Study: Most tax breaks go to wealthy, add to federal deficit
Measures do not increase rate of savings as intended

From Cox via the Houston Chronicle:

Gale also disputes the basic assumption that the tax breaks encourage savings. Real savings, he said, come when people decide to temporarily reduce their standard of living to put money away for the future. Instead, tax-advantaged savings accounts simply encourage affluent people to move cash into tax shelters, he said.

The accounts "reward people for placing assets in certain investments, but do they serve to raise the level of savings? No, largely they don't," he said. "The money just gets shifted."

Indeed, despite the proliferation of tax-advantaged accounts, Americans have been saving less. In 1982, when Congress created individual retirement accounts, or IRAs, which allowed wage-earners to shelter up to $2,000 annually, the personal savings rate was 10.9 percent. By 2002, the rate was down to 2.3 percent, according to the Commerce Department.

In a review of the subject, the Congressional Budget Office concluded that "empirical studies have not been able to resolve the uncertainty about how IRAs affect saving."

(Emphasis added by Real Art)

1982 was just around the time that President Reagan started ramming neo-liberal "reforms" down America's throat. It's been all uphill for the supply-siders ever since: clearly, neo-liberalism has been an abject failure; it's a clever philosophy, but, like Marxism, it just doesn't work in the real world. The rich, in fact, do not reinvest their tax cut benefits in large enough numbers to boost the economy in any lasting way. There is no "trickle down;" a rising tide does not raise all the boats.

It's time to end this love fest for the rich and start trying to stimulate demand again...just like they did back in the 1950s when we had a kickass economy.

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