If the Answer is 'Tax Cuts for the Rich; More Pain for the Rest of us,' What Was the Question?

Published on
by

If the Answer is 'Tax Cuts for the Rich; More Pain for the Rest of us,' What Was the Question?

"It makes you wonder why Trump and the Republicans are on a jihad against regulations in general, and doing everything they can to prop up fossil fuel companies instead of becoming leaders in the energy sources that will dominate the 21st Century," writes John Atcheson. (Photo: Reuters)

Well, where Republicans and Trump are concerned, it could be any question you ask. 

Take health care. Replacing Obamacare with the Republican’s version will cut taxes on the 400 richest households in America by about $7 million apiece on average. By decoupling the tax credits from income, the Republican replacement also gives relatively lower premiums to the wealthy in terms of the proportional bite it would take from total income.  But wait … there’s more. The half-assed system they’ve proposed will reward the young, healthy and wealthy with lower premiums, while punishing the unhealthy and older Americans – the very people who need health insurance the most.

What happened to the promise of, “I am going to take care of everybody. I don’t care if it costs me votes or not. Everybody’s going to be taken care of much better than they’re taken care of now.”

Yeah, if by everyone Trump meant the uber rich and the people who don’t need health care.  But if you’re middle income or lower and you actually need health  care? Good luck.

How do you grow the economy? Yup, you got it. According to Republicans, it’s tax cuts for the rich and corporations and pain for the poor, in the form of drastically reduced benefits.  You remember, trickle down?  Supply side? Job creators?

It’s not like there’s an iota of evidence that these con jobs have ever worked.  In fact, there’s a huge body of evidence showing that the whole feed the rich to benefit the poor scheme is just that – a cynical rationalization designed to justify their pre-ordained policy of showering gifts upon the wealthiest Americans.  A comprehensive study by the non-partisan Congressional Research Service on the correlation between tax cuts for the wealthy and economic growth concluded:

Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.

In short, there’s extensive and irrefutable evidence that their whole economic platform just funnels wealth and income up to the richest of the rich at the expense of the poor and middle class, without growing the economy. 

How do you create jobs? The Republican answer, of course, is tax cuts for corporations. Oh, and deregulation.  Let’s start with the tax cuts.

Here again, the evidence against the idea that corporate tax cuts create jobs is overwhelming.

For example, a study comparing the fourteen large US companies having the lowest effective tax rates with the fourteen having the highest effective rates between 2008 and 2012, found that the companies with the lowest rates shed 63,000 jobs, while the fourteen with the highest tax rates created 115,000 jobs. 

Some of the low-payers were actually no-payers.  That is, they paid no taxes during the period, giving lie to the Republican claim that US companies are at a competitive disadvantage because they are taxed at a higher rate than most of the rest of the developed world.  Fact is, the corporations have bought off Congress and gotten so many tax loopholes that their actual tax rates are at or below those of most of our competitor’s.

The reality is, the “job creators” won’t take their tax cuts and invest in job-creating expansions and the wealth won’t trickle down unless they think consumers have enough money to justify such investments.  But as the Congressional Research Service’s study pointed out, these policies take money out of the hands of the majority of consumers and put it in the hands of the obscenely rich, and no matter how many second and third homes, yachts, airplanes and other luxury goods they buy, the rich few simply cannot sustain enough demand to justify new investments and expansions.

By way of proof, between 2008 and 2012 – when the share of wealth and income going to the  rich was literally exploding  --  American corporations increased their cash holdings by an astounding 15% a year. David Cay Johnston notes that in 2012, corporations were sitting on $14.6 trillion in liquid assets, $6.7 trillion of it in cash.  As Johnston said, “When liquid assets grow six times faster than revenues, it tells you that companies are hoarding cash, not investing or spending.”

So much for the “job creators.”

Now let’s look at deregulation.  Back in the heart of the Great Recession (brought on largely by deregulation – much of it orchestrated by Clinton), there was a hunt on for the best way to stimulate the economy and create jobs.  Not surprisingly, Republicans immediately began to push deregulation.  When the non-partisan Congressional Budget Office looked at the options on the table, the very worst in terms of results was deregulation. 

In fact, there’s empirical evidence that the right kinds of regulations can actually increase economic growth and create jobs. Check out the Porter Hypothesis, which found that regulations such as cap and trade -- which set performance standards but give companies flexibility in how to reach them – actually increase economic growth and job creation. 

Or look at renewable energy portfolio standards – a law many states have requiring utilities to generate a specified amount of the energy they provide using renewable energy, often in combination with increasing the efficiency of energy use.  It turns out, investments in clean energy create three times as many jobs per dollar, as investments in fossil fuel energy do. The fact that they also give us cleaner air and water, and stem climate change is gravy.

So, it makes you wonder why Trump and the Republicans are on a jihad against regulations in general, and doing everything they can to prop up fossil fuel companies instead of becoming leaders in the energy sources that will dominate the 21st Century. 

Well, not really. 

It’s all pretty simple.  For them, whatever the question, the answer is tax cuts for the rich and corporations, even if it means bad health, increasing impoverishment, and a killer climate for the rest of us.

John Atcheson

John Atcheson

John Atcheson is author of the novel, A Being Darkly Wise, and he has just completed a book on the 2016 elections, tentatively titled, WTF America? How the US Went Off the Rails and How to Get It Back on Track, which will be released in the Spring.

Share This Article