Last time, I wrote about the absurdity of ideas like tax cuts and trickle-down economics, ideas that had been disparaged by econimists and disproven by trials. The state of Kansas is the poster child example. Six years of tax cuts by Republicans there led to bankruptcy until taxes were restored. Kevin Hassett, the White House economist, supported the Republican budget, with included tax cuts for the wealthy and corporations. However, Lawrence Summers, past president of Harvard and former Secretary of Treasury, referred to the tax cut proposal as “some combination of dishonest, incompetent, and absurd.” In her column of 29 Oct, Ruth Marcus refers to tax cuts as “worse than unwarranted. They are dangerous.” The Congressional Budget Office (CBO) declared last week that the deficiy has grown sharply during this Republican administration and would constitute the largest deficit since 2013. The basic reason cited for this increase in the deficit is that the federal government has been collecting less in taxes. And Republicans want to cut taxes more. This makes no sense at all, except that it does, sort of. Cutting taxes will bring a large windfall to the wealthiest Americans. They, in turn, will be so grateful to Republicans that they will donate to Republican causes. You have to make over $300K a year to expect any benefits from the proposed tax cuts, and the more you make, the larger the benefit. The rest of us pay for it.
So, if tax cuts don’t help the economy, why do Republicans focus on a failed strategy? Partly, I think, it comes from ignorance. They just never bothered to study the subject. Partly, it may come from the “facts don’t matter” approach of current Republicans. Mostly, however, the fault lies with voters who fail to read or listen to what candidates are saying before pulling the levers on election day.
Even at an individual family level, if you have a big expense (deficit), that’s not the time to quit your job and reduce your income. For the economy as a whole, a true stimulus would come from an infusion of cash, primarily to the lower income segment, because they will spend it. The stuff they buy will increase business for factories, who will hire more workers, who will buy more stuff. Injecting too much cash into the economy will bring inflation, so you need to balance that with higher taxes for the wealthy.
Corporations, for their part, don’t currently need a tax cut. They are sitting on loads of cash. More money for corporations would just go into the bank or into the CEO’s pocket. In a recent letter from a small company CEO, he said that he would hire more workers or start a new factory when people started buying more of his product. Reducing the corporate tax rate would not be a factor in that decision. He added that no one builds a factory because taxes are low.
What we need in this country is not lower taxes but leaders with common sense. Voters must elect them..