Financial Times (London) February 15, 2001, Thursday London Edition 1 SECTION: LETTERS TO THE EDITOR; Pg. 20
LENGTH: 246 words
HEADLINE: LETTERS TO THE EDITOR: Tax cuts for the rich are rich
BYLINE: By DOUG HENWOOD
BODY:
>From Mr Doug Henwood.
Sir, Amity Shlaes' latest effort ("The benefits of helping the Gulfstream crowd", February 13) makes a lot of claims about how Reagan-style tax cuts for the very rich really do benefit the masses in the long term.
Her argument is a bit short on numbers - understandable because with them her case would be somewhat harder to make. Allow me to help out. Let us be generous and take 1983, the post-recession low in household incomes, as our base year for the Reagan era. Between 1983 and 1993 (the dawn of the Clinton years and higher taxes on the rich), the real average hourly wage in the US fell by 6.9 per cent. Between 1993 and 2000 it rose by 6.4 per cent. Between 1983 and 1993 real median household incomes rose 3.1 per cent; for the poorest 20 per cent they fell 2.5 per cent; for the richest 5 per cent they rose 42.7 per cent. Between 1993 and 1999, the median household saw a 13.3 per cent real income gain, the poorest quintile gained 16.3 per cent and the richest 5 per cent gained 17.5 per cent.
Those with clearer memories than Shlaes may recall the dire predictions from her end of the spectrum when taxes on the richest 1 per cent were boosted in the Clinton years; clearly things did not turn out as predicted. It looks as if any repeat of the Reagan strategy by Bush the Younger will leave the rest of us envying the Gulfstream set.
Doug Henwood, Left Business Observer, Village Station, PO Box 953, New York NY, US