It takes only two things to keep people in chains:
The ignorance of the oppressed and the treachery of their leaders.
Let’s begin by stating that despite all the commentary, no one — no one in the Senate, no one in the House, not you, not me, and especially not President Trump — no one knows what the GOP tax “reform” package is or will be.
The current tax code is thousands of pages containing innumerable details. So far, the GOP “proposal” is a one-page “wish list.”
Though Trump predictably will describe each ever-changing iteration as the greatest tax proposal in the history of humankind, you can be sure he knows as much about the latest GOP plan as he knew about the multitude of GOP health care plans he praised to the sky, i.e. nothing.
Fortunately for all our sanity, America has no “Obamatax” to Repeal and Replace, so there is a (remote) possibility that whatever the proposal is, it would be evaluated on its merits. (I did say “remote,” didn’t I?)
So, if no one knows what is in the proposal, how can I give you any facts about it? Easy. I may not know what the proposal is, but I know who is proposing it — the GOP — and really, that’s all you and I need to know.
Fact #1: The proposal will be nothing like what Donald Trump says it is.
The man is uncanny in his ability to lie, misstate, deceive and otherwise not know what he is talking about. If you go to No, it isn’t “the economy, stupid.” It’s another issue, and you know what it is, you will see half way down, a section titled, “141 Stances Trump Took During His White House Bid.”
The title doesn’t fully explain that those are mutually exclusive stances, aka “flip-flops,” 141 flip-flops, any one of which might have doomed a politician with a sane, intelligent following, but simply bounced off Trump’s followers. Trump changes his mind — a lot.
Ignore all statistics Trump gives you; they are wrong. Ignore any other details he reveals; he came up with them from thin air, and he will change his mind twice by tomorrow.
Ignore the words “reform,” “simplify,” “fairness,” and “make America more competitive.” They are lies. The new plan will not “reform” anything, lest you believe that somehow “reform” is a synonym for “improve.”
That plan will not be an improvement, nor will it be simpler or fairer, and it will not make America more competitive, except in the most minor ways.
Fact #2. The plan will be designed to make Trump and his rich pals richer, and it will make the rest of us relatively poorer.
A handful of you in the lower “99%” may benefit, but that will be a mathematical accident. The vast majority of you will see the Gap between the rich and the rest of you widened.
“Rich” and “poor” are relative terms. A person who earns only $1,000 a year is rich if everyone else on the planet earns only $1. Thus, it is the Gap, not the sheer number of dollars, that determines how rich or poor you are.
The rich will get richer, not only by grabbing more money for themselves, but more importantly, by widening the Gap, i.e. by making you poorer.
A widening Gap acts like inflation in that even when you have a few more dollars, you actually can be poorer.
Pay no attention to the claim that by cutting taxes on the rich, money will trickle down to you in the middle-classes and the poor. “Trickle-down” economics didn’t work under President Reagan, and it didn’t work under President Bush II. It simply doesn’t work.
All that will happen is a giant river of money will flow to the rich, while the rest of you will swim mightily against the current, and you will be fortunate if you simply can stay in the same place.
How about eliminating taxes on the middle-classes and the poor, and allowing the benefits to “trickle up“? You never hear that option, do you? No, the rich don’t like that idea, because they know the “trickle” idea doesn’t’ work in either direction.
Fact #3. Tax rate cuts on corporations are a good idea, but not for the reasons Trump claims.
Trump’s spiel is: When corporate taxes rates are cut:
–corporations will be more profitable,
–which will make them grow,
–which will make them bid more for employees,
–which will increase your wages and
–increase the number of higher paying jobs.
Here is what really will happen when corporate tax rates are cut:
–for the biggest corporations, nothing will happen; they already use so-called “loopholes” to cut their tax rates
–for the vast majority of businesses, the extra money will be used to cut prices, or to
–increase share prices, or to
–increase executive pay and perks, or to
–do more Research & Development on product improvements, or to
—mechanize so they can reduce payroll.
You office workers, factory workers, manual laborers, and unemployed will see comparatively little from those corporate tax-rate cuts. Some even will lose their jobs to machines.
So, why do I say that cutting tax rates on corporations is a good idea? Because, every dollar in federal taxes paid, is a dollar lost to the economy.
Gross Domestic Product = Federal Spending + Non-federal Spending + Net Exports.
The federal government creates new dollars, ad hoc, every time it spends — so any tax dollars are lost. Note the word “Spending” in the above formula. Federal taxes decrease spending. Any federal tax cuts increase the amount of money in the economy, and so, increase spending which increases GDP.
(Aside: This isn’t true of state and local tax dollars, which remain in the economy.)
Increasing GDP should be good for everyone, but not if the government directs the benefits to the rich, which is exactly what the GOP plan will do.
How do I know? It’s the GOP, the party of the rich. It’s what they have been paid to do.
Bottom line: The single most important problems in economics involve the excessive income/wealth/power Gaps between the “have-mores” and the “have-lesses.” And any tax proposal put forth by Trump and his rich pals, absolutely, positively will widen the Gap between the rich and you.
The GOP tax program, no matter what the details, will make you relatively poorer, even in those cases where you will come out with a few more dollars.
You can take that to the bank.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.