At least, not according to what Republicans promised when they passed them. The Trump tax cuts didn’t work to grow the economy, increase revenues, alleviate the debt, or benefit ordinary Americans as alleged.
The Tax Cuts and Jobs Act (TCJA) was introduced by then-Speaker of the House (and fiscal hawk) Paul Ryan and signed into law by then-President Donald Trump on December 22, 2017. It permanently reduced the corporate tax rate from 35% to 21%, and lowered the overall tax for all brackets — seems fair, right? Except the wealthy walked away with 50 times the amount of tax benefit as the lower brackets.
Trump tax cuts add $1.5 trillion to the deficit
Not only did the tax cuts not raise revenue as promised — they became a liability on the balance sheet when almost immediately going into the red. The Joint Committee on Taxation (JCT) estimated the TCJA would add approximately $1.5 trillion to the federal deficit over 10 years, after accounting for any temporary growth effects. The national debt will rise to accommodate as we borrow money to make up the shortfall between earnings and expenditures.
The Trump tax cuts reduced federal tax revenue, with significant declines in corporate tax receipts (surprise, surprise!). They did the exact opposite of what they promised to do — leaving our economy in a more precarious position even before the pandemic hit.
Who benefited from Trump’s tax cuts?
Conservatives and right-wing economists claim that tax cuts will help ordinary people by raising wages. In reality, however, corporations instead used their tax windfalls to do other things: stock buybacks, dividends, and executive pay. In fact, this happens over and over again each cycle of empty promises from so-called “fiscal conservatives” who in large part know exactly what they do.
They seem to believe they are entitled to the lion’s share of America’s money (as they have been since at least Mudsill Theory in 1858 and even before) and by gum, nothing is going to stop them — not democracy, not a sense of decency, not a sense of institutional preservation as used to be the very core pillar of Conservatism. No longer. Now it’s a will to power and to plunder. It’s not so much trickle down as it is hoover up.
Reaganomics, Trickle down, Laffer curve, Supply-side economics — it’s all the same
The magical revenue-generating power of tax cuts has been long promised and never delivered by right-wing Republicans. Since the 1980s edition, Reaganomics — the economic “theory” drafted on the back of a cocktail napkin dubbed the Laffer Curve for the slightly drunken man who scribbled it — has moved immense amounts of wealth upwards into the hands and coffers of the 1% and 0.1% at the expense of the masses.
The argument is that rich people will take the extra billions in returned tax money and use it to innovate and grow the economy — except that never happens. And why would they? They don’t have to earn revenue the old-fashioned way, through free market competition — they can just sit back on their laurels, buy a Senator or two, and rake in a huge windfall every few years that a GOP officeholder is in the White House. It is rock solid orthodoxy for the right-wing now, that tax cuts are almost the only policy initiative they care about — along with a side of deregulation and the slashing of the social safety net.
We’ve seen this movie before. The rich guys take the money and run — in many ways literally, into the arms of tax-free havens like the Cayman Islands or Seychelles. They do not return it to the American economy — although they do inject it into American politics, to skew the playing field even further in their favor despite already extracting extraordinary privileges and benefits to themselves from all aspects of their coziness with the political elite and their direct capture of various institutions.
As LBJ once said:
“If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”
President Lyndon Baines Johnson, 1960
The economic elites are dividing us over race and religion, in order to pick our pockets. This is why we can’t have nice things. We should boot them out and have nice things.
Comments are closed.