The tax cut working its way through Congress is based on assumptions that haven’t yet proven correct, writes Don Herbst.
Republicans have proposed a tax plan that asks the American people to borrow $1.5 trillion over ten years and hands most of it over to the richest people in the country. Their budget plan calls for increased defense spending and massive cuts to Social Security, Medicare and Medicaid. Previous Reagan and Bush trickle-down tax cuts were combined with increases in defense and proposed budget cuts that never happened, resulting in record setting deficits and a dangerous increase in national debt. Look for more of the same this time.
Since the early 1980s the top 1 percent has more than doubled their share of total income from 10 percent to more than 20 percent. That works out to about $1.6 trillion annual reduction to the income of middle class consumers in favor of the wealthy. If making rich people richer is supposed to create an economic boom shouldn’t we be seeing it by now? If tax cuts create economic growth then shouldn’t the Clinton tax increases have created a recession instead of economic growth?
Over most of the last ten years corporate profits have been at or near record highs and nearly double the levels of the previous 25 years. Eughty percent of all stock is owned by the top 10 percent of Americans, so more benefit to the rich. Corporate income taxes that were as high as 5 and 6 percent of GDP in the 1950s have averaged less than 2 percent for the last 35 years. In a list of 32 developed countries America ranks fifth from the bottom in total taxes collected as a percent of GDP.
Corporate and personal income taxes account for less than half of all taxes collected in the U.S. The payroll, property and consumption taxes that make up the rest are all heavily regressive. If this tax cut is enacted the top 10 percent share of total taxes will be less than their share of total income, making America’s overall tax structure regressive.
Sine 1973, worker productivity has increased by 73.7 percent while worker wages have only increased by 12.5 percent. We’ve had trickle-down policy without any trickle-down. To understand what trickle-down really does to the economy, read the International Monetary Fund workpaper “Causes and Consequences of Income Inequality.”
This massive transfer of wealth from the poor to the very rich is obscene, immoral and completely unjustified. There is no doubt that Idaho’s congressional delegation will support these proposals 100 percent.
You might think corrupt politicians working for wealthy donors expect these proposals have been an integral part of the Republican platform for decades and Idaho voters supported them with overwhelming majorities. If you are among the 43 percent of eligible voters who didn’t vote in 2016 you might want to reconsider in 2018.
Herbst is a retired corporate tax accountant who has lived in Rigby for 15 years. He’s now a full-time cross country skier, hiker and river rafter.