Slash and Burn
Big Cuts For the Wealthy are the Secret Sauce in the Trump Tax Plan
November 20, 2017 12:58 am by Jacob McAllister
In the summer of 2016, when it started to become apparent that Trump would be the nominee, the establishment of the party took a low profile. It was clear that he was not their choice, but they excused his outrageous behavior anyways. He was their standard bearer, for better or worse.
Some would become never-Trumpers, while many others stayed silent. Spouting platitudes about the will of the people, and ignoring serious questions about his qualifications for the job, the vast majority ultimately held their noses and fell in line.
Despite being fashioned by the media as a populist revolution, it turned out to be a coalition of the usual suspects that got Trump elected: wall street, the religious right, working class whites, and tea party radicals.
Now they are coming together on something they can all agree on: in a time of unheralded prosperity, the wealthiest 1% of Americans deserve a tax break. And in their effort to get tax reform passed, they are bringing up some old arguments.
Who are the bg winners and losers in the Trump tax plan?
The Trickle Down Countdown
The crux of the plan is a rehashing of Reganomics, the idea that lowering the tax burden on the wealthy, and showering them with additional disposable income will compel them to invest in their businesses and create new jobs. Their wealth will “trickle down” to the masses, according to the theory.
Except its no longer a theory. This is not 1980. Between the Regan and Bush tax cuts, we have decades of empirical data with which to judge these policies by. By any metric that matters (jobs, deficits, longterm stability) they have been an abject failure.
Just consider this:
- Since the 80’s, the top marginal tax rate has gone from 70% to less than 40%, at the same time workers’ wages have stagnated, generating a massive gap between the rich and the poor
- The top 1% of earners now take home 20% of the national income. This share of the pie has doubled since the Regan presidency
- In 1989, CEO’s made 15 times more money than their average worker, today it is 271-to-1
- Our economy has shifted to an economy based on hoarding, in which consolidating assets is rewarded over productive activity. From NewsVandal:
this economy is a hoarding economy, not a productive economy. Hoarding is rewarded over production. Inflating stock prices with buy-backs is rewarded. Inflated valuations and speculation are rewarded. Exotic financial devices that repackage and sell debt are rewarded. Cutting the cost of labor is rewarded. And the people at the top are rewarded for stoking stock prices, no matter the P/E ratio.
In the face of all of this evidence, and in spite of lackluster public support, the GOP is pushing ahead full steam with their tax plan. This is because they are beholden to their corporate benefactors, and they are not about to turn their backs on them now.
Rep. Chris Collins (R-N.Y.) actually said on record that “My donors are basically saying, ‘Get it done or don’t ever call me again.’ ”
Starve the Beast
It is important to note the potential impacts of this plan on the deficit.The Republicans, supposedly deficit hawks, are now on board with adding another $2 trillion to the national debt to make this plan happen. They will use all sorts of fuzzy math to say that growth in the economy will offset revenue loss, and we really can have our cake and eat it too.
But just as in the Regan and Bush years before that, the deficit will explode out of control, reaching record highs. This is actually baked in the strategy, and it’s long been one of the GOP’s favorite tricks.
By cutting taxes without reducing spending, allowing the deficit to balloon out of control, the government obviously goes deeper into the red. This eventually forces the country to make hard decisions about which programs to slash services from, or even get rid of altogether.
The strategy is known as starve the beast, and 30 years of racheting up this process has left the public sphere in shameful decay.
Over the years, conservative free market fundamentalists have steadily chipped away at the idea that everyone should pay their fair share to keep our society functioning at a basic level. We have decrepit infrastructure, a dumbed down school system, and decaying social services to thank for their efforts. All of the while those at the very top have been able to amass staggering wealth.
They have gone from defending these policies on economic grounds (this is the best way to grow the economy), to moral grounds (it’s not the governments money, it’s my money). One thing we now know for sure, if you were wondering why all of the Republicans are sticking by Trump, we have our answer.
It’s the tax cuts, stupid.
13 Terrible Things About the House Tax Plan Courtesy of Americans for Tax Fairness