We Don’t Need GOP Tax Reform We Need a New New Deal
Regarding GOP tax reform a few things must be clarified:
1. The current GOP tax reform bill isn’t tax reform at all. Tax reform is deficit neutral and this explodes the deficit.
And it’s even worse than that because to the extent that the GOP does attempt to ‘pay for it’ they focus on ‘loopholes’ that benefit the middle class and the poor-particularly in blue states.
2. But the reality is that ‘tax reform’ isn’t a great idea even if it is the real article rather than the current fake GOP tax reform bill. I mean what problem is ‘tax reform’ actually meant to solve?
To be sure there are more and less efficient ways to run a tax system. But GOP tax reform is always going to amount to huge tax cuts for the rich and the corporations while making up for it and the backs of the middle class and the poor. That’s what Reagan’s tax reform did in 1986. The top rate went to 28% while the phased out the credit card interest deduction.
The plan, as many note, is to combine corporate tax cuts with higher taxes on many, perhaps most people, but to hide the effects of those tax hikes with a bunch of temporary tax breaks. Because the tax breaks expire, the bill supposedly doesn't raise long-run deficits 2/
— Paul Krugman (@paulkrugman) November 24, 2017
One big lie, one zombie argument you hear a lot from the GOP is that our corporate tax rates are the highest in the Western world. That’s true only of the nominal rate of 35%. But the effective rate is about half of that and a number of big corporations pay little or no tax.
The Mike Sax for Congress in the NY2 District declares that we have a ‘low wage epidemic’ in our country and for that reason we need a ‘new New Deal’ or a ‘New Deal 2.0.’
Many of you by now know I’m Mike Sax.
Usually I show you pictures with me and my buddy Kev-who’s also my communications director.
Kev is one of the best people you will ever meet. If you DO meet him at some point-maybe if you come to our Q&A in a few weeks, probably December 13-the first thing Kev will probably do is show you a copy of that time we met Hillary Clinton.
It WAS and IS a very proud moment.
In any case the big canard, the big lie, the GOP is telling is that their huge corporate tax cuts-much bigger even than George W. Bush’s-will be good for the middle class as they will raise wages.
But again, this is based on the false premise that our corporate taxes are so high that they’re hurting business and keeping wages low. But the effective tax rate is not high relative to other Western countries and Japan.
“The White House Council of Economic Advisers promises that the corporate tax cut, to 20% from 35%, would lead to an increase of at least $4,000 a year in average household income.”
“But that calculation depends on an assumption that workers would get a much bigger cut of the corporate tax savings than most economic studies — including those by the Treasury Department and Congressional Budget Office — have shown.”
“Most economists agree that the Republican tax plan will boost business investments. And that should lead to more hiring, greater productivity and increased company profits that would, in theory, prompt employers to raise wages.”
“One of the key drivers of investment is access to money, which hasn’t been a problem for most businesses. Large companies, in particular, already have plenty of cash. Borrowing costs are historically very low.”
“In today’s economy, however, experts said it’s unrealistic to expect the kind of investment bonanza that proponents of the tax plan are banking on.”
The corporations are already sitting on record cash.
The real issue of our time is NOT Where are the jobs? but Where are the good paying jobs?
And what’s keeping wages low is NOT lack of corporate cash as noted above but automation.
Our labor market in the early 21st century is at a similar place to where it was in the early 20th century. Then there was also a painful dislocation in the labor market as we went from an economy where most American workers worked on farms to where most worked in factories.
Today we have a painful dislocation as we transition from an economy where most Americans worked in factories to one where most work in the low wage service sector. But, remember, in the early 20th century manufacturing was a low wage sector and then came the New Deal.
The challenge today is for a new New Deal-a New Deal 2.0-which raises wages in the service sector. That recognizes that most workers today and in the future will work in lots of piece work jobs, jobs from home, jobs on the computer, will be freelancer workers, etc.
The basic three pillars of New Deal 2.0 as the Mike Sax for Congress NY2 campaign has laid them out are:
1. A Job Guarantee (JG).
Everybody who needs a job gets a job-the government facilities this. They will NOT all be government jobs;; some will be nonprofit or indeed, private sector jobs.
As you can see in the link above, Hillary’s buddies at the Center for American Progress are for a JG which means it’s an idea whose time has come in Democratic policy circles.
3. Raising the Earned Income Tax Credit
I believe that these policy ideas each taken either indiviually or on combination of one or both of the other will substantially raise American wages.
P.S. I’m Mike Sax, I’m running for Congress in the NY 2nd District and I’m a Hillary Clinton Democrat.
Meeting her recently was one of the biggest honors in my life to stand next to such a fine public servant and trailblazer. She seemed to like our Impeachment Train campaign t shirts too!
Think of the shirt as a one time investment in restoring legitimacy to this country.
And please donate so we can compete with Peter King’s $4 million. I know no lobbyists or millionaires like Peter King. Small donations are the engine of the Mike Sax NY2 campaign. Together we can do it. Because we must.