Nel's New Day

November 30, 2017

History Shows Disaster of Tax Bill

Over a century ago, George Santayana wrote, “Those who cannot remember the past are condemned to repeat it.” This saying applies to the disastrous tax bill moving through Congress. “The terrible, horrible, no good, very bad” tax raises for the poor and middle class (to paraphrase the title of Judith Viorst’s children’s classic) has passed the House, and another one, probably worse, has moved from committee to the Senate floor after GOP senators were bought off by bribes. Historian Robert S. McElvaine wrote this perspective from the past to illustrate the nation’s future: “I’m a Depression historian. The GOP tax bill is straight out of 1929.” The piece is subtitled “Republicans are again sprinting toward an economic cliff.”

“There are two ideas of government,” William Jennings Bryan declared in his 1896 “Cross of Gold” speech. “There are those who believe that if you will only legislate to make the well-to-do prosperous their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous their prosperity will find its way up through every class which rests upon them.”

That was more than three decades before the collapse of the economy in 1929. The crash followed a decade of Republican control of the federal government during which trickle-down policies, including massive tax cuts for the rich, produced the greatest concentration of income in the accounts of the richest 0.01 percent at any time between World War I and 2007 (when trickle-down economics, tax cuts for the hyper-rich, and deregulation again resulted in another economic collapse).

Yet the plain fact that the trickle-down approach has never worked leaves Republicans unfazed. The GOP has been singing from the Market-is-God hymnal for well over a century, telling us that deregulation, tax cuts for the rich, and the concentration of ever more wealth in the bloated accounts of the richest people will result in prosperity for the rest of us. The party is now trying to pass a scam that throws a few crumbs to the middle class (temporarily — millions of middle-class Americans will soon see a tax hike if the bill is enacted) while heaping benefits on the super-rich, multiplying the national debt and endangering the American economy.

In 1926, Calvin Coolidge’s treasury secretary, Andrew Mellon, one of the world’s richest men, pushed through a massive tax cut that would substantially contribute to the causes of the Great Depression. Republican Sen. George Norris of Nebraska said that Mellon himself would reap from the tax bill “a larger personal reduction [in taxes] than the aggregate of practically all the taxpayers in the state of Nebraska.” The same is true now of Donald Trump, the Koch Brothers, Sheldon Adelson and other fabulously rich people.

During the 1920s, Republicans almost literally worshiped business. “The business of America,” Coolidge proclaimed, “is business.” Coolidge also remarked that, “The man who builds a factory builds a temple,” and “the man who works there worships there.” That faith in the Market as God has been the Republican religion ever since. A few months after he became president in 1981, Ronald Reagan praised Coolidge for cutting “taxes four times” and said “we had probably the greatest growth in prosperity that we’ve ever known.” Reagan said nothing about what happened to “Coolidge Prosperity” a few months after he left office.

In 1932, in the depths of the Great Depression, Franklin D. Roosevelt called for “bold, persistent experimentation” and said: “It is common sense to take a method and try it; if it fails, admit it frankly and try another. But above all, try something.” The contrasting position of Republicans then and now is: Take the method and try it. If it fails, deny its failure and try it again. And again. And again.

When Bill Clinton proposed a modest increase in the top marginal tax rate in his 1993 budget, every Republican voted against it. Trickle-down economists proclaimed that it would lead to economic disaster. But the tax increase on the wealthy was followed by one of the greatest periods of prosperity in American history and resulted in a budget surplus. When the Republicans came back into power in 2001, the administration of George W. Bush pushed the opposite policies, which had invariably produced calamity in the past. Predictably, that happened again in 2008.

Just how disastrous would the proposed reincarnation of the failed Republican trickle-down policies of the past be for the American people and the future of the nation? A few ways:

  • Repealing the estate tax, or, as Republicans have dubbed it, the “death tax.” But the estate tax is not a tax on the dead; it is a tax on their heirs. Repeal would reverse an important aspect of the American Revolution and establish an American hereditary aristocracy. If your estate is not above $11 million, your benefits from this portion of the GOP’s tax cut will be a nice round number: zero.
  • Eliminating deductions for state and local taxes. The GOP has called these deductions favoritism for people who live in high-tax states. In fact, ending deductibility of state and local taxes would tax income that has already been taxed away from a taxpayer. It is, quite simply, double taxation.
  • Repealing the Alternative Minimum Tax, which assures that wealthy people who hire accountants to find all the obscure ways to avoid taxes cannot escape taxation altogether. Repealing it would save Trump millions.
  • Extending the “pass-through” provision to noncorporate businesses, including some 500 entities Trump owns. It would allow the owners of these businesses to pay taxes at 25 percent, instead of 39.9 percent. This provision would allow Wall Street fund managers, among other very wealthy people, to pay a lower tax rate than many middle-class Americans pay.
  • Ending the deductibility of large medical expenses.
  • Taxing waived tuition for college students, ending deductibility for student loan payments, and even disallowing teachers from deducting what they spend on school supplies for their students.
  • Ending the Affordable Care Act’s individual mandate, which would cause 13 million Americans to lose health insurance and result in much higher premiums for those who do get insurance through the exchanges. The Congressional Budget Office has indicated that, if enacted, the Republican tax bill may force deep cuts in Medicare through a generally unknown budget rule that its deficits would trigger.

The analysis of the nonpartisan Congressional Budget Office found that people making less than $100,000 a year (approximately 80 percent of American households) will have their taxes increased while the millionaires and billionaires will make off like bandits.

In the 1920s, Republicans were in full control of the federal government and used that power to pursue their objective to “make the well-to-do prosperous.” It didn’t “leak through on those below.” In that decade, the mass-production American economy became dependent on mass consumption. For it to work, the masses need a sufficient share of the national income to be able to consume what is being produced.

Republican policies in the ’20s instead pushed to concentrate more of the income at the top. Nine decades later, Republicans are rushing to do it again — and they are sprinting toward an economic cliff. Another round of Government of the People, by the Republicans, for the super-rich will be catastrophic. The American people must call a halt before it’s too late.

Thank you, Mr. McElvaine

The deliberate $1.5 trillion deficit, tacked on to the massive deficits from George W. Bush’s wars and tax cuts, hobbles future generations. Instead of cutting back the deficit, the GOP is following the lead of a man who bragged that “I’m the king of debt.” DDT said, “I’m great with debt. Nobody knows debt better than me. I’ve made a fortune by using debt, and if things don’t work out … you go back and you say, ‘Hey, guess what? The economy crashed. I’m going to give you back half.’” The king of debt made money cheating workers and retired people by refusing to pay them and declaring bankruptcies while he took all the cream for himself. He plans to continue the practice for all the people in the United States, for example anyone with Treasury bonds who will get only half of their investment back if he gets his way.

DDT claims he will “make America great again,” but he is turning the nation into a place where people are leaving instructions to send their ashes to Republicans who vote to literally kill them. Zoey Salsbury has created a popular website for people who may die without healthcare or Medicare. (The tax bill cuts $25 billion from that healthcare program). She provides information about how to mail cremains to the congressional member of choice, suggesting that packages be sent to legislators’ district offices because the Capitol may block them, and offers assistance in writing wills to for this process.

DDT is gaining his own vision of the United States, a place where he can take at least $1 billion for his personal gain from the bottom half of the population.

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1 Comment »

  1. Reblogged this on Civil Rights Advocacy and commented:
    History appears to be repeating itself. We’re heading towards another economic cliff with this Republican tax proposal. As my husband said this morning, we don’t need or want this devastating tax cut that’s being proposed. And neither does anyone else we’ve talked to.

    Like

    Comment by civilrightsactivist — December 1, 2017 @ 11:16 AM | Reply


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