THE LEFT Vs THE RIGHT |
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Nation November 7, 1981 "Reaganomics: The Supply Side of the Street" By Martin Carnoy and Derek Shearer This column by Carnoy and Shearer argue that the supply-side theory that "lower income taxes will induce people to work harder, produce more and save more is not supported by the facts." The authors also disagree with the notion that tax savings will be put back into job-creating actions. They believe the corporations will use their savings to invest in new lines of credit with other corporations, and not necessarily pass on the savings to the customer, another supply-side belief.
New Leader Weintraub writes about the 1983 budget in general, but spends some lines on the proposed tax cuts in the budget. He feels the tax cuts to be irresponsible at the moment, because of the budget deficit. Because of Reagan's call "to put up or shut up" to critics of his budget, Weintraub offers some. Three of his alternatives are to: defer some tax cuts to his "cronies"; change the quirky rules of investment-credit tax; and create an Incomes Policy to "ease the monetary standoff that is taking us down disaster road and, among other things, ensuring a massive future housing shortage."
Kansas City Times Reinhardt's analysis of the Reagan tax policy is a very critical one. He characterizes the policy as a change from "tax and tax, spend and spend" and a move to "spend even more and just borrow." Calling the supply-side view of economics a cult, he marvels at the sales job they were able to give to the American people. The cut in tax rates was supposed to create enough growth in taxable activity that tax revenues will actually increase. Businesses would hire more workers, consumers would save more and invest in business, and finally a balanced budget by 1984. This obviously did not happen, and Reinhardt blames both Reagan and the Congress for the ballooning national debt.
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St. Louis Globe-Democrat February 9, 1982 "The 1983 Budget: A Courageous Document"" The Globe-Democrat praises the 1983 budget because of its tax cuts. The Globe-Democrat sees the tax cuts as "providing incentives for restoring badly needed economic growth." Despite the recession, it was important for Reagan not to buckle to Congressional calls for delay or eliminate the tax cuts. Because of this, the effects of the tax cuts, which are not short-term benefits, will take place.
Looking Back on the Reagan Presidency In their analysis of Reagan's ideology, the two authors cite his personal experience as reasons for him wanting to cut the marginal tax rates. In the 1940s the high marginal tax rates discouraged Reagan from making movies. In the 1960s, Reagan the suburbanite felt the anger from high taxes that would make him want to lower taxes when he attained office.
Looking Back on the Reagan Presidency Although McClure makes note of some of the short-comings of the Reagan tax policy, he is generally positive about the results of the policy. McClure focuses on Rate Reduction, and the mixed record in Tax Reform. In the aspect of Rate Reform, Reagan did a marvelous job in the eyes of the author. When Reagan entered office in 1981, the marginal rate of the highest tax bracket was upwards of 70%, the Reagan tax policies lowered the highest rate to 33%. For corporate income, the tax rate has been reduced from 46% to 34%. McClure argues that high tax rates "do a great deal of mischief and accomplish little." Indeed it is hard to overstate the good that the Reagan tax reform did. In the area of tax reform, McClure feels that while on the basis of absolute tax reform, the Reagan reforms have not done well. When looked at in comparison to what was policy before Reagan arrived, though, the reforms look remarkable. Some of the progress has come in the following areas: consumer interest is no longer deductible; many other deductions have been either eliminated, combined, or had ceilings put on them; he elimination of state and local sales tax deductions shows that sub-national taxes are available to reforms; and limits have been placed on the deductions of home mortgage interest.
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