The tax cut myth: Aiding the wealthy doesn't create jobs | Arkansas Blog

Friday, April 24, 2015

The tax cut myth: Aiding the wealthy doesn't create jobs

Posted By on Fri, Apr 24, 2015 at 6:59 AM

Here's an item from International Business Times with particular relevance in Arkansas:

A study from the University of Chicago indicates that tax cuts do create jobs, just so long as they're not targeted at the wealthy.

Zidar examined the short- to medium-term impact of tax changes at the state and federal levels going back to 1948. On the national level, he found a 1 percent gross domestic product (GDP) tax cut aimed at the bottom 90 percent translates to job growth of 2 to 5 percent, but the impact of a similar cut on the top 10 percent of earners has a negligible effect. He reached similar conclusions on the state level: Tax decreases for most of the population generated 5 percent employment growth, but yielded little change when applied to the top income bracket.

Why is this relevant to Arkansas? In Gov. Asa Hutchinson's tax cut plan, he omitted the bottom 40 percent from ANY benefit. The poorest working Arkansans, those making less than $21,000 a year, got NOTHING. Everybody else got a break. The very wealthiest got the biggest tax cut of all.

The capital gains rate is declining by more than 33 percent. Overwhelmingly, it's a benefit the wealthy enjoy. Worst of all, the super wealthy got a total exemption on income over $10 million in capital gains. In the paper today was news of a banker who's reaped $30 million this year on sale of stock acquired for pennies as a banking executive. As much as $20 million of that will incur NO tax liability, a savings under the old tax rate of more than $900,000. Were jobs created in the bank merger that created the riches? Will jobs be created with that windfall? Or will it merely be invested (wherever the return is highest, not necessarily Arkansas.)

It's simple. Give poor people more money and they spend it, thus stimulating the economy.

[Researcher Owen] Zidar says the paper carries policy implications, too. If lawmakers want to stimulate job growth, “this suggests payroll tax reform could be a pretty powerful tool,” he says. Scrapping those taxes up to a certain amount would be a far more effective means of creating jobs than say, slashing income taxes on the top 1 percent.

Reduction of tax income also stifles investment in things that produce income growth — good education, healthy people, sufficient infrastructure.

Again, Republican orthodoxy knows better. In addition to stiffing working poor on the tax cuts, Hutchinson and Republicans also rejected a bill to give the poor an earned income tax credit, a state rebate of some payroll taxes.

In Arkansas, the rich must be served. We are a "unique" state, Hutchinson said yesterday in talking about the Common Core curriculum standards. Indeed. And look around. Our emphasis on corporate welfare, welfare for the rich and punishment of the working poor — even if it meant beggaring public services — has produced a model for the nation, has it not? And if the tech companies weren't already flocking here for that, they soon will be thanks to Gov. Asa Hutchinson's strong support for legal discrimination in employment against gay people.

Tags: , , , , , , ,


Favorite

Comments (18)

Showing 1-18 of 18

Add a comment

 
Subscribe to this thread:
Showing 1-18 of 18

Add a comment

More by Max Brantley

  • UA-Fort Smith chancellor leaving for South Dakota, interim named

    Edward Serna will lead UA-FS will search for new chancellor is made.
    • Aug 16, 2018
  • Satan vs. the supremacists

    So it goes. The Satanic Temple unveils its statue for a rally in support of the First Amendment protection against state establishment of religion. Meanwhile, a tiny group of white supremacists appeared in opposition, lending comfort to Bro. Jason Rapert's Biblical slab on the back side of the Capitol.
    • Aug 16, 2018
  • Thursday's open line

    The open line and daily news roundup, with Reality TV-style news all over.
    • Aug 16, 2018
  • More »

Readers also liked…

  • Trump immigration protest at LR: Quick and fierce

    It was not even 24 hours ago that Sophia Said, director of the Interfaith Center; City Director Kathy Webb and others decided to organize a protest today of Donald Trump's executive order that has left people from Muslim countries languishing in airports or unable to come to the US at all — people with visas, green cards,a  post-doc graduate student en route to Harvard, Google employees abroad, families. I got the message today before noon; others didn't find out until it was going on. But however folks found out, they turned out in huge numbers, more than thousand men, women and children, on the grounds of the state Capitol to listen to speakers from all faiths and many countries.
    • Jan 29, 2017
  • Latest Obamacare repeal bill would hit Arkansas treasury hard

    The latest effort to undo Obamacare, the Graham-Cassidy legislation, would shift federal support for health coverage to a block grant system to the states. Bad news for Arkansas.
    • Sep 18, 2017
  • Your daily dose of Jason Rapert

    Sen. Jason Rapert really, really didn't like it when a KATV reporter asked him about the hypocrisy of his political arguments.
    • Feb 4, 2017

Most Viewed

Most Recent Comments

Slideshows

 

© 2018 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation