Editorial: Big tax breaks --Reality for GOP donors, fantasy for the rest of us
Posted December 1, 2017 5:00 a.m. EST
CBC Editorial: Friday, Dec. 1, 2017; Editorial # 8243
The following is the opinion of Capitol Broadcasting Company
Imagine the scene in a Fortune 500 company boardroom next year if Congress does pass the tax changes now being considered:
The CEO announces to the board of directors that the company has more cash in the bank than ever. The board: Heaps praise on the CEO; Okay’s multi-million-dollar bonuses for the top executives; Approves a huge stock buyback, Seeks out mergers and acquisitions. Meanwhile, they lay off workers in companies that are merged or acquired and, maybe, provide laborers and staff workers with a 2-percent raise.
THAT is reality in corporate America -- NOT the wishful fantasy that is driving Republicans toward passage of their misbegotten tax package.
It is a fantasy reinforced by myth-makers like North Carolina Sen. Thom Tillis, who recently told a classroom of fourth graders that the state has been “thriving” since state legislators (when he was Speaker of the state House of Representatives) passed a tax overhaul in 2013. “I'm completely convinced when we pass this bill we're going to completely unleash the power of the American economy and we're going do for the families across this nation what we started doing for the families in North Carolina five years ago.”
The families he must be talking about are the state’s corporate CEOs and others in the most-upper of income brackets. He doesn’t mention the impact on average North Carolinians who: Haven’t seen a significant increase in their buying power; Are paying higher sales taxes; Have suffered stagnant spending in public schools and universities and; Are getting less in government services.
It is simply NOT TRUE that tax cuts lead to economic growth. Putting more cash in the hands of the general consuming public (through things like increasing the minimum wage and pay increases) stimulates MORE SPENDING. Increasing purchasing power is how the nation climbed out of the Depression in the 1930s. We’d be climbing out of the Great Recession at a far faster pace if there was more consumer spending now.
Another major problem is that the plan in Congress cuts taxes but continues current spending. This contorted congressional thinking is that tax cuts will spur wage increases and greater consumer spending – thus yielding greater tax collections. That flat-earth trickle-down theory is, as former President George H.W. Bush so accurately put it, “voodoo economics.”
“No tax cut in history ever paid for itself or recouped more than 1/3 of the static revenue loss. Republicans lie when they say otherwise,” says Bruce Bartlett who, as an economic adviser to presidents Ronald Reagan and Bush, helped create the myth and now seeks to debunk it.
“This is just complete nonsense," Bartlett said in a public radio interview. "I think in their heart of hearts they believe that only the wealthy really help the economy, and they believe that the wealthy just carry the rest of us on their backs, that we're all worthless, and only the Charles Kochs and Robert Mercers of the world really add economic value to the economy, and, of course, this is just utterly ridiculous.”
Don’t just take Bartlett’s word for it. In response to a recent University of Chicago poll of 38 prominent economists, just one said the tax cuts being considered in Washington would result in any significant economic growth. All the economists agreed the cuts would increase the federal debt.
The reality here is simple: The effectiveness of tax cuts is based primarily on who gets them. Corporations don’t automatically use tax cuts to increase wages or hire more workers. Corporations, automakers for example, spend and hire more when people have more money to buy cars. It is DEMAND that drives corporate expansion and that demand relies upon average Americans having and spending more money.
Sadly, it appears the truth here is the tax cuts are payback to the big donors and corporations who’ve been financing Republican campaigns. These folks are now getting what THEY paid for. The rest of America gets a fantasy – a check that cannot be cashed.
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