The unsustainability of endless tax cuts
Government can best be described as a series of private jokes that aren’t funny to anyone but politicians. There is also the bitter joke that “we have the best Congress money can buy.”
Those comedians in the Republican Party are making us laugh again. They have elephant-sized tears that would drown a dozen crocodiles over our $20 trillion deficit. And what is their answer to this growing debt? Why, more tax cuts, of course.
They call it “tax reform,” but it’s really a tax cut for their donor base – the 1 percent. Oh, and they’re going to do away with the “death tax,” too. That’s the tax that applies to families that leave more than $5.4 million to their heirs. The 40 percent tax really is far too high, but it should be lowered, not done away with completely.
From a conservative perspective, the income tax rate has always been too high. At the end of World War II, the top individual tax rate was up to 94 percent. President Ronald Reagan lowered it to 50 percent. Then George W. Bush lowered it to 35 percent, but it was subject to expiration because the reconciliation process was used to pass it. President Trump now wants to lower it to 10 percent, 25 percent and 35 percent.
As for the corporate tax rate, the top rate of 35 percent is high, but our tax code goes into thousands of pages because of the exemptions given to certain companies and individuals. The average corporate tax paid is 14 percent, less than half of what the “official” rate is.
The Republican nonsense that tax cuts spur the economy has been disproven again and again for more than 30 years. But we didn’t have these trillion-dollar deficits until Republicans came down with tax cut fever. Yes, it worked for Reagan in 1981, but the top income tax rate then was 70 percent, so a cut really did boost the economy. Not anymore. There was no blistering economic growth from Preident George W. Bush’s tax cuts in the 2000s, and there will be none this time.
Tax cuts juice the economy. At least that’s the official conservative line. The real reason has more to do with self-interest. Yes, conservatives believe in small government. They usually refer to tax cuts as “starving the beast,” the “beast” being government’s ability to spend money. Of course, it’s also a large tax cut for their donor base and will assure them support for future campaigns.
Politically speaking, nothing is more popular than a tax cut. While promising these goodies to the middle class, they quietly use the same argument to build their case for reforming “unsustainable” entitlement programs, such as Social Security, Medicare and food stamps, which is the real aim of tax cuts. If there’s no Social Security or Medicare, then the 1 percent can keep almost all of their money. Besides, the thinking goes, Americans should learn to pull themselves up by their bootstraps. These social programs make them lazy.
The real reform that is needed is to stop these unsustainable tax cuts – not just on the federal level, but many so-called red states have found themselves with unsustainable deficits because of tax cuts.
The damage estimate for Florida following Hurricane Irma is $179 billion. Trump has promised $15 billion in relief. That’s not even a good start. The reason the Federal Emergency Management Agency (FEMA) has so little money to help the victims is because of the many unreasonable tax cuts we’ve had in the last 30 years. That’s poor planning.
Another big bluff being offered by Republicans is that reform will do away with many exemptions, which really would increase revenue. The exemptions circulating among the GOP right now are: doing away with the exemption for state and local taxes; taxing employer-provided medical insurance; and perhaps even doing away with the mortgage deduction, although that would be politically risky. However, your right to claim your yacht as a second home will probably remain intact. Since the tax cuts are destined for the families at the top, not many of their exemptions are likely to go.
It took thousands of years for decadence to destroy the civilizations of Egypt, Greece and Rome. In America, it took less than 250 years. Sometime in the 1970s, America turned from its moral past – the belief in fairness, the benefits of government largesse, along with it’s institutions – and trended toward a laissez-faire amorality.
The growing amorality of government and its institutions has been a model that has inevitably led a cynical populace. This acquired amorality will end in decadence – a paradise lost – as it has for all the great civilizations of history.
Fenton is a resident of Washington and a retired writer and film restorer for VCI/Magic Lantern entertainment in Tulsa, Okla.