Supply-Siders and Taxes

In response to “Supply-Siders Have No Shame,” Column Left, April 25:

Why is it so hard for Robert Kuttner to accept the supply-siders’ position that taxing the rich will not increase tax revenues? Every first-year microeconomics student knows that a rational person, rich or poor, will work and earn income at an equilibrium point where his marginal cost of working is equal to his marginal benefit. Working any less or more, he will not achieve his maximum net benefit. An income tax increase will simply shift his marginal benefit curve downward and to the left, resulting in less work and less earned income. This model is an oversimplification of the real world, but the concept applies just the same.

Furthermore, if Kuttner’s argument is correct, President Clinton should have pushed for a more aggressive tax program (i.e., increased taxes for everyone and tax the rich to the maximum possible extent). But, deep down in his heart, Clinton agrees with the supply-siders: Taxing the rich will not increase tax revenues. So, to increase tax revenues, Clinton will rely instead on regressive taxation such as the energy and Social Security tax. This type of taxation will actually hurt the poor and the old more than it will the rich.

Let’s face it, Clinton wants to tax the rich just to appease the poor and gain their support and votes. Taxing the rich alone will not increase tax revenues. Taxing the poor, the old and the middle class will.

RICHARD HAN

Anaheim