For decades, taxation in the US has been based on a progressive tax structure, which means those who earn the most money pay the highest taxes. And those less fortunate pay the least. Similarly, corporations were taxed to help pay for the government-provided infrastructure they needed to operate. When the nation incurred substantial debt, the Congress raised taxes to reduce that debt. For example, following World War II, tax rates were raised to pay down the debt. Through the Eisenhower administration, the nation’s highest tax rate exceeded 90 percent. Yet, despite such high tax rates, the economy boomed.
Then, in the 1980’s everything changed. Based on a discredited economic theory known as trickle-down economics, Republicans began to cut taxes (and revenue) under the guise of “tax reform.” They cut the top income tax rate, as well as estate taxes and capital gain taxes – all for the benefit of the wealthy. At the same time, they repealed usury laws and eliminated the tax deductions for interest on all loans except home mortgages. All the while promising that the cuts would benefit middle Americans.
They didn’t.
Not only did they transfer much of the tax burden from the wealthy to the middle class. The national debt soared. As a result, even those who originated the idea of Reagan’s trickle-down economics were forced to admit that the plan failed.
Unfortunately, Republicans have never abandoned the theory. For years, they have continued to promote the trickle-down fairy tale. They not only signed Grover Norquist’s misguided “No New Taxes” pledge. They continue to promote tax cuts as the elixir for any economic ailment. Is the economy suffering? Tax cuts will help. Is unemployment too high? Tax cuts are the answer. Is the economy booming? Tax cuts will make it even better. As a result of all this tax cutting, our national debt has continued to climb – slowing only when Democrats are in power.
Fast-forward to today. Republicans are proposing yet another tax “reform.” And just like the “reforms” of the past, it looks a lot like another round of tax cuts for corporations and the very wealthy. Indeed, if this tax plan passes and is signed into law, the deficits will, once again, soar. And the national debt will be increased by trillions. According to a report from the Urban Tax Policy Center, “Over the first 10 years, the individual income tax provisions — excluding those related to the taxation of corporations, pass-throughs, and estates — would raise $470 billion, the business provisions would reduce revenues by $2.6 trillion, and repealing the estate tax would cost another $240 billion.”
As far as I can tell, this is all part of the GOP long-range plan.
The Republicans seem concerned with deficits and debt only if they can be used as a hammer to bludgeon Democrats when they are in control. (Remember the outrage when President Obama used TARP funds to save the US auto industry? Though the impact of the bail-out on our national debt was negligible, Republicans howled that it would be a burden to future generations.) In reality, I believe the GOP plan is to push our nation more deeply into debt. Then, and only then, will they be able to reach their long-term goal of reducing the government to a size small enough that, in Grover Norquist’s words, “it can be drowned in a bathtub.” Only when the debt has reached an unsustainable level will the GOP have the ammunition needed to slash government programs regardless of their popularity or need. That is when they will be able to argue the necessity of ridding the nation of safety nets such as Social Security, Medicaid, Medicare and all the varieties of welfare.
If you doubt this is the Republican goal, consider the Ayn Rand-like philosophy of the billionaires who finance the Republican Party. As mentioned in a previous post, the Koch brothers believe that government is unnecessary for anything but national defense, law and order, and social stability. And, by some counts, there are 16 people in the White House with ties to the Koch brothers. In addition, there are many more in the Republican congressional delegation who are beholding to the brothers grim of oil refining.
You must also consider that Trump’s presidential campaign was heavily funded by Robert Mercer, a man who has stated that he wants to shrink the government to the “size of a pinhead.” Worse, he apparently thinks that human beings have no intrinsic value – believing that an individual’s value should be based solely on income. In other words, someone who earns $2 million per year is 20 times more valuable than someone earning $100,000 per year. And he believes that anyone on welfare is worth less than nothing.
Obviously, the Kochs and Mercers spent hundreds of millions to elect today’s Republicans with the expectation that the Republicans would do their bidding – that they would reshape government to fit their ideas and to lower their taxes. If you think that means the Republican tax proposal will benefit you, think again.