Reagan’s tax cuts did initially increase employment,

Rather substantially. Probably best not to understate that. Peak to trough, unemployment decreased by over 50%, from a peak that we never saw again until 2009.

but the wealth of those in the top percentile never trickled down to boost income equality.

That’s largely true, but income inequality grows at a rather constant rate regardless of tax policy. You can have a good economy with inequality rising, and a weak economy with income inequality rising. It’s not correlated with either GDP nor tax policy.

Simply put, and although we all agree that less inequality is better than more inequality, it’s a factoid which cannot be used to judge the efficacy of a tax policy.

The goal should be to bridge the chasm between the rich and the less privileged by promoting social equity through increases in capital investments (ideally from said tax cuts) that will directly benefit the working and middle classes.

I believe the data shows that the only way to do this is by government removing barriers to economic and job growth. If the government tries to do it through redistribution, it fails.

This graph (courtesy of NY times) illustrates negative income growth for those in the 5th percentile, 30 years since Reagan’s tax cuts — if these people were banking on the ‘trickle-down’ effects, their hopes were apparently dashed.

This is an odd statement. When it comes to their daily lives, people don’t care about income inequality across the entire economy; what people care about is if their own individual circumstances are improving or not. As long as their individual circumstances are improving, then they really don’t care how rich the rich are getting.

Because of this, policies need to be focused on an improvement in the lot of the common man (education (traditional, plus trade and vocational, plus more and better jobs).

I’d also note that the birth of income disparity coincides with the time when Reagan took office and implemented his fiscal policies. Infer from that what you will about the effects of Reagan’s tax reforms.

(Clears my throat). Uh……bullshit.

As you can see, the GINI ratio (which was falling up until the mid 60’s) started rising in the mid-60’s, and has risen pretty much unabated since. That rise is certainly not correlated with the Reagan period; in fact, one of the few times the increase abated was the second Reagan term (when it temporarily flattened). And interestingly that JUMP in the ratio you see in the beginning of the 90’s correlates to the Bush/Clinton tax INCREASES, further weakening the argument that inequality is related to tax policy (which is what you’ve been implying throughout your post).

There is no reason for that chart to start in 1979, unless the intent is to imply that the fault is Reagan’s; ergo, the chart is designed to mislead. Here’s what the average real wage in the US looks like over time:

Urk. Real earnings in the US peaked around 1973; adjusting for inflation, we’ve been behind ever since. Obviously, a trend that began in 1973 can’t be attributed to Reagan. The worst you can say about him (obviously) is that he was unable to reverse the trend, which did NOT reverse until the dot-com economy in the second Clinton term.

We’re not going to get our economic problems in the US sorted out until everyone realizes (and admits) that in the large scheme of economic shifting in the US due to automation, information, and globalization, Reagan was just along for the ride. He created no new trends as far as inequality and income are concerned.

You cannot solve a problem until you understand it. And as long as the right deifies him, and the left demonizes him, we will not solve any of these long term economic challenges.



Free markets/free minds. Question all narratives. If you think one political party is perfect and the other party is evil, the problem with our politics is you.

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Kady M.

Free markets/free minds. Question all narratives. If you think one political party is perfect and the other party is evil, the problem with our politics is you.