Over the past 50 years, before the GOP went all in on fascism and isolationism, the most dramatic difference between Democrats and Republicans lurked in the driest of places: their tax policies. Democrats essentially wanted to tax the rich to help the middle class and working poor, while Republicans argued that helping the rich would eventually help everyone.
Trickle-down economists gave the GOP political cover for decades, providing Republican Presidents Reagan, Bush and Trump the plausible justification they needed to pass massive tax cuts for their donor class. Conservative economists-for-hire claimed that gifts to wealthy individuals and corporations would drive economic investment. Tax breaks for top-bracket earners, they argued, would result in the creation of more jobs, higher average wages, and an overall upturn in national economic indicators.
Research debunks trickle-down as a scam
Decades of Republicans’ welfare-for-the-wealthy have finally delivered enough data to put trickle-down where it belongs: in the political scam column.
Economic indicators reveal that helping the rich helps only the rich. As National Economic Council Director Lael Brainard told the Economic Club of New York last year, although tax cuts for the wealthy added trillions to the national debt, the cuts didn’t deliver measurable gains in jobs, they didn’t cause an increase in wages earned by the average worker, and they didn’t, despite a promise of more “capital to build factories, to buy equipment, and hire more people” lead to any increase in investment whatsoever.
Instead of delivering these — or any — economic benefits to the middle and lower classes, tax gifts to the rich caused economic inequality to increase, as many communities suffered from stagnated investments in infrastructure and sustained disinvestment. For the first four years following Trump’s 2018 corporate tax cuts, the largest corporations spent their savings to enrich themselves and their shareholders through stock buybacks. Instead of investing the money in plants, employees or equipment to increase production, they spent the tax windfall on themselves.
Reduced tax income from the top, which increased the national debt, also led to higher interest rates overall, increasing the costs of day-to-day necessities. As a result, while top earners retained even more disposable earnings, income for other Americans failed to keep pace with the rising cost of living.
Data from U.S., other countries, say the same thing
The U.S. economy is not alone in debunking the GOP’s trickle-down con job.
A joint paper by the London School of Economics and King’s College of London tracked data from 18 developed countries over a 50-year period. Researchers compared economic data from countries that passed tax cuts for the rich in a specific year with countries that did not pass tax cuts for the rich that same year, between 1965 to 2015.
The conclusion?
“Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn’t,” the report found.
Forbes reported the same thing about Trump’s 2017 tax cuts for the wealthy.
Noting that “Trump tax cuts helped billionaires pay less taxes than the working class in 2018,” Forbes reported that for “the first time in American history, the 400 wealthiest people paid a lower tax rate than any other group,” citing “The Triumph Of Injustice: How the rich dodge taxes and how to make them pay” by economists Emmanuel Saez and Gabriel Zucman.
In 2022, after Biden had been in office for two years, income inequality finally declined for the first time since 2007, but the disparity remains striking: 10% of households in 2022 had income above $216,000 (a 5.5% reduction from the 2021 estimate of $228,6000), while 10% of households had income at or below $17,100.
Biden’s budget vs. Trump’s tax giveaway to the rich
Seeking to reduce such aggressive imbalances (which lead to other costs that increase other taxes), last week the Biden administration released its proposed budget. Biden’s plan requires wealthy and high earners to contribute more in taxes, while keeping Biden’s promise not to raise taxes on anyone who makes less than $400,000 a year. Biden’s proposed budget also reigns in national debt after Republicans added an unprecedented $8 trillion to the national debt under Trump.
Under Biden’s plan, wealthy individuals and corporations would pay more in taxes — partially rescinding Trump’s gifts to the rich — which would pay for tax credits to the working poor and middle class. Economists project that Biden’s plan will cut $3.3 trillion from the deficit over 10 years as it lifts children out of poverty and cuts taxes by an average of $2,600 for low-to-middle income families.
Although Biden’s budget faces significant pushback from donor-protective Republicans, years of disinvestment from the GOP’s trickle-down scam are finally over. Manufacturing trends are finally, demonstrably, and undeniably moving up.
With any luck, mainstream media will soon take notice.
Sabrina Haake is a Chicago attorney and Gary resident. She writes the Substack newsletter The Haake Take.
Sabrina Haake , 2024-03-16 16:00:56
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