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Jan 14, 2019
2 Min read time
A close look at the legacy of trickle-down taxation.
Last week freshman Democratic Congresswoman Alexandria Ocasio-Cortez sparked the latest round of debate about tax policy in the United States. In an interview with Anderson Cooper for 60 Minutes, she embraced the marginal income tax rates of the 1960s—“as high as 60 or 70 percent” in the top bracket—both as a model of fairness and as a way to help finance a Green New Deal.
In fact, the top rate was well above 60 percent not just for the turbulent sixties but for the half century spanning 1932 and 1981, before they were slashed by Ronald Reagan’s tax cuts. (The top rate for 2018, by contrast, is only 37 percent.) Yet Ocasio-Cortez’s figures made headlines as the latest specter of big government, and even Cooper responded by calling her proposal “a radical agenda”—at least “compared to the way politics is done right now.”
Cooper’s qualification may gesture to the enduring clout of anti-tax lobbies such as Grover Norquist’s Americans for Tax Reform. But realpolitik should not blind us to the ethical and empirical questions. Do high rates in the highest brackets really discourage job creation and economic growth? Can progressive tax policy help to safeguard democracy? These pieces from our archive weigh in on the legacy of trickle-down taxation.
Half a Century of Anti-tax Orthodoxy is Wrong
by Felicia Wong
Decades of evidence show that tax cutting is not associated with growth or greater prosperity; gifts to the wealthy do not “trickle down” in the economy.
• • •
Studying the Rich
by Mike Konczal
In Thomas Piketty’s analysis, the decline of high marginal tax rates is the main culprit in the large growth of inequality internationally since the 1980s. Since this major transfer of resources didn’t cause an increase in economic productivity, the cost of undoing it will be minimal for the economy as a whole.
• • •
The Unseen Threat of Capital Mobility
by Marshall Steinbaum
Offshore tax havens have allowed the wealthy to choose their own tax system and regulatory regime.
• • •
Taxing Away Inequality
a discussion between Emmanuel Saez and David Grusky
"I have yet to see a study that shows me that when you increase top tax rates, top earners work less."
• • •
Time for a Wealth Tax?
by Edward Wolff
The U.S. tax system leaves vast differences in wealth and power largely untouched. A majority of advanced industrial countries—including those with high savings and growth and low levels of inequality—provide for a direct annual tax on household wealth holdings (not just income), but the United States does not.
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January 14, 2019
2 Min read time
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