Yes: It’s time to try a new ap­proach

Lodi News-Sentinel - - OPINION - Michael Mad­owitz is an economist at the Cen­ter for Amer­i­can Progress. He wrote this for In­sid­

We've been cut­ting taxes on the wealthy for two gen­er­a­tions, and the re­sults have been dis­mal. Econ­o­mists, who started as gen­er­ally sup­port­ive of the tax cut ex­per­i­ment, have seen enough. By 2017, only 2% of the Univer­sity of Chicago's Eco­nomics Expert Panel agreed the Trump tax cuts would lead to faster eco­nomic growth. The 98% were right.

The econ­omy is grow­ing slower, and bud­get deficits are ris­ing faster than tax-cut­ters promised. Yet the same peo­ple are ar­gu­ing for more tax cuts to solve the prob­lem. We don't need an­other drink to steady our nerves be­fore we get be­hind the wheel. It's time to sober up, raise taxes on the wealthy, re­store our pro­gres­sive tax sys­tem and get our econ­omy grow­ing again.

How could the econ­omy grow faster with higher taxes? It's hard for most Amer­i­cans to re­mem­ber how rad­i­cally dif­fer­ent our tax code was dur­ing the glory days of the U.S. econ­omy, but we used to tax the rich, much more, and we taxed the su­per-rich much more still.

From the end of World War II into the 1970s, the United States ex­pe­ri­enced rapid, broadly shared growth un­der a dra­mat­i­cally more pro­gres­sive tax sys­tem than we have to­day. Be­tween 1945 and 1980 we had an av­er­age of 24 dif­fer­ent tax brack­ets (there are seven to­day) with a top in­come tax bracket start­ing at 137 times higher in­come than the low­est bracket (to­day that num­ber is closer to 30), and a top rate be­tween 70 and 90%.

Half­way through the tax cut ex­per­i­ment, it was pos­si­ble to be­lieve it could work, but with an ad­di­tional 20 years of data we know more about how tax cuts _ and tax cut­ters _ work. And it's hard to take ei­ther se­ri­ously.

Real eco­nomic growth was faster in each of the three decades be­fore 1980 than in any decade since, both for over­all GDP growth and af­ter ad­just­ing for pop­u­la­tion growth. Af­ter the fail­ure of the 1980s tax cuts, Ge­orge W. Bush passed large tax cuts for the rich in 2001 and 2003, and growth slowed fur­ther, all be­fore the great re­ces­sion and a lost­decade of in­come growth.

The good news is we don't need bril­liant in­sights to get out of this hole, we can just stop dig­ging. Rais­ing taxes on the wealthy, which is ex­tremely pop­u­lar, will al­low us to make the im­por­tant in­vest­ments in our fu­ture — in ed­u­ca­tion, in ca­reer and fam­ily sup­ports, in sci­en­tific re­search and phys­i­cal in­fra­struc­ture — that we've been short-chang­ing for a gen­er­a­tions. We can get back to re­ly­ing on in­no­va­tion for eco­nomic growth that's broadly shared and makes all our lives bet­ter.

An­other bonus is that the peo­ple who have both­ered to look have con­firmed the fail­ure of tax cuts for so long that there are nu­mer­ous good ideas for lev­el­ing the play­ing field with­out rais­ing a dime from mid­dle-class fam­i­lies. There are pro­pos­als for mil­lion­aire (and mul­ti­mil­lion­aire!) sur­taxes, wealth taxes, mark-to-mar­ket cap­i­tal taxes and in­her­i­tance taxes, just to name a few. All have the ben­e­fit of check­ing the power of wealthy Amer­i­cans and cor­po­ra­tions, and re­vers­ing some of the bur­den of fund­ing the im­por­tant func­tions of govern­ment off of lower-in­come Amer­i­cans who have been back­fill­ing the lost tax pay­ments from the wealthy with higher sales and pay­roll taxes.

This is no doubt wor­ry­ing for tax cut­ters, who have grown used to win­ning the ar­gu­ment with disin­gen­u­ous claims about un­pop­u­lar poli­cies. But tax cut­ters can re­lax be­cause all along they've had the power to close their eyes, tap their heels to­gether three times and go back to Kansas . ... where they can en­joy the cat­a­strophic ef­fects of a dif­fer­ent tax cut ex­per­i­ment gone hor­ri­bly wrong.

For at least 15 years now, it's been the right time to raise taxes on the wealthy. It will lead to a fairer, stronger econ­omy that will grow faster as we make the pub­lic in­vest­ments we've been de­lay­ing for decades. And as econ­o­mists have got­ten more so­phis­ti­cated about taxes, ev­i­dence for tax­ing the wealthy has got­ten much stronger. The only thing that's eas­ier to pre­dict is that the usual char­ac­ters will claim the so­lu­tion to the harms be­got­ten by decades of tax cuts for the wealthy is a Shiny New Tax Cut. It's our fault if we be­lieve them.

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