For The Love Of Capital Income

Paul Krugman writes For The Love Of Capital Income.

Shorter Glenn Hubbard: Means-tested programs and tax credits are a terrible thing, because benefits that fall when your income rises discourage work. Also, we must save money by means-testing Social Security and Medicare.

The real point, of course, is that Hubbard is defending his pride and joy, the 2003 cuts in tax rates on dividends and long-term capital gains, which were supposedly designed to spur business investment. They didn’t — we have what amounts to a controlled experiment, because the dividend tax cut had no effect on closely held corporations, which can therefore be used as a control group. And what the comparison shows is that the tax cut didn’t boost investment or employment at all — all it did was boost payouts to shareholders.

And who were those shareholders? Glad you asked. According to the Tax Policy Center, two-thirds of the benefits from the dividend tax cut went to the top 1 percent; more than half went to individuals with incomes of more than a million dollars a year.

So who, exactly, has been waging class warfare?

Emphasis Mine

Class warfare is far more than accumulating capital through increased rents. It is about maintaining and strengthening the social relations between the classes.