The great tax myth

Phew! I'm glad that it's over, but now we get to hear the rightwing pundits obsessively recast the shitpile Bush lft behind for us as the "Obama Recession." The nerve, but I expect nothing more from the lot of them. Now, on to taxes...

Recently, the common wisdom is that to stimulate the economy, you must cut taxes. The wisdom continues with "Why will the rich produce more if they are, like in most of the first 2/3 of the last century, paying 80% or even greater than 90% in taxes?"

Well, the numbers say otherwise. I suggest you read this blog entry from Larry Beinhart (of Wag the Dog fame). The bottom line is that when we put stiflingly high taxes on high incomes and profits, profits tend to be revinvested into the companies that made them. When the opposite is true and taxes on super high profits are low, rich folks start wondering what to do with all those piles of cash. So, they end up throwing money into bad investments (e.g., Ponzi schemes or houses in Florida) and such, which leads to a bubble, which grows and grows until it pops! (sound familiar?

This makes me worry about Obama's recent talk about tax cuts. And don't think democrats will easily raise taxes the rich.

Once again, be sure to check Beinhart's post out.