Trump's Tax Cuts (beware of the wonkishness of this essay) by Eric Keller

Let's start by stating a simple truth, based on empirical research that uses ground truth data; there is no evidence that tax cuts for the very wealthy increases investments and more tax revenue.  No evidence at all.  But first- what do these knuckleheads think when they expound on why tax cuts for the wealthy will stimulate the economy and thus "rising tide lifts all boats"?

Currently, Republicans are building a tax plan in secret, keeping with the successful model that worked so well with their healthcare plan.  So we only have what Trump proposed in April 2016 which, according to the Tax Policy Center, " that the highest income 1 percent would enjoy about 40 percent of the benefits of a tax plan consistent with the President’s April outline. If revenue-raisers suggested by the president were added to the mix, the top 1 percent would get half the benefits. (Gleckman, Howard, The Vast Gulf Between Democrats and Republicans in Tax Legislation,, August 1, 2017)".   The same article stated, "three quarters of the tax cuts in the House GOP leadership plan would go to the highest income 1 percent of households in 2017, (those making $700,000 or more). About 3 percent would go to middle-income households (those making between $48,000 and $83,000)."

Why on earth would anyone think that giving most of the tax cuts to the wealthy will somehow benefit the lower and middle class?  Well, Republicans firmly believe that trickle-down works.  That cutting taxes for "job creators" means they will use that money to then invest in more factories and such which increases employment and thus, tax revenue. 

I have a whole slew of empirical research from such places as the Congressional Budget Office, the Congressional Research Service, and the National Bureau of Economic Analysis as well as virtually all of the mainstream economists who are not on a think tank's payroll.  Just to use two, in 2013, Robert Moffitt & Seth Giertz did a comprehensive research review for a paper that was published in the peer-reviewed Tax Law Review.  The title, Taxation and Labor Supply, the Decisions of the Affluent, says it all.  After Reagan's big 1986 tax cut, there was no change in actual hours worked by employees.  Economist Thomas Hungerford analyzed the effects of tax cuts for the wealthy from 1945 to 2012 and found, "The top tax cuts appear to have little to no relation to the size of the economic pie (Hungerfold, Thomas, Taxes and the Economy: An Economic Analysis of the Top Tax Rates since 1945, Congressional Research Service Report #42729, December 2012)".

In other words- trickle down does not and has never worked.  Tax cuts that favor the very wealth just increases their wealth which then seems to go into non-productive savings (like financial synthetic products or global high-yield investments).  Trump is a con artist.  The research clearly shows it.  Fight this madness.  Democrats offer a progressive and fair tax system that insures all people pay a just amount to keep our society running.  Simple.  Democrats govern.  Republicans plunder.

Eric KellerComment