Shall We End The Economic Experiment

Republicans typically say that the Democrats want to raise taxes on the rich to pay for their liberal agenda.  Democrats say the Republicans want to cut taxes on the wealthy and then claim there is no money for safety net programs (social programs).  This has been going on for years.

However, should we be looking at the United States’ fiscal issues from a different viewpoint? In 1986 “The Tax Reform Act of 1986” was signed into law. One of the changes made was a reduction in the number of marginal tax brackets. This, of course, resulted in large tax cuts for the wealthy.  The theory behind this change is known as “Supply–side economics.”  It is also known as trickle-down economics, and Reaganomics (even though the concept was created before Reagan became president).

In theory, the increased capital generated by the tax cuts would fuel economic growth. This increased economic growth would result in higher tax revenue for the federal government. As a result, it was expected to pay down the federal debt while increasing defense spending.  Unfortunately, this did not happen. In fact, when Reagan left office the federal debt had risen to TBD.  Now the debt is over $22 Trillion!

As a result, according to the Brookings Institute, in 2016, the top 20% of households had about 77% of the total wealth in the United States.  This wealth distribution shows, in my opinion, a tremendous amount of wealth hoarding. What was supposed to be an increase in capital spending became an increase in wealth. Doesn’t it seem reasonable to end this decades-long economic experiment? Younger people that weren’t paying attention in the mid-1980s might view this as raising taxes on the wealthy when, in fact, it is merely restoring the marginal tax rates, adjusted for inflation.  When are we going to recognize that excessive hoarding is going on? Do you need billions of dollars to believe you are successful?  What they are doing with this enormous wealth is another matter altogether.