Lots of bad things are happening every day, but let’s not lose sight of perhaps the worst thing that is happening every day: the advance of the Republican tax cut plan. Which is based on an enormous lie!
I am not going to tell you a secret right now. On the contrary, I am going to relay to you a fact which is extremely well known and widely accepted by mainstream economists. Which makes it all the more outrageous, because our ruling national political party has for decades and continues to contradict this fact in order to enrich the already wealthy. Because they know that Americans don’t know shit about economics! That’s fucked up!
Since the Reagan era—for more than three decades now!—the basic Republican argument for tax cuts has been, “Cut taxes for companies and they will use it to give the little people jobs and boost the overall economy; cut taxes on rich people and they will invest that money and benefit little people and boost the economy.” This is supply-side economics, or, more disparagingly, trickle-down economics. It’s a lie! That is not a partisan opinion that should be argued over based on which political party you identify with—that is a fairly well-established fact based on ample evidence. From Eduardo Porter today:
“In 1986 we dropped the top income tax rate from 50 to 28 percent and the corporate tax rate from 46 to 34 percent,” said Bruce Bartlett, a policy adviser in the administration of President Ronald Reagan. “It’s hard to imagine a bigger increase in incentives than that, and I can’t remember any big boost to growth.”
Yes—we’ve tried this very thing before and it doesn’t work! But what do big tax cuts at the top accomplish?
Looking at a set of industrialized countries from the 1970s until the years preceding the financial crisis, the economists found no meaningful correlation between cuts in top tax rates and economic growth. Big tax cutters like the United States did not grow faster than countries like Denmark, which kept taxes high. What did respond to lower taxes was inequality: The income share of the top 1 percent grew much more sharply among big tax cutters like the United States than in countries like France or Germany, where top tax rates changed little.
Shockingly as well as surprisingly and astoundingly, when you cut taxes on the wealthy, the wealthy get richer, instead of the poor. When you give huge windfalls to corporations they tend to do things like “buy back shares and take other measures that raise the compensation of the executives running said corporation,” rather than building an inspiration new job-creating American flag factory; when you give huge windfalls to already wealthy people, they tend to do things like “stash it in offshore tax havens” rather than giving generous raises to their household staffs. Here is a very simple way to test the sincerity of those like, oh, THE ENTIRE REPUBLICAN PARTY LEADERSHIP, who say that their motivation for giving large tax cuts to the rich is to help the economy as a whole, particularly the working middle class:
REPUBLICAN: These tax cuts will ultimately help the middle class.
YOU: Why not just give the money directly to the middle class?
REPUBLICAN: No, that would be a handout.
In America it is only considered patriotic to give handouts to the already rich. Anything else would be socialism. Therefore the party that gets most enraged over anyone protesting during the national anthem feels no cognitive dissonance whatsoever pushing a tax plan that would give two thirds of its tax cuts to the wealthiest 1% of people in America.
Anyhow, we can keep arguing about this but please understand that the underlying argument is a fraud. Rich people should just be honest and say they want more money.