Really nice column by Richart Thaler in the Times debunking pretty much all of the right’s talking points on why the really rich really need their tax cuts (note to reader: they don’t). My favorite parts:
They [the Republican leadership] offer three arguments to support their view.
The first is that it is folly to raise taxes in a weak economy. There is some merit to this argument, of course, but economic policy is always about trade-offs.
Tax cuts are one of many ways to stimulate the economy. Building infrastructure, for example, is another. We have to choose. And if the primary goal is stimulating the economy, tax breaks to the rich are simply not cost-effective. Numerous studies have shown that the poor spend nearly all of their income, while the rich save a significant amount of theirs…
Which brings us to the third argument. Conservatives say that to do anything other than extending tax cuts to everyone would amount to “class warfare.”
The best response to that notion comes from Warren E. Buffett: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
Thomas Piketty and Emmanuel Saez, two academic economists, provide data to back up Mr. Buffett’s view. They show that the proportion of income earned by the top 1 percent of American families was about 10 percent of the national total from 1945 to 1979. Since 1980, that share has doubled, reaching about 20 percent in 2008 — or more, if capital gains are included.
I’ll also mention here, the Thaler is the co-author (with Cass Sunstein) of an excellent book, Nudge. (Which I now realize, I somehow forgot to review on my webpage). Anyway, Nudge takes the insights and findings from behavioral economics and applies them to actual policy debates. It’s no Predictably Irrational (a wonderfully engaging book on behavioral economics), but given the more serious tone and intentions, it’s quite readable and quite good.