stalled the economy. In 1993, Bill Clinton raised taxes on top earners from 31 percent to 39.6 percent. Conservatives predicted economic disaster. Instead, the economy created 23 million jobs and the economy grew for 8 straight years in what was then the longest expansion in history. The federal budget went into surplus. 

2. George W. Bush’s big tax cuts for the rich didn’t grow the economy. In 2001and 2003, George W. Bush lowered the top tax rate to 35 percent while also cutting top rates on capital gains and dividends. Conservative supply-siders predicted an economic boom. Instead, the economy barely grew at all, and then in 2008 it collapsed. Meanwhile, the federal deficit ballooned. 

3. Obama’s tax hike on the rich didn’t slow the economy. At the end of 2012, President Obama struck a deal to restore the 39.6 percent top tax rate and raise tax rates on capital gains and dividends. Once again, supply-side conservatives predicted doom. Instead, the economy grew steadily, and the expansion is still continuing.

4. The Reagan recovery of the early 1980s wasn’t driven by Reagan’s tax cut. Conservative supply-siders point to Ronald Reagan’s 1981 tax cuts. But the so-called Reagan recovery of the early 1980s was driven by low interest rates and big increase in government spending. 

5. Kansas cut taxes on the rich and is a basket case. California raised them and is thriving. In 2012, Kansas slashed taxes on top earners and business owners, while California raised taxes on top earners to the highest state rate in the nation. Since then, California has had among the strongest economic growth of any state, while Kansas has fallen behind most other states.

So don’t fall for supply-side, trickle-down nonsense. Lower taxes on the rich don’t generate growth and jobs. They only make the rich even richer, at a time of raging inequality, and they cause bigger budget deficits.