Dissecting The Demagoguery About ‘Tax Cuts For The Rich’
by Thomas Sowell
High rates drive taxpayers into shelters.
Mellon pointed out that, under the high income-tax rates at the end of the Woodrow Wilson administration in 1921, vast sums of money had been put into tax shelters such as tax-exempt municipal bonds instead of being invested in the private economy, where this money would create more output, incomes and jobs — thereby producing higher tax revenues for the federal government.
It was an argument that would be made at various times over the years by others — and repeatedly evaded by attacks on a “trickle-down theory” found only in the rhetoric of opponents.
Sowell remains a reliable spokesperson for the conservative movement.