Letter: Unbalanced tax cuts
The key tenet of the Tax Cut and Jobs Act is that it will stimulate the economy and create jobs. Let’s look over the last three administrations (24 years) and see what tax cuts have actually done.
Clinton administration raised top rate from 35 percent to 39.6 percent and saw GDP grow annually by 2.58 percent. Bush administration lowered it back to 35 percent and saw GDP grow annually by 0.66 percent. Obama in turn raised it back to 39.6 percent and saw the GDP grow annually by 2.05 percent.
What about the belief that President Ronald Reagan’s 1981 tax cuts are evidence that supply-side tax cuts accelerate economic growth? Reagan’s own chief economist found that the recovery of the early 1980s was driven by monetary policy, not tax cuts. So there is no evidence that tax cuts in fact stimulate the economy and create jobs. And while there is no general consensus among economists that a tax cut would create jobs, there is a consensus that if a tax cut is to be effective, it must be given to the lower 80 percent, in particular the lower 40 percent who will actually spend it.
There is no evidence that tax cuts to the top 20 percent will in fact stimulate the economy. Currently, almost 68 percent of the tax cut is scheduled to go to the top 20 percent, and 31 percent to the top 1 percent.
The top 1 percent has seen its share of national wealth rise from its low point of about 25 percent around 1980 to around 42 percent today. Meanwhile the lower 80 percent has seen its share drop from around 20 percent to around 10 percent.
How are these tax cuts to be funded? By either making deep cuts to social programs today or letting the deficit balloon so that deeper cuts will have to be made to social programs in the future. And these are social programs like Social Security, Medicare, Medicaid, health care, etc., that benefit the lower 80 percent.
My family is presently part of the top 20 percent in terms of wealth, and even though we stand to benefit from the tax cut, we choose to do the right thing because in the long run, we must support the working and middle classes if we are to have a vibrant economy.
Call your members of Congress today and demand that they support an equitable tax system, one that doesn’t continue to shift wealth or gut the social programs.