The following article by Eduardo Porter was posted on the New York Times website December 5, 2017:
President Ronald Reagan, with a replica of a federal income tax form, promoting his tax legislation in New Jersey in 1985. Credit Scott Stewart/Associated Press
It was the spring of 1985 when President Ronald Reagan first proposed to put an end to the state and local tax deduction. The idea was, to be sure, politically tricky. The provision had been around since the creation of the federal income tax in 1913, the budgetary expression of America’s celebrated federalism. As Justice Louis Brandeis might have put it, it was the federal government’s way to help pay for policy experimentation in the nation’s “laboratories of democracy.”
And yet to a Republican Party embroiled in a fundamental debate on how to shrink the government, it was an idea hard to resist: a direct shot at states’ capacity to spend. Bruce Bartlett, then a conservative tax expert who would go on to serve under Reagan and his successor, George Bush, estimated that without federal deductibility, state and local spending would fall 14 percent.
Nixing deductibility “threatens the political livelihood of spendthrift lawmakers across the nation,” Mr. Bartlett exulted at the time in an article for the Heritage Foundation. And it “would become more difficult for states to finance programs of doubtful benefit to their taxpayers by ‘hiding’ the full cost within the federal tax system.” Continue reading “Tax Plan Aims to Slay a Reagan Target: The Government Beast”
The following article by Jeremy W. Peters was posted on the New York Times website December 6, 2017:
So far, Americans for Prosperity and its field staff and volunteers have visited more than 41,000 homes and made 1.1 million phone calls. Credit Cassi Alexandra for The New York Times
MIAMI — A dozen high school students working for Americans for Prosperity, the conservative political network funded by Charles G. and David H. Koch, fanned out across the Little Havana neighborhood one day last week to make the case that the Republican tax bill was something to get excited about.
“We believe it’s time to fix our broken tax code and let families keep more of what they earn,” Barbara D’Ambrosio, a sophomore, dutifully told an elderly woman who answered the door in her slippers. After she finished her script, Barbara glanced up from the iPad she was carrying and asked if the woman would kindly call her senators to urge them to support the tax bill, which was hours away from being approved by the Senate.
The following article by Patricia Cohen and Jesse Drucker was posted on the New York Times website December 5, 2017:
A real estate investment trust helped rescue a stake held by Kushner Companies in 666 Fifth Avenue in Manhattan. Such trusts would get new advantages under Republican tax legislation. Credit Karsten Moran for The New York Times
After a frenzy of congressional action to rewrite the tax code, salesclerks and chief executives are calculating their gains. Business was treated with the everyone’s-a-winner approach that ensures no summer camper goes home without a trophy.
Some got special prizes. Cruise lines, craft beer and wine producers (even foreign ones), car dealers, private equity, and oil and gas pipeline managers did particularly well. And perhaps the biggest winner is the industry where President Trump and his son-in-law, Jared Kushner, made their millions: commercial real estate.
House and Senate Republicans, in their divergent bills, both offered steeply reduced rates to corporate giants, partnerships and family-owned firms across the board. But when it came time to eliminate special breaks or impose tighter standards, real estate was generally excused from the room. Continue reading “Tax Plan Crowns a Big Winner: Trump’s Industry”
The following article by Emily Gee was posted on the Center for American Progress website December 5, 2017:
Mitch McConnell Credit: Reuters/Joshua Roberts
Last week, the Senate dealt a blow to health care by repealing the individual coverage mandate as part of its tax bill. The Congressional Budget Office (CBO) has estimatedthat repeal of the mandate will result in millions more uninsured over the next decade, even if Congress approves a market stabilization package. A major portion of the newly uninsured would come from the individual market, where mandate repeal would raise premiums and drive some people out of coverage altogether.
The CBO projects that 4 million fewer people would have coverage in 2019 and 13 million fewer would be covered by 2025. As a result, the share of the nonelderly population that is uninsured would swell to 16 percent by 2025, compared with about 10 percent currently. By simply allocating the 13 million proportionally across states, the Center for American Progress estimates that, on average, about 29,800 more people would be uninsured in each congressional district by 2025 under the Senate Republican tax bill. CAP previously published state-level estimates of coverage reductions due to mandate repeal here. Continue reading “Estimates of the Increase in Uninsured by Congressional District Under the Senate GOP Tax Bill”
The following article by Jared Keller was posted on the Pacific Standard Magazine website June 18, 2015:
“Trickle-down” economics began as a joke. Seriously.
If there’s one person most often associated with the origins of of trickle-down economics, it’s President Ronald Reagan. Few people know, however, that the phrase was actually coined by American humorist Will Rogers, who mocked President Herbert Hoover’s Depression-era recovery efforts, saying that “money was all appropriated for the top in the hopes it would trickle down to the needy.”
Rogers’ joke became economic dogma within two generations, thanks in large part to Reagan. At the center of Reagan’s economic doctrine was the idea that economic gains primarily benefiting the wealthy—investors, businesses, entrepreneurs, and the like—will “trickle-down” to poorer members of society, creating new opportunities for the economically disadvantaged to attain a better standard of living. Prosperity for the rich leads to prosperity for all, the logic goes, so let’s hurry up with those tax cuts already. The legacy of Reaganomics continues to shape modern debates over macroeconomic policy in the United States, from the Bush tax cuts of the mid-2000s to the deficit hawks waging war over the federal budget in Congress.
Now, nearly 80 years later, Rogers’ quip is getting the punchline it deserves: A devastating new report from the International Monetary Fund has declared the idea of “trickle-down” economics to be as much a joke as he’d imagined.
Increasing the income share to the bottomow 20 percent of citizens by a mere one percent results in a 0.38 percentage point jump in GDP growth.
The IMF report, authored by five economists, presents a scathing rejection of the trickle-down approach, arguing that the monetary philosophy has been used as a justification for growing income inequality over the past several decades. “Income distribution matters for growth,” they write. “Specifically, if the income share of the top 20 percent increases, then GDP growth actually declined over the medium term, suggesting that the benefits do not trickle down.”
This should shock no one: Observers of income inequality over the past five years (especially those fond of Thomas Piketty’s Capital in the Twenty-First Century) will recognize this trend from economic data going back to the end of World War II. Consider this much-cited chartby Pavlina R. Tcherneva, of the Levy Economics Institute, tracking the distribution of income gains during periods of economic expansion:
According to Tcherneva’s analysis, the balance in the distribution is flipped from the majority of the nation to the top 10 percent during the Reagan and Bush administrations, a rapid acceleration of a gradual trend. Income inequality was already growing in the U.S., but the advent of Reaganomics kicked the trend into overdrive.
Or consider this chart from the Economic Policy Institute, which shows that, in general, the top one percent of society derives an increasing portion of income gains from existing capital and wealth:
(Chart: Economic Policy Institute)
One last chart, this one from the Economist, based on data from Emmanuel Saez of the University of California-Berkeley and Gabriel Zucman of the London School of Economics, shows how wealth has become increasingly concentrated in the hands of the super-rich:
(Chart: The Economist)
According to the IMF, countries looking to boost economic growth should concentrate their efforts on the lower segments of society rather than bolstering so-called “job creators” with tax breaks. The study results suggest that raising incomes for the poor and middle class yields measurable improvements to the national economy: Increasing the income share to the bottom 20 percent of citizens by a mere one percent results in a 0.38 percentage point jump in GDP growth. By contrast, increasing the income share of the top 20 percent of citizens yields a decline in GDP growth by 0.08 percentage points.
It’s not just the IMF making the case against trickle-down economics: As Quartz notes, the Organisation for Economic Co-operation and Development recently published a strong case for fighting income inequality, asserting that economic growth “is most damaged by the effects of inequality on the bottom 40% of incomes,” Quartz’s Gabriel Fisher writes.
The message of the IMF report is clear: Income and wealth inequality isn’t a class problem, but a national issue. “Widening income inequality is the defining challenge of our time,” the authors of the report write. “The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels.” While disciples of Reaganomics may be clenching their fists, Will Rogers is probably laughing from the grave.
The following is from the December 1, 2017 Progress Report email:
Last night, Senate Republican leaders were busy behind closed doors buying off votes to pass tax cuts for the wealthy paid for by tax hikes and program cuts for the middle class. Since neither the Senate or the House held a single hearing to study the bill’s impact—a bill that touches every American and significantly reorders our national economy—many Senators are still wondering exactly what’s in it. In fact, the final text has yet to see the light of day.
$25 billion of automatic cuts to Medicare would be triggered,
More than $1 trillion will be added to the national debt, falling far short than the estimated $2.5 trillion in new revenue that Treasury Secretary promised.
Unfortunately Senator Susan Collins (R-ME)—who expressed deep misgivings about the bill and the process—was one of the ones bought off. In exchange for her vote, Collins struck a deal with President Drumpf to pass bipartisan health care legislation that in fact would not undo the damage done by the ACA repeal-without-replace provision in the current tax bill and has no chance of passing the House!
TAKEAWAY: Whatever happens with today’s vote, the fight is far from over. The increasingly fickle House has to pass the Senate version or the bill heads to a conference committee to resolve differences, and the Senate and House will vote again on a new version.
But for now, go to TrumpTaxToolkit.org to make sure this bill goes down today!
ACTION OF THE DAY
#TrumpTaxScam. You know what to do. Take action and call your Senators using TrumpTaxToolkit.org!
WHAT’S TRENDING
Flynn is #4. General Michael Flynn—Drumpf’s former National Security Advisory and top campaign advisor—is now the fourth top Drumpf campaign official to be charged in connection with the Russia investigation so far. Flynn is charged with lying to the FBI about his conversations with the Russian Ambassador. ABC is also reporting that Flynn plans to testify that Drumpf directed him to make contact with the Russians during the campaign. First and foremost, THIS IS COLLUSION. Directing Flynn to make contact with the Russians during the campaign is massive. It destroys Drumpf’s lies about having nothing to do with Russia. Follow The Moscow Project on Twitter for the latest.
Shady Judges. This week, the Senate confirmed Greg Katsas—another troubling judicial nominee from the Drumpf Administration. Katsas was appointed to a lifetime seat on the second most powerful court in the Country – the U.S. Court of Appeals for the District of Columbia Circuit. Katsas provided Drumpf legal advice on his most controversial executive actions.
No More Blue Slips. On Wednesday, Senate Judiciary Chairman Chuck Grassley, violated a century-old senate tradition to pack the courts with even more of Drumpf’s extreme judicial nominees. Grassley scheduled a hearing for a nominee over the objection of the Senator who represents the people where the judge would serve – called a “blue slip” objection.
#DreamActNow. The clock is ticking for Congress to pass a Dream Act before the end of this year, that would protect nearly 800,000 DACA recipients from being at risk of detention and deportation. Thousands of dreamers are already losing their DACA status – each day that Congress fails to act, an average of 122 dreamers lose their protections. Tell Congress to stop playing politics with young people’s lives, and call your member today DreamActToolkit.org.
Drumpf’s Continued Attack on Public Lands and Native Americans. On Monday Drumpf is heading to Utah where he is expected to announce what will be the largest elimination of protected areas in U.S. history. In his repeal of protections for more than two million acres of public lands, Drumpf will reportedly cut Bears Ears National Monument by more than 85% and Grand Staircase-Escalante National Monument by more than half. These actions will put tens of thousands of Native American sacred sites at risk. Tell the Administration that this is a monumental mistake by joining the rally this Saturday in Salt Lake City.
More than a quarter of Minnesotans will see their taxes go up under the House plan, by nearly $1,000 on average.
Workers and small businesses:
These wills would create new incentives for businesses to move production offshore and increase the trade deficit, hurting Minnesota workers and small businesses.
Rural and distressed communities across Minnesota:
The following article by Stephanie Leiser, Lecturer in Public Policy at the University of Michigan, was posted on the Conversation website November 29, 2017:
Credit Tasos Katopodis/Getty Images
Republicans seem to be operating under the assumption that if the details of their tax “reform” plan are aired for too long, the whole thing might fall apart.
The following article by John T. Bennett was posted on the Roll Call website November 28, 2017:
During turbulent day, White House tries to get a legislative win
President Donald Trump arrives on Tuesday with Sen. John Barrasso, R-Wyo., left, and Senate Majority Leader Mitch McConnell, R-Ky., for the Republican Senate Policy luncheon in the Capitol to discuss a tax overhaul bill. Credit: Tom Williams/CQ Roll Call
President Donald Trump lobbied GOP senators behind closed doors Tuesday to support a tax overhaul bill that is key to his agenda, but the chamber’s leading Republican indicated afterward he is still searching for the votes to pass it.
Trump returned to Capitol Hill for the third time in four weeks to sell Republican members on the House and Senate versions of GOP tax plan. But this time, he also went to try and wrangle the remaining holdouts to secure the 50 votes needed to pass the bill later this week. (Vice President Mike Pence could cast the 51st and decisive vote.)
