Even a broken clock is right twice a day.
After 30 years, The New York Times has admitted that Reaganomics worked.
The inadvertent revelation comes in a November 29th article by Binyamin Appelbaum chronicling the steadily falling tax burden Americans have experienced since the 1980s.
AEI columnist James Pethokoukis notes that the heart of The Times’ article is that in 2010 Americans “paid far less in total taxes — federal, state and local — than they would have paid 30 years ago.”
Pethokoukis points out that some tax hike advocates think this means that America’s tax burden is too low and time has come for a hike. But Pethokoukis disagrees.
Maybe I’m crazy, but I think the reduction in the tax burden — staring with the Reagan tax cuts — has been a huge competitive advantage for the U.S. We should keep that edge. Check out these numbers. In 1981, France’s per capita GDP was 81% of U.S. per capita GDP, Germany’s 83%, Italy’s 81%, Britain’s 69%.
In 2010, France’s per capita GDP was 73% of U.S. per capita GDP (down 8 points), Germany’s 81% (down 2 points), Italy’s 68% (down 12 points), and Britain’s 76% (up 7 points).
Pethokoukis reminds readers that Europe was closing the gap with U.S. wealth by 1980, but after Reagan’s tax cuts that trend stagnated and in other cases even began to reverse.
There are many great points made in the Pethokoukis piece and you need to go read them, but his last one is the funniest—or saddest, depending on your point of view.
4. Another bit: “Economists agree that taxes on business are passed on to investors, reducing profits, and to workers, reducing wages. Upper-income households bear the brunt of these taxes, and corporate tax collections have fallen sharply.” That is right. Taxes matter.
Funny, the NYT never mentioned this widely known economic fact when Mitt Romney was attacked for saying “Corporations are people.”