By Laura Donnelly
Published December 19, 2005
One of the most common justifications that's trotted out every time someone in Congress proposes a tax cut for rich Americans is trickle-down economics . This supposed economic phenomena, around since the Reagan area, posits that when the tiny percentage of very rich Americans receive tax breaks, the tend to use the money for things like investing, charitable giving and opening businesses—all of which produce benefits that trickle down and help middle- and lower-income citizens. But a new study on charitable gifts throws more than a trickle of cold water onto this theory.
The study, which was based on IRS data and was the first of its kind, found that middle-class Americans are much more generous with their charitable contributions than the super rich. Folks earning $50,000 to $100,000 annually give two to six times as much to charity than those Americans making more than $10 million. And taxpayers in the $200,000 to $10 million income range were less generous than middle-class people as well.
That kinda puts a wrench into the idea that everyone benefits when really rich people get a tax cut. And the study results are particularly relevant now, in the midst of a drawn-out battle in the House and Senate over cuts to social programs like Medicare and student loans to balance out tax cuts for the super rich. The study also pokes holes in the religious right's oft-cited post-Katrina argument that charitable groups (those associated with churches, in their plans) can help those in need more effectively than the government. While the generosity of millions of Americans in the wake of Katrina shouldn't be disparaged, it turns out it was probably the middle-class folks who carried the charitable burden—not the rich people who could most easily afford it.
Bottom line? The super rich don't need another tax cut. But regular Americans do need the proven programs that keep our country running: Medicare, food stamps, student loans, heating assistance