Matthew Dowd, ABC’s token “conservative,” produced a tweet that is abound with economic illiteracy:
He proceeded to double down on his economic illiteracy:
Here are five statistics showing that tax cuts have in fact benefited the middle class and resulted in higher revenues.
1. From 1982 to 1989, real middle class incomes grew by 12.6 percent. This is according to data compiled by John Hinderaker and Scott W. Johnson, who found that lower-income Americans saw real incomes increase by 12.9 percent in the same timeframe. The 1980s, of course, were the era of Ronald Reagan’s supply-side tax policies with massive across-the-board tax cuts that whittled down the tax code to a two-tier tax system of 28 percent and 15 percent. According to Peter Ferrara:
Real per-capita disposable income increased by 18% from 1982 to 1989, meaning the American standard of living increased by almost 20% in just seven years. The poverty rate declined every year from 1984 to 1989, dropping by one-sixth from its peak. The stock market more than tripled in value from 1980 to 1990, a larger increase than in any previous decade.
The era of strong economic growth stemming from Reagan’s policies benefited all Americans, not just the wealthy. Federal tax revenues also increased by around 28 percent between 1983 and 1989 when adjusted for inflation.
2. The Bush tax cuts resulted in per capita real after tax income rising by over 11 percent. George W. Bush’s presidency is generally associated with the economic crisis that occurred toward the end of his reign, but people forget that the Bush economy up until that point was actually quite strong. Via Ferrara:
The proof is in the pudding over the Bush tax cuts. They were followed by a record 52 straight months of job creation, producing 8 million new jobs, with the unemployment rate falling to 4.4%. Business investment spending, which had declined for 9 straight quarters, reversed and increased 6.7% per quarter, producing all those new jobs.
Because of that increased investment, labor productivity soared by 2.5% annually from 2003 to 2007, higher than the averages of the 1970s, 1980s, and 1990s. As a result, real after tax income per capita increased by more than 11%.
Manufacturing output soared to its highest level in 20 years. The stock market revived, creating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 almost doubled. After the Bush tax cuts started in 2001, quickly ending the 2001 recession, the economy continued to grow for another 73 months. From 2000 to 2007, real GDP grew by more than 17%, meaning an additional $2.1 trillion for the American people.
Dowd would likely argue that deficits and income inequality increased as a result of the Bush tax cuts, but neither of these propositions are true. Ferrara noted that total federal revenue increased by 47 percent from 2003 to 2007 and the deficit in 2007 was at a low of $167 billion. The income inequality argument is contradicted by Census Bureau data that shows that in 2006 the poverty rate declined to its lowest level since 2002 at 12.3 percent and median family income had increase by 0.7 percent from the previous year. Even The Washington Post begrudgingly admitted that the middle class saw “increased take-home pay” as a result of the Bush tax cuts.
Like the Reagan tax cuts, the Bush tax cuts resulted in a strong economy that benefited everyone; the 2008 economic crisis stemmed from government intervention in the housing market.
3. The 1997 capital gains tax cut from 28 percent to 20 percent reluctantly signed into law by Bill Clinton resulted in a 6.5 percent increase in wages from 1997 to 2000. Yearly GDP growth grew by over four percent on average in that same timeframe and added 11.5 million jobs to the economy. According to Daniel Mitchell, “all income groups enjoyed increases in income after the 1997 capital gains tax cut.”
4. Real GDP per person increased “from $16,000 to over $50,000” from 1950 to 2000, according to Larry Kudlow. Kudlow called this statistic “a huge win for the middle class.” The timeframe, of course, features the aforementioned Reagan tax cuts and the capital gains tax cuts as well as John F. Kennedy’s tax cuts, all of which spurred economic growth, suggesting that tax cuts are in fact “a huge win for the middle class.”
5. Middle class income grew by 36.7 percent from 1979 to 2007. In their book Equal Is Unfair: America’s Misguided Fight Against Income Inequality, authors Don Watkins and Yaron Brook point out that statistics showing a decline in middle-class income in that same timeframe are based on pre-tax income and doesn’t take into account other factors and forms of compensation like health insurance; post-tax income that is adjusted for these myriad of factors reveals a 36.7 percent increase in income over that time in which the Reagan, Bush and capital gains tax cuts all occurred.
Therefore, the data is clear that despite Dowd’s claims, the middle class has benefited from tax cuts. But more importantly, the data suggests that tax cuts benefit everybody. For being a supposed “conservative,” Dowd is falling for the obvious class warfare fallacies promulgated by the Left.