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From: orb@whuxl.UUCP (SEVENER)
Newsgroups: net.politics
Subject: Re: The WSJ on Reaganomics
Message-ID: <333@whuxl.UUCP>
Date: Fri, 9-Nov-84 08:52:54 EST
Article-I.D.: whuxl.333
Posted: Fri Nov  9 08:52:54 1984
Date-Received: Sat, 10-Nov-84 09:52:35 EST
References: <421@hogpd.UUCP>
Organization: Bell Labs
Lines: 41

Response to the Wall Street Journal Editorial on Reaganomics:
*************************************************************************
> that, following the reduction in the top marginal rate to 50% from 70%,
> "the percentage of income tax collected from taxpayers earning $50,000
> or more rose from 32.9% to 35.4%.  At the same time, the share paid
> by those making $20,000 or less fell from 17.1% to 15.5%."  Time concluded
> that, true to supply-side claims, "the share of taxes paid by the richest
> Americans is on the rise."
This is an impressive statistic.  However I also find it more impressive
that for the first time in 40 years there has been a major shift in the
income distribution from the middle class and poor to the rich.  Social
scientists had considered the distribution of income something fairly stable
no matter what party was in power.  Reaganomics has proven that supposition
wrong.  When the majority of people making under $20,000 are facing a decline
in purchasing power or in their share of income relative to the wealthy
then they are going to pay less income taxes.
> It adds that "the strongest argument supply-siders have
> is the economy's performance.  Defying conventional wisdom, it has achieved
> sustained expansion" without renewed inflation.  And "budget deficits have
> come down."
Where is the evidence for this? Budget deficits have come down? When we
have the largest deficits in history? Yes, budget deficits have come down
from previous estimates that they would be even higher than they now are
due to economic expansion.  But we are still facing enormous deficits greater
than any in our history. Even with the most optimistic projections of
economic growth with no downturn (extremely unlikely) those deficits will not
disappear.  In fact increases in interest payments were larger than all the
cuts in social spending over Reagan's first four years.

>    ...the [post-election] debate will not be over whether there is a Laffer
> Curve, but over its precise shape.  Even while many of the debaters 
> continue to ridicule Arthur Laffer, they will be arguing over which tax 
> rate will maximize revenues. 
While I don't believe the Laffer Curve has any validity, I do believe that
the current structure of tax deductions skews investments in very bad ways.
Instead of looking at tax deductions as some sort of free sop to special
interest groups we should recognize they are actually a form of tax
expenditure--a form of tax expenditure that heavily favors the rich since
they are only ones with the extra money to be able to afford many of the
things which gain tax deductions.
Tim Sevener whuxl!orb