Republicans in Washington are moving closer to final enactment of the only piece of significant legislation that they’ve been able to produce in President Trump’s first year in office. Their tax package has the potential to be the single most damaging thing Congress has done since the early 1980’s.
They’ll call it a tax cut for America, cleverly disguising the reality that it will reward the very wealthy and corporations for doing nothing and produce massive new debt and pain for the rest of us (but not until after the next election, of course).
The idea that if you throw more money at the rich it will trickle down to everyone else is the poison elixir that Republicans have been hawking to the American public since Herbert Hoover created the Great Depression.
We’re all familiar with the songbook by now. Cut taxes for the wealthy. Throw in some cake crumbs for ordinary people. Promise to pay for it with unbelievable growth. Then, when the growth doesn’t happen and the debt explodes, blame it on big-spending liberals, unions, immigrants and people on welfare.
The problem is that across the board tax cuts for the very wealthy and corporations have just about never produced the promised benefits. Corporations and the wealthy don’t take the newfound goodies they find under the government’s Christmas tree and create jobs. They take the money and run.
Ronald Reagan championed the idea of trickle down tax cuts and tripled the national debt. George W. Bush tried the strategy in 2001 and 2003 and what followed was the Great Recession. But when George H.W. Bush and Bill Clinton actually raised top marginal rates, between 1990 and 1993, we had a five-year period of robust growth.
If you’re wondering whether the ‘cut and trickle’ approach works at the state level, take a close look at Kansas and other states where a Republican governor and legislature were in place in recent years. In almost every state that doesn’t have rich deposits of oil or gas, the result has been flat growth and an exploding debt.
Seven years ago, the tea party candidate for governor in Kansas, Sam Brownback, was swept into power with pledges to cut taxes and government, and to create a robust and growing economy. Income taxes for the wealthiest of Kansas citizens were reduced by 25%. And everyone waited for the promised gravy train.
But the growth never materialized. Instead, the people of Kansas got bleeding red ink covering the state, as schools, roads and critical services in government shrunk and the richest folks in Kansas laughed all the way to their offshore bank.
This year, the Kansas legislature, which is controlled by Republicans, awakened from their stupor and dismantled Brownback’s tax program, after projected revenues were half what Brownback promised, the state was billions of dollars in debt, schools had been pushed back a decade and both of the country’s largest credit rating agencies had downgraded Kansas’s rating.
The greatest period of expansion in the American economy, between 1946 and 1978, is when the modern American middle class was born. In 1946 the top tax rate was 86 percent. By 1978 it had dropped to 70%. Since then, it’s dropped to 35%. Now, Republicans are reducing it, for corporations, to 20%.
Three things have happened while this parade was passing by. The middle class began to vanish. Government debt grew. And income was redistributed from the bottom 90% of Americans to the top 1%.
Maine has its own version of this nonsense. What we do is give away tax breaks, like candy on Halloween, to anyone who so much as sneezes the word “jobs.” We don’t even tie that largesse to actual jobs created. We just hand out checks and do photo ops for aspiring politicians.
Across-the-board tax cuts to the rich, unless they’re tied directly to job creation, is a sucker’s bargain. If we want to use tax cuts to produce jobs, there’s a simple enough way to do that: Don’t give money away to people just because they’re a rich or they make grand promises. Give tax breaks to people and companies that actually create good jobs. Then take them away if the jobs vanish.
The bill coming out of Washington will generate some short-term giddiness on Wall Street but a cold wind is about to blow down a suddenly quieting Main Street.
We can do better than this in Maine, and it’s long overdue.
Alan Caron is an independent candidate for Governor and the co-author of MAINE’S NEXT ECONOMY (2015) and Reinventing Maine Government (2010).. He can be reached at alan@caronforgovenor.com
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