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 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”
NOTE: The middle class cuts expire, while the corporate and top bracket decreases are permanent.
The following article by Mallory Shellbourne was posted on the Hill website December 3, 2017:
Mitch McConnell (Credit: Reuters/Joshua Roberts)
Senate Majority Leader Mitch McConnell (R-Ky.) said Sunday that “it’s impossible” to promise that the GOP’s tax overhaul will lower the taxes of every person in the middle class.
“Well, it’s impossible to do that,” McConnell told ABC News’s “This Week.”
“You can’t craft any bill that would guarantee no one was in a special category that might get a tax increase,” the majority leader added.
McConnell’s interview comes after the Senate early Saturday passed its tax-reform bill, which includes the repeal of ObamaCare’s individual mandate.
“Every segment of taxpayers, every category of taxpayers, on average, gets significant relief,” McConnell said of the bill on Sunday.
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”
The following article by David Cay Johnston was posted on the dcreports.org website Decemer 2, 2017:
Even the Merely Rich Will Be Shafted as Congress Gives Billions to the Wealthiest of the Wealthy
Buried in the in the two tax bills being rushed through Congress is a fleet of lucrative opportunities to escape taxes, though no one is talking about this costly and unnecessary problem.
By the way, you won’t qualify for these tax favors unless you are mega-rich. The bills create tax avoidance yachts, not small sailboats or dinghies—and certainly not life rafts.
Think of the twin tax bills as the Forbes 400 Tax Forgiveness Act of 2017.
As much as two-thirds of the tax savings will go to the 1%—and of that, the savings will overwhelmingly go to the tenth- and hundredth- of 1%. The savings will help those whose incomes range from a few million dollars a year to more than a billion dollars a year. The official analyses by Congressional experts show that over the next decade everyone making less than $75,000 a year will pay more tax so that the super-rich can pay much less. Continue reading “A Tax Law For The Forbes 400”
The following article by Dylan Scott and ALvin Chang was posted on the Vox website December 2, 2017:
“The bill is investing heavily in the wealthy and their children.”
America’s rich have gotten richer for decades, while the middle class and poor have seen meager gains. Since the mid-20th century, the top 1 percent have more than doubled their share of the nation’s income, from less than 10 percent to more than 20 percent.
Donald Trump said he was going fix it — that he would represent the forgotten men and women, the people who had been left behind in this widening of income inequality.
The following article by John Cassidy was posted on the New Yorker magazine December 2, 2017:
Approved in the dead of night, when virtually nobody was watching, the biggest change in U.S. tax law in decades included last-minute revisions that skewed the bill even more toward the rich. Credit: Alex Edelman/picture-alliance /dpa/AP
When historians write about the broader atrophy of the American system of governance, the passage of the 2017 tax-reform bill will be an illuminating event to dwell upon. Whatever the Founding Fathers had in mind, it surely can’t have resembled the unedifying spectacle that played out in the Senate this week. When the delayed vote on the Senate version of the G.O.P’s Tax Cuts and Jobs Act finally took place, in the early hours of Saturday morning, the sole Republican to dissent was Senator Bob Corker, of Tennessee.
Four G.O.P. senators who had been mentioned as possible holdouts—Susan Collins, of Maine; Lisa Murkowski, of Alaska; and John McCain and Jeff Flake, of Arizona—all voted for a proposal that is unnecessary, unfair, and still largely unexamined.
The Senate and House tax bills will have to be reconciled, but it’s now perfectly possible that President Trump will get to sign the final legislation before Christmas. If that happens, the process of getting there will have been a travesty of the legislative process. Continue reading “The Passage of the Senate Republican Tax Bill was a Travesty”
The following article by Lee Fang was posted on the Intercept website December 1, 2017:
President Donald Trump walks with House Speaker Paul Ryan, November 2017. Credit: AP/Jacquelyn Martin
TOUTING SUPPORT FOR their tax cut legislation, House Speaker Paul Ryan, R-Wis., the Senate Finance Committee, and Sen. Rob Portman, R-Ohio, released a letter this week signed by 137 economists who say they strongly endorse the Republican legislation before Congress. President Donald Trump on Friday afternoon tweeted a short video featuring the list of 137 economists.
“Economic growth will accelerate if theTax Cuts and Jobs Actpasses, leading to more jobs, higher wages, and a better standard of living for the American people,” reads the letter, which was organized by the RATE Coalition, a corporate advocacy group that is lobbying in support of the bill.
The following article by David C. Barker, Profession of Government and Director of the Center for Congressional and Presidential Studies, American University, was posted on the Conversation website December 2, 2017:
Credit: Christopher Penler / Shutterstock
Congressional Republicans’ collective sigh of relief after passing tax legislation may seem confusing. Won’t voters hold them accountable in 2018 for passing such an historically unpopular bill? The answer is “no,” for several reasons.
First, the bill’s unpopularity may be somewhat overstated. A lot of the disapproval expressed in surveys is more about the bill’s sponsors than about the bill itself. In these polarized times, almost anything carrying the president’s endorsement is going to be a nonstarter for more than half the population. If Trump were to designate ice cream the official White House dessert tonight, at least a third of us would stop “screaming for it” tomorrow.
