Like a groundhog stepping out of his hidey-hole to see his shadow, Trump and his fellow conservative, white, rich guys…er, administration…have come forth blinkingly into the sunlight, with their tax plan. While this coincides with the 100th day of their rule of our fine land, please note that it is not a celebration of that time. Rather, it is punitive for those who aren’t like them.
Theirs is a plan which is heavy on benefits for the wealthy, while giving virtually nothing to anyone else (at least that was all too notably absent in the details, most of which certainly favored the rich). This plan, combined with some other key achievements and attempted achievements of the Republican controlled government of this nation, just prove that ultimately the only people they seek to serve with their government is themselves and those like them.
What’s the proof? Here goes: the first point in a multi-point discussion of conservative economic fallacies.
Trickle-down doesn’t trickle down. Never has, never will.
Ever since the Reagan Administration, conservatism has consistently pounded the unceasing drumbeat of supply-side economics. Even in the face of a distinct lack of actual proof that it helps the economy as a whole, they’ve insisted that cutting taxes, especially on businesses and the wealthy will make them those groups spend more and hire more people. But that’s far from the truth.
No business has ever actually hired more people and attributed that to how much they saved thanks to tax cuts or savings. Hell, even the company I work for (that went through an inversion so that they could repatriate billions of dollars held in foreign accounts without paying a hefty tax penalty on that) never said they’d hire people with the money saved from paying those taxes. Instead, companies, including my own, seek first to pay more back to their shareholders, then pass on tax breaks as profit and bonuses to executives, and finally even invest in R&D. Never has hiring people ever been attached to tax breaks. Except by conservatives.
Nevertheless, conservatives say, let’s drop the corporate income tax from 35 to 15 percent. Companies will hire huge numbers of people, they assert. Can this possibly be right? Nope. Cutting corporate income taxes will just ensure bigger profits. Bigger returns to shareholders. And more money to the executives who also happen to be the wealthiest people in the nation.
Want actual empirical data? Let’s look to the oil industry when gas prices were sky high back in the early part of this decade. If the theory is that companies hire people when they’re making more money, then it should hold that employment would mirror the price of gas at the pump. Right? Okay, let’s investigate.
So, from gasbuddy.com, I give you the average gas prices since 2008.
Note in there that from early 2011 to late 2014, the average price at the pump for gas was over $3.00 the whole time. For three solid years, the price of gas was at least 7% over the maximum average for the two years before 2011 and all of the years since 2014. That should correspond to an increase in jobs in the industry, right?
From a report issued by the Center for American Progress, figures actually gathered from oil companies and reported on by Price Waterhouse Coopers show nearly flat employment in the industry:
Meanwhile, 2012 and 2013 offered the oil companies some of their largest profits in history. So none of that extra money coming in translated to jobs.
WTF? Companies making more money is supposed to be making them grow!
Oh! Maybe there was some increase in the corporate income tax rate that kept those numbers flat? Um…No (remember that this is the effective corporate tax rate–that number most companies get to after they’ve done all of their accounting magic to hide the real numbers):
If tax breaks (and let’s mention it here: those pesky regulations that make life so damned hard and costly for companies) truly translated to economic growth and development, then the target of greatest effect should be the largest economic class in the nation: the middle class. Especially when considering that in 2009, corporate income taxes amounted to 1% of the US GDP.
Wait…1%? Since 1982, corporate taxes have amounted to between 1 and 3% of the US GDP? That’s what all of this fuss and economic BS has been focused on for so long? Roughly 2% of the GDP? Republicans seriously argue that a more than 50% drop in tax rates on 2% of the US GDP will actually drive the economy?
Sadly, yes, they do. They believe this snake oil they’re trying to sell.
Okay. Deep breath. Let’s roll up our sleeves and find a realistic tax solution that would actually impact our economy.
Ah! Of course: giving a huge tax break to individuals and not corporations would free up a lot of money. A lot MORE money, according to to the Tax Policy Center, who reports that an estimated 9.3% of GDP in 2017 is coming from individual income taxes–a full 400% (and probably closer to 450%) more than corporate income tax (worth noting is that the numbers the data is based on comes from the OMB–part of the White House–and that page is gone right now under the Trump administration’s policy of not actually showing the people anything that may disagree with their world view).
To continue, from that cut to household taxes, you can be sure that the middle class alone would free up billions of dollars that could be used to invest in home improvements, buy houses, cars, electronics, pay for education, eat out more, or even save more (which would drive the economy even further). And the working poor who do pay taxes may actually be able to pull themselves out of poverty and live better lives with that cut.
But Republican fiscal policymakers don’t even look that way. They pay it a ton of lip service during election time, but when it’s all said and done, Trump’s plan to cut the tax brackets from seven to three wasn’t even accompanied by any information about which income ranges would fall into which category or how a cut may actually impact a family making $60,000 a year. Moreover, just to add insult to injury, one of the details spells out that the simplification of the tax code includes eliminating the 40% inheritance tax, which would allow those inheriting more than $5.5 million to receive it without penalty or cost. I’m sorry, but the kids of a working poor family aren’t going to be inheriting more than $5.5 million. Hell, it would be amazing if they inherited $550.
So let’s take a moment and just shed some light on something that Republicans insist isn’t actually a thing…Or if it is, isn’t caused by things the left claim it is.
Let’s look at the household income taxes in this way: in 1982, the second full year of the Reagan Administration, the first of the supply-side, trickle-down tax cuts were put in place. In this year, the highest tax rate was dropped from 70% to 50%. In 1987, they were dropped again, this time to 38.5%. Here’s the end result, from the Center on Budget and Policy Priorities:
Spot a trend?
When do the economic classes really diverge? Yup. In the early ’80s.
But note something else in that graph: that the general trend line for the poorest 20% of households in our nation stops closely shadowing the richest’s trend around 2001, when the highest bracket was again lowered to 35% under President Bush.
Why is this important? Because in the last three decades, through a series of moves clearly meant to serve their own political class, the Republicans have succeeded in feathering their own nest at the expense of everyone else.
The end result is that here we sit, 36 years after the “Reagan Revolution,” and we find the Republicans playing the same tired, disproven tune that they used back then. And what’s even more astonishing is that they’ve somehow managed to package it so that the lower and middle economic class actually believes that lowering those taxes on corporations and top earners stimulates the economy.
Swallow hard, everyone. When the details come out, it will only get worse.
Next time: now that we’ve established that the Republicans don’t like paying for government, we’ll show how they don’t like having government give anything to those who need help, aren’t them, or don’t act like them, either.