Tornado Alley (PROG)

[StephanieVanbryce]

Want recovery? Then tax the freaking rich!

January 2 2011

Michael Hudson, esnl’s favorite economist, offers a devastating takedown of the Obama administration’s endorsement of the Bush “tax the poor” economic strategy in this interview with Paul Jay of The Real News Network.

http://www.youtube.com/watch?feature=player_embedded&v=CnrEHFwZ9hk

America’s economy has been most powerful and employment numbers the highest precisely at those times when taxes on the wealthiest were at their highest, Hudson observes.

A couple of standout quotes:

GDP, national income, and prosperity and wealth grows fastest when income tax rates are highest. . .the economy slows when taxes are cut. That’s counterintuitive, but if you look at any chart comparing tax rates and economic growth rates, that’s what you find. The 19th century knew it. The 18th century knew it. But today you have a kind of counterrevolution of junk economics that is basically anti-labor economics.

Today the capital gains rate is only 15 percent. That’s less than the 15.3 percent FICA withholding tax that workers have to pay in their Social Security and Medicare. So now you have, all of a sudden, the economy encouraging speculation in real estate, in stocks and bonds, instead of direct investment. So the result of lowering the taxes, of steadily lowering the taxes on the rich, has been to encourage money to be made in the way that the rich make their money, which isn’t on building factories. It’s not on employing labor. It’s on speculating on real estate, stocks, and bonds.

A transcript of the interview is here. [ http://www.therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=6000 ]

http://richardbrenneman.wordpress.com/2011/01/02/want-recovery-then-tax-the-freaking-rich/