Thursday, March 10, 2016

"The secret of freedom lies in educating people, whereas the secret of tyranny is in keeping them ignorant."

In this article from The New Yorker about tax breaks for billionaires who donate to public projects, David Rubenstein, who is worth an estimated $2,600,000,000 (and who wrote his initials on the top of the Washington Monument after he bought half of it) says:

“The government doesn’t have the resources it used to have. We have gigantic budget deficits and large debt. And I think private citizens now need to pitch in.”

He was talking about how he regularly donates money to things that would be public projects otherwise, like the aforementioned Monument restoration after a rare earthquake in D.C.

Tax-cutting really took off in the 1980s, but the idea of tax cuts as economic stimulus goes back further: President Ford "reluctantly" signed the then-largest tax cut bill in 1975 to bolster the economy. As of 1960, the top marginal tax rate was 90%.  By 1980, that rate was 70%, having fallen 20% in 20 years.  In the next 8 years, under Reagan, the top marginal rate fell from 70% to 28%.

Which means that in 28 years -- 16 of which were under Republican presidents -- the top marginal tax rate fell by sixty-two percent.

Business Insider noted that there is no correlation between high tax rates and a sluggish economy; rather, there is a correlation between low tax rates and boom-or-bust economies. Since Reagan was elected, the government has spent


 ...that's TWO TRILLION dollars...

bailing out private companies which failed when the economy went bust.

Meanwhile, there was no -- NO-- significant increase in spending relative to the amount of tax revenues received.  Government spending, as a percentage of GDP, has remained relatively consistent at 18-21% since 1970.  Nor has the tax-cutting produced greater revenues for the government (through more workers earning more money and hence paying more, albeit lower-rate, taxes.) That same chart shows that government receipts as a percentage of GDP have stayed the same over that time.

In other words, cutting taxes does not stimulate the economy in a healthy way. Cutting taxes does not help increase tax growth via the "rising tide" effect. Government spending has not skyrocketed over the past few decades.

Why doesn't the government have more money to take care of monuments and help feed poor people?

Because since 1960, the rich have been convincing the government to reduce their taxes -- and then to use what little money is left to bail out their businesses.  At the expense of the middle-class, and the poor (two groups that are rapidly becoming the same group.)

Don't idolize billionaires.  Idolize Robespierre.

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