Alexandria Ocasio-Cortez (D-N.Y.), Elizabeth Warren (D-Mass.), and a retinue of other Democratic Party notables love the idea of high taxes. For them, soaking the rich is the way forward. And for any self-respecting Establishment Republican, raising tax rates is crazytalk unworthy of taking seriously. There’s nothing to see here in the appeal it seems to have for large numbers of Americans! Tax cuts for the wealthy! Trickle down will save us! These solutions that worked for Ronald Reagan are good enough for me! And, besides, John F. Kennedy cut taxes, too!
We’ve seen this movie more times than we’ve seen the “Wizard of Oz.” But the Republican Party continues to screen it expecting a different ending.
Unfortunately, however, the facts today are different from those that shaped the 1980s. America’s debt is so large; its deficit spending is so uncontrollable; and most Americans do not support cutting the most expensive programs (Social Security, Medicare, and Medicaid) in order to reduce the economic burden on the country, that something drastic has to be tried. Add to these liabilities the fact that Republicans never stop thinking “bigger is always better” when it comes to the defense budget. There is no amount of economic growth that the United States can achieve to allow the country to outgrow its oversized debt.
The debt has become so cumbersome, for example, that nearly the first $364 billion of taxes collected per year (around $1.3 trillion) goes simply toward paying down the interest on that colossus! As the decade continues and spending rates explode, as more Baby Boomers retire, America’s economic productivity may easily be entirely sapped by its debt.
In fact, looking at the actual proposals that Ocasio-Cortez and her party cohorts appear to be backing, one begins to hope that the Trump Republicans do not fall prey to the establishment’s obsession with a caricatured understanding of Reagan, as we head into the next “most important presidential election of our lifetime.” For example, Ocasio-Cortez has posited plans to raise marginal tax rates on income-earners making $10 million or more to 70 percent, in order to pay for some of her more creative policy proposals, such as her fanciful “Green New Deal”.
Seventy percent is a high figure and the Green New Deal is nutty. But the idea of raising marginal tax rates on the ultra-wealthy in the United States is not new or even strange. Remember, shortly before leaving the White House, Steve Bannon and his team proposed raising the marginal tax rates on people earning $5 million or more by a modest 5 percent. The left-leaning Economic Policy Institute estimated that the country could raise the marginal tax rates of high-income earners as high as 69 percent in 2013 with no major economic damage done to the country.
Bannon’s suggestion, while politically brilliant (it would have taken away a key DNC talking point in 2018, that the Republicans only represent the interest of entrenched wealth), did not go high enough. Democrats would never agree to such a low figure.
A marginal tax rate increase on people making $5 million or more of, say, 15 percent to 30 percent would be a good starting point. True enough, the revenue generated from such increases would not be enough to pay down the debt. And it is still unknown whether the Democrats would support raising taxes to pay down a debt they believe poses no threat to the country. Even if that money was simply channeled into shoring up America’s foundering Social Security program, it would be enough to help those working-class and middle-class elderly Americans who were facing diminishing returns with their Social Security benefits as they are currently structured today.
Meanwhile, the Democratic Party’s leadership recognizes that President Trump has been running circles around them and they’re in desperate need of a legislative win. Getting the Republicans to acquiesce to any form of a tax increase would be a coup for them. And that’s where the Republicans could play their hand best.
In exchange for the modest, marginal tax rate increase on those pentamillionaires and above, the Republicans could hold the Democrats to a plan of making commensurate, simultaneous, permanent spending cuts in wasteful government programs.
By triangulating the nascent Democratic plans to hike taxes on their fellow Americans, the Republicans could also isolate their attempts to raise taxes by only allowing for marginal tax rates to increase (as opposed to raising corporate taxes, which would drive up unemployment). Republicans could also embrace a Trump campaign promise of closing the so-called carried-interest loophole, the part of the tax code that makes hedge-fund owners mega-rich instead of merely rich. This could also assist in paying down the debt or shoring up more programs that a majority of Americans refuse to see cut.
Fact is, despite the 2017 tax reforms, most Americans do not attribute their growing economic prospects to that policy. You can spew all of the Ayn Rand and Milton Friedman theories you want at them. Most Americans did not actually see the gains. That’s the problem with trickle-down, by the way. It takes too long for people to notice. Besides, the truth is that the Trump deregulation policies did far more to spur current economic growth than the Paul Ryan-Mitch McConnell tax cuts ever will.
Most Americans support the Democratic Party’s proposals to raise marginal tax rates on the über-wealthy, according to a Hill/HarrisX poll. Another poll from Politico/Morning Consult shows that a staggering 61 percent of Americans support Senator Elizabeth Warren (D-Mass.) in her calls for a meager 2 percent “wealth tax” on people who make $50 million or more and 3 percent for those who make $1 billion. If anything, the Democrats—the true party of the entrenched elite in this country—are putting forward weak proposals on taxing personal wealth because they want to appear as though they’re protecting “the people” while actually favoring their wealthy donors. Three percent of $1 billion? Please.
Wealth in this country has simply become too concentrated in the hands of a very few, mostly leftist globalists. This tiny cohort of ultra-wealthy elite own most of our media; they control the dominant figures in both political parties; they support open borders and outsourcing of middle-class and blue-collar jobs; and they push policies that make it all but impossible for a middle-class family to make it comfortably in the United States. Ours is not the glitzy postwar, JFK era of hope. It’s not even the reassuring, trickle-down period of the 1980s boom economy.
We are living in a new gilded age. Perhaps it’s a gilded age made of biodegradable material. But it is gilded nonetheless! The politics that helped America in the first gilded age must be embraced, before we lose the American middle-class forever and the whole country resembles coastal California.
The Democrats are homing in on their 2020 economic policies: tax increases to pay for more benefits. These policy proposals are more popular than Mitch McConnell cares to admit. The least the Republicans could do would be to triangulate those policies first, isolate them to prevent the increases from totally destroying economic growth, and then use whatever gains can be realized to pay down the debt and/or protect the programs that most working-class Americans support.
Free marketers love to tout the glories of capitalism in the industrial revolution for having created the middle-class miracle in the United States. But, that’s only part of the equation. They may have created that uniquely American lifestyle, but it was protections and policies enacted by the government that ensured that way of life was preserved for future generations. These protective programs have been gutted by both political parties, at the behest of their corporate backers. A modest increase in marginal tax rates will be the first step toward revitalizing the middle-class. This isn’t about a Republican or Democratic solution. This is about being a patriot.
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