The GOP is trying for two rounds of tax cuts at this time. The first is the result of the AHCA wealthcare bill, and the second comes from their upcoming effort at tax reform.  In this article from CNN, Steve Mnuchin is quoted:

It will be “the biggest tax cut and largest tax reform in history of this country,” Treasury Secretary Steven Mnuchin said earlier Wednesday, describing the proposal to The Hill.

This whole tax cuts for the rich thing is transparently wrong as a means to stimulate the economy. If it were about tax cuts to business, that would at least be an argument worth having. But tax cuts to rich individuals? That’s ridiculous. Does anyone think that Warren Buffet is going to use his $600,000 tax cut to go out and buy more goods? Does anyone think he will use that $600,000 to create jobs? No rich person is going to spend their tax cut money to increase jobs. This is so clearly ridiculous. It is an insult to anyone with even an ounce of brains.

On to the next item: tax cuts for businesses. That too is transparently wrong. The plight of the small retail business owner in the US is that they are under continual pressure to compete with larger companies. Price pressure is never ending. While a tax cut to small retail businesses will give them a shot in the arm for a little while, sooner or later big retailers like Walmart will be their demise. Service providers will benefit, and will continue to do better with the tax cut. But giving a small business 10% or 15% more will make owners happy, but won’t create jobs. There’s just not enough cash to support job creation. The only possible benefit is job protection, not job creation. The numbers for this are not understood, and it is hard to imagine using this as a justification to give all businesses a tax cut. For the large majority of businesses, this is just a quick-fix to one quarter’s numbers, and then the next quarter, it will be business as usual. Business success is measured quarter by quarter, and year by year, so once you create a new baseline, the next quarter or year is measured by that baseline. Give them a tax cut, and the next year, that money is already figured in to performance. It’s “what have you done lately”. Stock prices won’t reflect on-going thankfulness for last year’s tax cut. And businesses won’t use that money to create jobs. Evidence is too readily available that they will claim big numbers, get a stock price bump, and then get bigger bonuses, while telling their workers to “do more with less”, and “tighten up their belts”,even though the C-suite and executives don’t look any thinner than they did the year before.

Republicans: trickle-down economics has been the prevailing methodology for 37 years (since Reagan), and look where we are: greater economic disparity between haves and have-nots, and declining real wages. Since 1980,

FT_dual-income-households-1960-20121

and

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As you can see, life has indeed gotten tougher on all segments except the top 5%. Income inequality has increased. Income growth for the lowest 20th percentile has stagnated since 1980. This is why the bottom 20% of income gainers are angry. This is why they desperately want change. Fine. Everyone should get it. What is impossible to believe is that people still think that trickle-down works. It may appeal on some emotional level with regard to freedom, but its consequences are clear.

It is a well known saw that “It isn’t the money, it’s the principle of the thing” means “It’s the money”. Government taxation is in fact a degradation of your freedom, in that it leaves you less money. However, its benefits outweigh its infringement on your freedom. Where would the US be if we had never had a standing army? It might have survived until the 1800s, or perhaps even into the early 1900s, but does anyone think that the US without a standing army would be here as a nation? There are some realities that call for taxation. Can drug enforcement policy be done only at the state level? Let’s be done with the discussion that federal taxation is wrong.

As to whether government should be using its power for “income redistribution” or for “enforced charity”, let’s look at that. Libertarians and conservatives say that this is not the purview of government, it should be left to individuals. They say that giving anyone support and money is inherently demeaning, and detrimental to them as individuals.  In other words, “It’s not the money, it’s the principle of the thing”. Which group of republican representatives is saying “It is the responsibility of the private citizen to use all of his/her tax break money to directly give to charity. In this way, it will be more effective than being administered by government”? Right: no one. It’s the money. It’s about people wanting more, and caring about others less.

Republicans found out in the early 2000s, that talking about tax cuts to the rich at the expense of the poor was unpopular with Americans, so they’ve changed their rhetoric to “respecting the whole human being”. The premise here is that it is inherently demeaning to people to receive charity, which predisposes them to a life of indigence, and low self-esteem. There are studies to show that there is some truth to this idea. However, republicans use this as a justification for doing less, rather than for doing more.

Jobs are the issue. Flexibility is the issue. If, for example, you had a job running a Kodak photo processor, and you still insist on that as your career, then there will be no good end to this story. The government can give and give, but it will end badly. When rural Americans find that jobs are migrating to the urban centers, support won’t change the employment outlook. So what do we do? Do we tell people “tough luck, move to the city”? That uproots people from their lives, family, past, and culture. Is that the governments fault? But here is where government can do more, not less. While government can’t force businesses to open new manufacturing/distribution/services/stores in areas where the economics are not favorable to those businesses, it can work with tax breaks for employing remote workers. Government can also provide money for training for the new jobs. There may be answers here, but the republican answer is “Tough luck, we aren’t funding the government to help you out. We want small government.”

Paul Ryan’s brand of conservatism is good only for the one percent. It is amazing that those who are going to suffer most from the ongoing rush to urbanization don’t understand how they are destroying their own future and way of life. Rest assured, republicans will be there to tell them that their problems are the lingering results of small periods of democratic control, instead of 37 years of trickle-down economics.

Helpful links:

Center on Budget and Policy Priorities

Pew Research

William Casperson

editor

Political Nation

 

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