Economic Recovery Plan B

Plan A for promoting economic recovery is for the government to try to keep people employed and keep money in circulation so that businesses will have customers when they start to recover. Plan B is for the government to do nothing except cut tax rates on the highest-income taxpayers, who then, having more money than they need, will invest it in productive enterprise and put Americans back to work.

The problem with that is that the greatest period of economic growth in American history was the 1950s and 1960s, when the top income tax rate was 70 percent to 95 percent. Since the 1980s, the top tax rates have been less than half that, and we’ve experience economic stagnation for everyone except millionaires and billionaires.

I am not of course saying cuts in the top tax rates caused the economic stagnation or that income tax rates should be put back to pre-Reagan levels. I am saying that experience shows that enriching millionaires and billionaires is not the key to economic recovery.

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