Robert Reich Quotes
It is a myth that higher taxes lead to less demand and slower growth. In the first three decades after World War II, US top tax rates on the wealthy were never below 70 percent.
Reich, Robert B. Beyond Outrage: What Has Gone Wrong with Our Economy and Our Democracy, and How to Fix It. Vintage Books, 2012.
The traditional conservative tax principle has always been that low tax rates are needed to produce economic expansion and in general this had been so until Clinton and Rubin combined higher tax rates with great fiscal discipline of government spending and low interest rates, not only produced a great economic expansion but eliminated the Reagan deficit and left office with a huge projected surplus.
This is the most articulate historical statement of the modern conservative mantra regarding taxes. However, one change has taken place. The words “necessarily” and “often” tend to be left out of the more modern ideological statements. Mellon’s original statement has never really had any politicians or economists who disagreed. Politicians of all economic persuasions have generally accepted the Mellon statement but the extreme conservatives’ creed is that a lowering of taxes always produces more revenue and a tax increase will inevitably lead to greater tax revenue—a position which Mellon never took. Mellon however was very solicitous of the wealthy, felt the welfare of the nation depended on their prosperity, and was a strong advocate of what was later called ‘trickle down’ economics {628592}.
Many corporate executives were claiming that they were not investing in growth and jobs because they were uncertain about the future tax rates or regulatory environment with which they would be coping. But with elections coming up, there has never been such certainty, and much of the best growth in American business was in the Clinton administration where these policies were under constant debate. Immelt identified the real problem: Demand for products and services was very weak.
She was refuting the claim of many economic conservatives that cutting taxes will always produce economic growth. Actually, in many cases tax cuts do have that effect, but as the counter-example shows, not always and not under all conditions. The Kennedy tax cuts, for example, did produce economic growth.
Robert Bernard Reich is an American economist, professor, author, and political commentator. He served in the administrations of Presidents Gerald Ford and Jimmy Carter, as well as serving as the United States Secretary of Labor from 1993 to 1997 under Bill Clinton. He was a member of President Barack Obama's economic transition advisory board.
