The following article by Daniel Hemel, Assistant Professor of Law at the University of Chicago, was posted on the Conversation website December 4, 2017:
Protest signs are seen in front of the office of Sen. Marco Rubio (R-Fla.) as protesters urge him and others in the U.S. Senate to vote against the $1.5 trillion tax cut. Credit: Joe Raedle/Getty Images
The tax bill passed by the Senate in the wee hours of Dec. 2 will – if it becomes law – widen the gap between the rich and the poor at a time when income inequality is already approaching historic heights.
Initially, most U.S. households are likely to experience a modest tax cut under the Senate plan. However by 2027, the average family earning less than US$50,000 would pay about $250 more in taxes under the Senate plan, while the average family earning more than $1 million would experience a tax cut topping $8,000 a year, according to estimates from Congress’s own Joint Committee on Taxation.
The following article by Andrew Van Dam was posted on the Washington Post website December 4, 2017:
The Democrats say President Trump’s tax cuts are a massive giveaway to the rich, the most unequal overhaul of the U.S. tax system in modern history. Republicans argue they are a huge middle class tax cut — “a great, big, beautiful Christmas present” for the American people, according to Trump.
Who’s right?
We decided to find out by assembling historical reports about the 10 largest tax cuts of the past 50 years.
The following article by Diane Dewar, Associate Professor of Health Policy, Management and Behavior, University at Albany, State University of New York, was posted on the Conversation website December 2, 2017:
Credit:. J. Scott Applewhite/AP
The new tax bill, passed by the Senate early Saturday, is not just about taxes. It has significant consequences for the American health care system – especially for the most vulnerable of our citizens.
If the proposed tax bill comes to fruition, it will reduce the affordability of health care for many Americans. Without access to care, our sickest and most vulnerable – especially the the poor and elderly – will suffer an increasing chance of poorer health outcomes.
The following article by Jenna Johnson was posted on the Washington Post website December 3, 2017:
Ron Stephens, 49, of Troy, Mich., looks on during a bowling game at 5 Star Lanes on Wednesday in neighboring Sterling Heights. (Sean Proctor for The Washington Post)
STERLING HEIGHTS, Mich. — On a busy weeknight at the 5 Star Lanes bowling alley in this Detroit suburb that voted heavily for President Trump, there was little excitement about the Republican plan to cut taxes.
A 60-year-old retiree bowling with a group of girlfriends said she’s tired of the middle class having to pay more so the wealthy can become even wealthier. A few lanes away, a middle-aged woman with frizzy gray hair said that the more she hears about the plan, the more she hates it. And a group of young guys in matching shirts said they didn’t even know the proposal was in the works, although they seemed skeptical that their taxes would ever go down in a meaningful way. Continue reading “‘I don’t think it’s going to help’: In a pro-Trump area, many voters are skeptical of GOP tax plan”
The following article by Jesse Drucker and Patricia Cohen was posted on the New York TImes website December 2, 2017:
A drilling rig in Texas. A late amendment in the Senate tax bill would allow certain income from gas and oil ventures to qualify for lower rates. Credit Ernest Scheyder/Reuters
The overhaul by Republican lawmakers of the nation’s tax laws percolated for weeks with virtually no public input, and by the end it turned into a chaotic mad dash with many last-minute changes on Friday night and Saturday morning, some handwritten in the margins of the nearly 500-page bill.
Even hours after the Senate vote, tax experts were scratching their heads over precisely what had made it into the final version of the bill and the impact of some significant provisions.
The following commentary by Dean Phillips was posted on the Eden Prairie News website November 16, 2017:
I wholeheartedly support the stated goals of tax reform: simplifying the tax code, supporting small businesses and putting money back in the pockets of middle class families. I was optimistic that it might present an opportunity for bipartisan accomplishment.
My perspective on this issue is shaped in no small part by my experience as a job creator. As someone who has owned and managed businesses both large and small, I know that the best way to grow the economy and create good jobs is through increasing demand. And the best way to increase demand is to afford more resources to middle class families. It seemed that the politicians in Congress agreed. Continue reading “Commentary: Tax bill would hurt the middle class”
The following article by Jared Keller was posted on the Pacific Standard Magazine website June 18, 2015:
“Trickle-down” economics began as a joke. Seriously.
If there’s one person most often associated with the origins of of trickle-down economics, it’s President Ronald Reagan. Few people know, however, that the phrase was actually coined by American humorist Will Rogers, who mocked President Herbert Hoover’s Depression-era recovery efforts, saying that “money was all appropriated for the top in the hopes it would trickle down to the needy.”
Rogers’ joke became economic dogma within two generations, thanks in large part to Reagan. At the center of Reagan’s economic doctrine was the idea that economic gains primarily benefiting the wealthy—investors, businesses, entrepreneurs, and the like—will “trickle-down” to poorer members of society, creating new opportunities for the economically disadvantaged to attain a better standard of living. Prosperity for the rich leads to prosperity for all, the logic goes, so let’s hurry up with those tax cuts already. The legacy of Reaganomics continues to shape modern debates over macroeconomic policy in the United States, from the Bush tax cuts of the mid-2000s to the deficit hawks waging war over the federal budget in Congress.
Now, nearly 80 years later, Rogers’ quip is getting the punchline it deserves: A devastating new report from the International Monetary Fund has declared the idea of “trickle-down” economics to be as much a joke as he’d imagined.
Increasing the income share to the bottomow 20 percent of citizens by a mere one percent results in a 0.38 percentage point jump in GDP growth.
The IMF report, authored by five economists, presents a scathing rejection of the trickle-down approach, arguing that the monetary philosophy has been used as a justification for growing income inequality over the past several decades. “Income distribution matters for growth,” they write. “Specifically, if the income share of the top 20 percent increases, then GDP growth actually declined over the medium term, suggesting that the benefits do not trickle down.”
This should shock no one: Observers of income inequality over the past five years (especially those fond of Thomas Piketty’s Capital in the Twenty-First Century) will recognize this trend from economic data going back to the end of World War II. Consider this much-cited chartby Pavlina R. Tcherneva, of the Levy Economics Institute, tracking the distribution of income gains during periods of economic expansion:
According to Tcherneva’s analysis, the balance in the distribution is flipped from the majority of the nation to the top 10 percent during the Reagan and Bush administrations, a rapid acceleration of a gradual trend. Income inequality was already growing in the U.S., but the advent of Reaganomics kicked the trend into overdrive.
Or consider this chart from the Economic Policy Institute, which shows that, in general, the top one percent of society derives an increasing portion of income gains from existing capital and wealth:
(Chart: Economic Policy Institute)
One last chart, this one from the Economist, based on data from Emmanuel Saez of the University of California-Berkeley and Gabriel Zucman of the London School of Economics, shows how wealth has become increasingly concentrated in the hands of the super-rich:
(Chart: The Economist)
According to the IMF, countries looking to boost economic growth should concentrate their efforts on the lower segments of society rather than bolstering so-called “job creators” with tax breaks. The study results suggest that raising incomes for the poor and middle class yields measurable improvements to the national economy: Increasing the income share to the bottom 20 percent of citizens by a mere one percent results in a 0.38 percentage point jump in GDP growth. By contrast, increasing the income share of the top 20 percent of citizens yields a decline in GDP growth by 0.08 percentage points.
It’s not just the IMF making the case against trickle-down economics: As Quartz notes, the Organisation for Economic Co-operation and Development recently published a strong case for fighting income inequality, asserting that economic growth “is most damaged by the effects of inequality on the bottom 40% of incomes,” Quartz’s Gabriel Fisher writes.
The message of the IMF report is clear: Income and wealth inequality isn’t a class problem, but a national issue. “Widening income inequality is the defining challenge of our time,” the authors of the report write. “The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels.” While disciples of Reaganomics may be clenching their fists, Will Rogers is probably laughing from the grave.
The following article by Kimberly Amadeo was posted on the Balance website December 2, 2017:
Trickle-down economics is a theory that says benefits for the wealthy trickle down to everyone else. These benefits are usually tax cuts on businesses, high-income earners, capital gains, and dividends.
Trickle-down economics assumes investors, savers, and company owners are the real drivers of growth. It promises they’ll use any extra cash from tax cuts to expand business growth. Investors will buy more companies or stocks.
Banks will increase lending. Owners will invest in their operations and hire workers. The theory says these workers will spend their wages to demand and economic growth.
Trickle-Down Economic Theory
Trickle-down economic theory is similar to supply-side economics. That theory states that all tax cuts, whether for businesses or workers, spur economic growth. Trickle-down theory is more specific. It says targeted tax cuts work better than general ones. It advocates cuts to corporations, capital gains, and savings taxes. It doesn’t promote across-the-board tax cuts. Instead, the tax cuts go to the wealthy. Continue reading “Why Trickle Down Economic Works in Theory But Not in Fact”
The following article by Eric Levitz was posted on the New York Magazine website November 28, 2017:
Senate Majority Leader Mitch McConnell (R-Ky.) holds a news conference to talk about the Republican tax plan. J. Scott Applewhite/AP
Most liberal criticism of the Trump tax cuts has focused on the fact that Arthur Laffer was a false prophet, and supply-side economics is a superstition.
This makes sense. Republicans campaigned on a giant middle-class tax cut, but they’re pushing a plan that delivers the lion’s share of its benefits to wealthy business owners and corporate shareholders. To reconcile this apparent contradiction between their rhetoric and their policy agenda, GOP lawmakers have insisted that the middle class actually has an enormous stake in boosting corporate profitability — even if many middle-income Americans have no literal stake in that matter. Reciting the trickle-down gospel, Republicans have argued that reducing the cost of capital will turbocharge investment; and thus, economic growth; and thus, middle-class wages. If supply-side economic theory is demonstrably false, then the GOP has no politically viable argument for its agenda. Continue reading “There Is No Economic Theory That Justifies the GOP Tax Plan”
The following article by Steven Rosenfeld was posted on the AlterNet website December 2, 2017:
Great damage is being done, even as the Trump mob is targeted by Robert Mueller.
President Donald Trump walks with House Speaker Paul Ryan, November 2017. Credit: AP/Jacquelyn Martin
The wheels of justice might be turning with the guilty plea by Trump campaign and White House aide Michael Flynn and the reality that the presidents’ team are real targets, but that will not stop the GOP Congress and White House from gutting essential social safety nets.
The GOP tax plan, which passed the Senate 51-49 early Saturday with no Democrats voting yes, now moves to the phase where differences in the House and Senate bills get ironed out. That will prompt fierce lobbying and protests, but a major bill transferring wealth from the middle-class to the best-off Americans will be passed and signed by Trump.
If all the Republicans were doing was lining the pockets of the already rich, that would be bad enough—pick your adjective. But that’s not the endgame. Before the Senate voted, Senator Marco Rubio of Florida, a past presidential candidate, said the Republicans must make additional cuts to Social Security and Medicare, both federal programs for those over age 65 as well as people with disabilities and parentless children (such as Republican House Speaker Paul Ryan as a youth). Continue reading “Disastrous Republican Tax Plan Is Only the First Step in Long Term Effort to Cut Social Security and Medicare, Exacerbating Inequality”
