What is your wisdom on tax breaks for the wealthy?

History shows that tax breaks for the wealthy and the national debt going up coincide. The graft shows it. Arguing that tax breaks for the wealthy does not increase wages, job, or lower GDP, it only goes into the pockets of the wealthy and the social programs and social security are under attack. Minium wage has not increased with inflation. Please explain your view.

Official response from submitted

Cutting taxes for corporations and the rich risk arousing political anger in the population as a whole. To mitigate that, tax breaks are often extended to the mass of people on some modest scale. Since political problems would likewise arise if such tax breaks were accompanied by corresponding reduced spending on social programs, the typical end result in capitalist economies are government budget deficits covered by govt borrowing (national debts). This is OK with corporations and the rich because they just lend to the government the money they retained when govt reduced their taxes. From their perspective, lending to the govt is far better than having that money taxed away by the govt. For the mass of people, the deficit just postpones the reckoning for a bit, but eventually they will be taxed more and/or have govt services reduced by the extra burden of servicing the national debt on top of struggling with insufficient govt revenues resulting from the tax cuts. That this system is unjust and ineffective is clear from the historical record. Yet the ability to obtain support for this behavior has been reproduced repeatedly and especially in recent decades.

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  • Richard Wolff
    responded with submitted 2017-05-27 16:18:40 -0400
  • Linda Sherlock
    published this page in Ask Prof. Wolff 2017-05-26 14:47:32 -0400