Tax plan sends nation in wrong direction
By Hez Brown
Saturday, December 30, 2017
It is amazing how quickly the Republican Party has permitted President Trump to completely pervert and take over the party lock, stock and barrel. His leadership and their willing support have exposed the Republican Party as the party of the rich and for the rich at the expense of the vulnerable. It is inconceivable that any right-minded individual would listen and follow him down a path of the failed policy of trickle-down economics. At best, supportive Republican legislators are misguided and certainly not looking out for the best interests of their constituents.
They have done an outstanding job in selling it to themselves and trying to convince the general public that their tax cut/reform will spur the economy and assist the poor and middle-class more than it will assist the wealthy. Nothing is further from the truth. It has been reported that once this bill is implemented, the Trump family alone will benefit by approximately $7 million.
Every major study (including Congress’s Own Congressional Budget and Joint Committee on Taxation) finds that the benefits would go mainly to big corporations and the wealthy. The Republicans persist that corporations need tax relief to expand. But at a recent conference of 57 top corporate executives, when asked if they would use the potential tax cut money for wage increases or employment expansion, only 3 of the 57 indicated they might. Still the Republicans say their tax overhaul will promote growth by increasing the profits of American corporations and investors. This is trickle-down nonsense.
Corporate profits are already at record levels, but corporations are not investing them. They are using them instead to pump up share prices and executive pay. This won’t fuel growth. Corporations expand only when customers are able to buy what they produce and most of these customers are middle income and below, who spend just about all they earn. The rich spend only a small fraction. Expansion and growth are created when consumers demand more products and have the ability to pay for them. Growth doesn’t trickle down. It rises up.
Trickle-down economics has historically been proven not to work. The Reagan tax cut of 1981 didn’t cause wages to rise, in fact they flattened. Republican President George W. Bush was instrumental in selling the idea that giving the wealthy a big tax cut would create jobs. Nothing was further from the truth. After the Bush tax cuts of 2001 and 2003, economic growth stalled and then dissolved in recession. After the 2004 corporate tax holiday for bringing foreign profits home, to spur the economy, corporations didn’t invest or expand. Again, nothing was further from the truth.
When Democratic President Bill Clinton left office in 2001, incoming President Bush assumed a $236 million surplus with a projected 10 years surplus of $5.6 trillion. After eight years of Republican administration, Bush left Barack Obama with a $1.3 trillion deficit and a projected 10 year shortfall of $8 trillion. Moreover, Bush implemented a 10-year tax cut for the so-called “job creators”, and just how many jobs were created during this 10-year period as a result of those tax cuts? We know that when Obama assumed office, the country was losing 750,000 jobs per month. So what happened to the money given in tax cuts to the job creators? They turned out to be another tax cut for the wealthiest 10 percent of the population. Growth doesn’t trickle down.
The real formula for growth is better access to education, healthcare, and transportation, all of which make workers more productive. These more productive workers command higher wages. With higher wages they purchase more goods and services. These purchases motivate companies to expand and invest which would create more and better jobs. It is a proven formula that works. At the end of World War II the government invested huge sums in education, healthcare, and infrastructure. The economy boomed and wages shot upward. This unleashed more consumer spending which generated more growth. This was the formula used by the Clinton administration on a smaller scale in the 1990’s, investing in education and infrastructure. The economy boomed, 23 million new jobs were created, and the typical American worker wages rose.
The Trump – Republican tax overhaul would take us in the opposite direction. The few dollars of tax reduction for middle-class working Americans has an expiration date. It’s temporary. Temporary to all but the wealthy 1 percent.