“Still, Reagan’s labor and tax policies greatly accelerated the process of stagnating and declining wages and increasing investors’ after-tax incomes.”

The GOP’s suspicion of organized labor is well known. I have often wondered what the dynamic would be if organized labor had decided to *not* align itself with a single political party. (There is nothing in conservative economic governance theory that precludes worker collectives. The GOP animus towards labor stems primarily from the fact that in the US, organized labor gives all their money to the “other guys.”)

As for Reagan’s tax policies accelerating declining wages…..I’d have to disagree. But it’s the last point that interests me:

The intent of the Reagan tax packages was always that they were to be revenue neutral to the government. And they were, mostly. I recall in my 20’s, just starting to work in sales for a major computer corporation, sitting in my office listening to the high wage earners gripe, “I though we were supposed to get a tax CUT if we elected this guy. My taxes went UP!”

What happened was that Reagan dropped marginal rates and killed the tax shelters that the rich were using to lower their AGI’s. Their after-tax incomes didn’t change that much on an annualized basis, but what happened was that the money that the rich previously invested in those money losing tax shelters went looking for something else to do. So, it all flowed into the stock market and real estate, which took off.

And….the rest is history, for better or for worse.

Written by

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

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