John Grund, one of your fellow readers, offers this wonderfully clear analysis (thank you, John):
Here’s another way to think about the Republican tax bill: Think like an owner.
Sit down quietly and let your mind inventory all that you own as an American. I like to start with the Statue of Liberty. It was a gift from France to the American people; I’m an American person, so that includes me. And the Park Service charges admission, so there’s that.
From there, I like to fly over the country in my mind, surveying all that you and I own. All the beaches and waterways. All the roads and bridges. All the public lands and forests. All the great national landmarks and parks. All the wonderful buildings our fathers and mothers built for us: the libraries and colleges and theaters.
Take your time. It takes time to even touch on how much there is. The public hospitals and clinics. The harbors and canals. The lighthouses and navigation markers. The reservoirs, rivers, lakes and water systems. The radio and television airwaves. The courts and city halls and schools. The warships, guns and warplanes.
And now reflect that corporations are granted a charter by the state (which you and I own, of course) that allows them to do business. And think of corporate taxes as the rent those corporations pay for using all that we own – the roads to deliver their products, the monetary system the underpins commerce, the police to keep their trucks safe, the schools to train their workers, the military to protect it all.
The Republican tax bill cuts the rent you earn on all that property. The corporate tax rate drops from 35 percent to 21 percent of profits.
Now perhaps you are a gracious and benevolent landlord, and you say you don’t really mind giving your renters a break. You’re feeling generous.
But remember you have a mortgage against all that property, too. It’s the national debt, and you use the rents – the taxes – you receive as owner to pay off that mortgage. And remember that the rents have to pay for upkeep on all that property. Are the roads and bridges in great shape, with plenty of money squirreled away to keep them that way? Or are they in dire need of long-delayed maintenance and restoration?
This is one case where it is right to think like an owner, because that is what you are. Be a calculating landlord when you consider the Republican tax bill.
Isn’t that kinda great?
One could certainly tinker with the implementation. For example, how about revenue-neutral corporate tax reform? Adopt the more-globally-competitive 21% were adopted — but pay for it by closing loopholes that most big corporations have been using to pay far less than the nominal 35% rate.
But the gist of John’s essay, I think, is exactly right.
And again, note how beyond nuts — how bizarro-world — it is that this tax bill, designed to help the middle class (yeah, right), and that’s gonna cost Trump a fortune, “believe me” (yeah right), includes a special provision for real estate developers like Trump.
I’m all for the much-heralded $1,000 bonuses a few million employees (maybe 5% of American workers?) have gotten from corporate employers . . . perhaps in part to curry favor with the strong man in the White House, perhaps in part to help Republicans hold Congress in the next election, and surely in part because they’d like to do something nice for their valued employees. That’s great.
And I’m all for the modest but real tax breaks many middle-class Americans will see (if we can afford them; though: can we afford them?). Bloomberg estimates $930 a year for people in the middle fifth of taxpayers ($60 for people in the bottom fifth). But don’t you get it? The motivation here is to help those at the top. You get $930! And you get $930! And you get $930! And — if I’m in the top 1% — I get $51,140. Unless I’m in the top tenth of that group — $193,380. Unless I’m in the top tenth of that group — where Trump and his friend Carl Icahn and his pal Wilbur Ross and his pals Sheldon Adelson and the Mercers and Betsy Devos presumably are. That number Bloomberg doesn’t even try to estimate, but it would be a lot higher.
When the ultra-rich were taxed at a 90% top federal tax rate (Roosevelt, Truman, Eisenhower), it was too high (though designed to lower our National Debt, relative to the economy as a whole, which it did help do). And when they were taxed at 70% (Kennedy, Johnson, Nixon, Ford, Carter) it was still too high (though it, too, helped shrink the Debt relative to the economy as a whole). Even when they were taxed at 50% (Reagan’s first cut), I would argue it may have been too high.
But, with his second cut, Reagan, and then Bush 43, and now Trump have exploded the National Debt — borrowing not to build infrastructure that’s been crumbling for 35 years, but to enrich the already-rich by cutting their taxes to record-low levels.
Well, not literally. But immoral.
And dishonest (Bush told us “by far the vast majority” of his tax cut would go to people “at the bottom”).
And . . . well, tragic.
Only Clinton and Obama managed to turn the deficits around, leaving their successors with economies growing faster than the debt . . . thus shrinking the debt relative to the economy as a whole.
This massively irresponsible Republican tax cut reverses that, once more. It puts us back over $1 trillion in deficit spending . . . gets the debt growing faster than the economy again, as under Reagan, Bush, and Bush . . . and is sold to the voters as, “Look! You get $930! And you get $930!” (And me? Don’t bother your pretty little head with that. If you can’t trust Donald Trump and Mitch McConnell and Paul Ryan and Devin Nunez and Vladimir Putin — Trump trusts him, why shouldn’t we? — whom can you trust?)
Quote of the Day
LONG PULL: There may be nothing exciting about buying for the long pull, but it works.~David L. Babson
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