Supply-side economics
Supply-side economics is an economic theory which beings with "an assertion that no economist would dispute: taxes reduce the incentive to work, save and invest." [1]As one website put it:
- "Supply side" economics is now associated with Arthur Laffer and his advice in the late 70's that the highest tax rates should be cut, which would free up private capital and produce economic growth, which then would result in higher tax revenues. Although cutting tax rates produced the "seven fat years" from 1982-89, and tax receipts actually did increase, this advice is now commonly disparaged as "tax cuts for the rich" and falsely blamed for growing federal budget deficits in the '80's [5]. The thinking seems to be that the profits of business should either be given directly to workers through pay raises or be taken by the government to be given to workers indirectly. Producing greater profits is thought of as useless and immoral. [1]
- Alan Greenspan, who labored in the Wall Street vineyards before he got his academic degrees in economics, [said] he had spent decades trying to figure out how to convert capital gains to ordinary income, and couldn’t figure out how to do it. As he put it in a conversation in his office at the Fed, perhaps a decade ago, any tax on capital gains is a tax on the national standard of living. It was Forstmann who made me see that the political forces who oppose a lower capital gains tax are those who have already acquired their wealth. I found confirmation of this view in the writings of Karl Marx and Ludwig von Mises, on the left and on the right, both of whom observed that people of wealth have a natural inclination to protect that status by using the tax laws to discourage those in lower stations from climbing into their ranks. [1]
