The House has passed a tax bill. The Senate is working on one, but keeps coming up with new ideas to make it more palatable to some but harder to swallow for others — Democrats, and a few Republicans who will be crucial to passing something that can go to conference, where the battle will resume.
According to many observers, both bills have clear winners — tax breaks to those who need them the least—and less clear-cut losers, including some middle-class families, poor families who may face higher tax bills over the next few years, and the nation, which will face another trillion dollar or so increase in the national deficit, which apparently no longer matters. A trillion here, a trillion there, and pretty soon we’re talking serious money.
Agriculture gets a few breaks, according to various analysts, but some proposals could increase the tax burden (loss of deductions), and one highly ballyhooed change (the estate tax) will mean nothing for most farmers and ranchers, say numerous financial observers.
Reducing the corporate tax rate from 35 percent to 20 percent is the centerpiece of proposals in both houses, and like many tax plans before, it comes with promises that cutting taxes on corporations will mean increased investment, building or refurbishing manufacturing, and hiring more workers, all while stimulating the economy and paying for that $1.4 trillion addition to the deficit.
We’ve seen this before: It’s what they call trickle-down economics — the theory being that keeping more money at the top of the economic heap means more will trickle down to the less fortunate.
The mere idea of trickle-down economics is offensive; it assumes a caste system that keeps people in their place. Consider the definition of trickle: “A small, slow, or irregular quantity of anything coming, going, or proceeding…” Not much to build a family budget around. It’s reminiscent of an Old World feudal society in which the lord of the manor keeps his vassals poor and dependent.
The assumption that more money at the top results in more investment and more opportunities to those lower on the ladder has not been borne out in practice. Most of what goes to the top ends up in the pockets of CEOs and stockholders, and the trickle dries up pretty quickly.
Opportunities still exist in America. I’m an example. My dad worked all his life in a cotton mill and sent five children to college. We all built successful careers, but we probably would not have without government help: grants, low interest student loans, and flexible repayment options — programs that have been watered down while college tuition costs have skyrocketed.
Those mills no longer exist, nor do other manufacturing jobs, once the backbone of this country. A trickle was not enough to maintain the infrastructure that kept blue collar jobs and white collar supervisors and office staff that supported it.
It makes more sense to offer more tax advantages to folks who will spend the money on goods and services, creating demand and pushing the benefits upstream.