On that “wealth transfer” I’m always hearing about…
September 26, 2012
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The usual context in which wealth transfer appears is from the wealthy to the poor. Taxes and all sorts of public assistance are said to be wealth transfers from one group of people to another. Well, in an OP-ED on the latest Forbes 400, Joe Nocera points out the increase in net worth of the Forbes 400 rose by $200 billion and that happens to correspond to a 4 percent median household income drop from last year.
I recommend reading the article. For me, this is the punchline:
This is also what Forbes means when it links its list to “the American dream.” Except that there is no evidence that it’s true. In 1986, when Ronald Reagan was president, the differential between capital gains and ordinary income was eliminated — and the economy soared. The capital gains rate was higher during the Bill Clinton years than in the George W. Bush years, yet the economy did better under Clinton than under Bush.
In the printed copy of his Congressional testimony, Burman has a chart that plots the ups and downs of the economy since the 1950s with changes in the capital gains rate. There is no correlation between the two. The idea that a lower capital gains rate spurs economic growth is one of the enduring myths of conservative thought.
I hold out no hope, though, our discussion (on a national level) of these issues will be based in fact.