Editorial: Ciphering the GOP tax cuts
We get that not every American understands math well enough to debate the merits of the GOP’s current tax cut proposal, but here’s a point most voters can grasp: As outlined by Republicans, the proposal would raise $169 billion in revenue over the next decade through new economic growth, but at a cost of $1.4 trillion. Simple math shows the GOP plan runs a deficit of $1.231 trillion over that first decade, after which the hefty tax cuts for big corporations remain in perpetuity, while the taxes on individuals will have to skyrocket to ever be able to pay down that incurred debt.
That saddles future generations with the biggest debt in the nation’s history, while gaining almost nothing in return.
Most economists also argue that providing such a hefty stimulus to the wealthiest people in America is exactly what’s not needed at this time. After eight years of stimulus under President Obama needed to recover from the Great Recession of 2008-09 — which started under President George W. Bush — the economy is finally running at a steady 2-3 percent growth without any further stimulus needed. The world economy is also doing well, which has helped existing policies keep the momentum moving in the right direction.
More stimulus might add a slight bump to the economy for a short-period, but because the economy is already at full employment and because corporations are sitting on hordes of cash (which has been the case for the past few years), the GOP and Trump’s tax cuts spend a whole lot of dollars for not much bang.
Wall Street economists are making that very point. According to columnist Paul Krugman, they are arguing that “not only do they see the plan failing to pay for itself through added growth, financiers also pointed to a near-term downside resulting from all the new deficit spending the cuts will require, as federal borrowing could crowd out private investment in the economy. ‘I can’t see this is the moment when you want the most fiscal stimulus in the market, when we’re kind of mostly at full employment, when GDP last registered at 3 percent,’ Goldman Sachs chief executive Lloyd Blankfein said in a Bloomberg News interview this month. ‘The United States can afford some deficit spending now,’ he added, ‘but not so much of it that we make inflation inevitable down the road.’”
Turns out that tax policy, while complex, isn’t rocket science: If your tax policies cost far more than the revenue gained, you’ll run a deficit. And if the economy won’t benefit from the stimulus provided, then the gains won’t offset that deficit spending. And when the tax cuts are this huge, you end up with a gigantic deficit.
It’s also important to define who “wins” in this tax cut proposal. Republicans are quick to say that most of the middle class and the upper class will benefit in that first year or two (while some middle class taxpayers will pay more), but the gains are all relative.
As a taxpayer am I excited to get a $200 tax cut, while a billionaire wants away with a $30 million tax cut? No. I’d rather that $30 million go to build the nation’s infrastructure; on put toward federal aid to education (they could pay their fare share of special education costs, for example, instead of shunting that cost onto our local property taxes); or help create adult learning programs to retrain American workers for tomorrow’s more technical jobs; or help finance Medicare or Medicaid, or mental health or fight the nation’s drug addiction crisis. Or a thousand other things that will benefit lower and middle class Americans throughout the country.
But give millions of dollars in tax cuts to multi-millionaires and billionaires? That makes no sense, and neither does this GOP tax cut proposal. Every sixth-grader in the land should know enough basic math to understand that.
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