RFK Jr. Would Have Made JFK Proud

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#7 | Posted by Corky at 2024-09-15 12:32 PM
"5 Reasons Why Supply-Side Economics Does Not Work
Many of the claims made by supply-siders have been disproven over the years"
www.investopedia.com

I've already debunked this particular "opinion piece" in the Investopedia and similar ones well over a year ago, so I won't go into a lot of details again, except to note that it's not written by an economist, "reviewed" by a lawyer, and "fact-checked" by an aspiring yoga and mind wellness influencer.

The main problem with this "opinion piece" is that it's very short on facts and very heavy on biased opinions, particularly skewed against what it mischaracterized as supply-side economics (which has since become "normal economics" in most advanced and developing countries, particularly in former socialist Warsaw Block countries)**, and in favor of so-called "backlash of left-wing thinkers," and it's also full of qualifiers (like "not always" etc.) and false "correlations" / comparisons, let alone trying to prove causations etc.

Another is the long-debunked "correlation" of marginal tax rate cuts with deficits. Deficits are the results of uncontrolled spending, not tinkering with marginal tax rates - while the actual percent of income tax revenues to GDP went up or stayed the same (didn't go down as a result of tax rate cuts), the spending "over budget" and on "off-budget items" have increased significantly, by Congress + Presidents.

Total tax revenues have stayed in median range of 16% - 18% of GDP since 1960s, only dipping below 14% after GFC and stock market meltdown in 2009, and getting above 19% at the height of "internet bubble" in 2000 (due to cap gains), despite vastly different tax rates and brackets over decades, and higher marginal individual (including cap gains) and corporate tax rates and additional taxes, like Social Security and excise taxes (~2.5% of total taxes) .

For instance, we understand that high taxes on tobacco discourage the consumption, or that tariffs/taxes lead to higher prices and lower consumption. IOW, we understand the fact that costs can and do affect buyers' behavior - yet somehow fail to accept it when it comes to income, corporate or other taxes.

One of the things that Reagan's tax reforms have done is reducing brackets down to 3-4, i/of 15-30+ in the 50s-70s.

There were also grudging acknowledgements that supply-side policy is a long-term solution to produce desired results, yet examples of it "not working" were short-timed - well, duh - we've had 40 years of low inflation / disinflation to be thankful for it.

We've just had another "experiment" with Keynesian "quick-fix" demand-side economics ("trickle-up") which inevitably and predictably leads to high inflation and consequent increase in "inequality" as money from the lower quintiles of "demanders" / consumers / buyers "trickle up" faster to highest quintiles of producers / sellers / "suppliers" - i.e., money flows "from the bottom up" or "from the middle out." ***

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** If you want a quick, unbiased tutorial - not a biased opinion piece - on supply-side from Investopedia, reviewed by economics professor:

www.investopedia.com - Supply-Side Economics: What You Need to Know

And short, but factual and comprehensible essay:

www.econlib.org - Supply-Side Economics - James D. Gwartney, professor of economics and former chief economist of the Joint Economic Committee of the U.S. Congress

*** "From the middle out" always reminds me of 'Silicon Valley' series where that was a description of main character's high-speed compression algorithm.
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"The Failure of Supply-Side Economics

Three Decades of Empirical Economic Data Shows That Supply-Side Economics Doesn't Work"

www.americanprogress.org

"Neither history nor research supports supply-side economics"

equitablegrowth.org

Debunking Laffer

"A series of reports from Institute on Taxation and Economic Policy explains why these supply side claims are not supported by the evidence, and exposes the many serious flaws in the analyses that Laffer has constructed to lend it support."

itep.org

"Art Laffer still thinks he was right about tax cuts

At 82, the Reagan tax-cut cheerleader is still preaching the gospel of trickle-down economics, even after some dire failures of the Laffer curve.'"

"After instituting historic cuts to tax rates, Reagan implemented tax-raising initiatives for several years to offset mounting deficits.

The deficit also grew after Trump cut taxes. And a decade ago in Kansas, after Republican Gov. Sam Brownback instituted tax reductions on the wealthy that Laffer hailed as a "revolution in a cornfield," state leaders had to impose severe cuts to education and infrastructure as they scrambled to close a massive deficit. T

he state legislature then reversed the tax cuts.

"It turned out pretty badly," said Bruce Bartlett, a former domestic policy adviser to Reagan and a Laffer critic.

"It lost so much revenue that the same people who passed the tax cut had to pass an increase to keep the whole financial enterprise afloat. It shows the lack of seriousness that underlies all of Arthur's analyses."