Government taxation of its citizens goes back at least six thousand years, and at least as far back as the Greeks, the purpose of taxes have always been twofold: To raise revenues for the government and to guide public policy. In the case of Athens, the social policy was to go to war with other nations, as Athens would raise taxes on a temporary basis to finance war-making. But Athens also taxed every inhabitant who did not have an Athenian mother and father, which certainly advanced a public policy that has recently gained adherents in many western nations: limit immigration.
Societies and governments are much more complex than they used to be. Most industry sectors and most of the utilities that define modern life like electricity and natural gas service didn’t even exist 200 years ago. Tax policy can’t help but favor certain industries and individuals, and typically the hand-up—be it in the form of tax credits or deductions—is a conscious attempt by our leaders to make people and industries do something, or stop doing something.
The overall dynamic of the current Trump GOP tax plans is to give most people a tax break today, but heavily weigh the benefits to top wage earners, especially in the financial industry, and those whose income comes mostly from investments; the tax breaks for the ultra-wealthy are permanent, while most of the breaks for everyone else are temporary. In either of its forms, the proposed new tax system will not be revenue neutral, but raise the budget by 1.5 trillion dollars. Despite this enormous increase in the deficit, the Trump GOP tax plan still needs to raise taxes on many people and cut government programs and services to pay for what can most accurately be described as an enormous tax break for the wealthy.
Within this broad outline are the details, most of which assert a public or social policy, and they certainly are devilish. Let’s then, take a look at the public policy implicit in both the overall thrust of the plan and in its minutiae.
On the macro level, the tax plan suggests that its developers do not believe that people have any responsibility to society and that society should be a cold and inhumane place in which everyone essentially is on their own, sink or swim, with no help to the poor or disadvantaged to level the playing field of a market economy of private actors.
I understand full well the Republican line on tax cuts for the wealthy dating back to before the Great Depression, nonsense that the wealthy and corporations will reinvest their tax savings to create new jobs and that high rates of taxation harm society’s producers. But all historical evidence going back at least to the 16th century in Spain demonstrates that in the real world raising taxes on the wealthy and lowering taxes on everyone else generally produces economic growth, whereas lowering taxes on the wealthy generally causes stagnation or economic decline, especially when accompanied by raising taxes on everyone else. An analysis of the cash flow when rich folk, everyone else and the government get more money demonstrates the almost offensive illogic in believing that lowering taxes on the wealthy creates wealth that flows down to everyone else. Governments spend all the money in their coffers, sooner or later, and for most modern governments, it’s sooner. That spending becomes jobs, government contracts and benefits to the poor and middle class, which then get spent. When everyone but the rich get more money, they spend most of it and save only a little, again putting money into the economy. The rich, by contrast, will stick most of the extra money into dead assets, that is, assets that do not create wealth such as collectibles, real estate and stocks that are bought on the secondary market and not directly from companies.
Except for the stupid and the fanatical, most elected officials and certainly most of the right-wing’s well-paid horde of think-tankers know that the idea that cutting taxes on the wealthy will unleash growth is a ridiculous myth. We must therefore look behind their overheated rhetoric to understand the true public policy in the Trump GOP plan. If we judge the plan by past history and the outcomes predicted by virtually all mainstream economists, it’s clear that the public policy goes beyond laissez faire to create a society that favors the already wealthy and provides no helping hand to anyone else.
The provisions of the plan involve some radical truly social thinking. In the case of education, Ted Mitchell, President of the American Council on Education, put it best when he called the Trump GOP tax plan “a reverse GI Bill.” The GI Bill put millions of veterans of World War II through college free or at a very low cost, through government support of public higher education. By contrast, the Trump GOP plan removes many of the tax breaks that help people pay for their college education, making college even less affordable than it already is in the 21st century:
- Repeals the interest deduction for student loans, which is taken by more than 12 million people.
- Repeals the $2,500 tax credit that middle-class parents can take for having children in college.
- Forces graduate students to pay taxes on the tuition waivers they receive, which will make many leave school.
- Places a 1.4 percent excise tax on college endowments that exceed a specific limit, which will affect over 150 colleges and reduce the funds these institutions have for scholarships to needy students. Thus, in the same bill that gives corporations a tax break and continues the carried income tax break for hedge fund managers, most major universities will pay a new tax.
It’s clear that the Trump GOP do not see the benefit in providing or facilitating the educational aspirations of its citizens and see no benefit to society to educating the next generation of managers, engineers, physicians and other medical professionals, technicians, communicators, software developers, translators, urban planners, human resource professionals, teachers and the myriad other professions that require higher education. Nor do the Republicans place any value on the pursuit of knowledge or research and development.
Let’s move on to healthcare. From its many failed attempts to repeal the Affordable Care Act we already know the GOP has no interest in providing low-cost universal healthcare, a birthright enjoyed by the citizens of virtually every other industrialized country of the world. Again, the GOP espouses the false idea that the marketplace will provide less expensive, higher quality healthcare, and again the facts belie this nonsense. The citizens in our private sector healthcare system pay more than those in other industrial nations and we get less, as our infant mortality and life expectancy rates are much worse. In truth, the rightwing that controls today’s Republican Party does not believe that healthcare is a birthright and questions the idea that it is in the best interests of society to keep its citizens heathy at an affordable price.
The Senate version of the tax bill reinforces the Trump GOP notion that it’s every person for himself when it comes to healthcare by ending the individual mandate that makes those who don’t buy healthcare pay a special tax. Most experts agree that ending the individual mandate will leave 13 million more people uninsured and raise premiums for everyone else by 10%. Both bills end the deduction for unusually high medical expenses. It’s clear that Trump and the GOP do not really care about the health of Americans—at least not as much as they care about giving the ultra-wealthy more money.
For decades, the federal government has encouraged support of charities and religious institutions by allowing deductions for charitable contributions. But to take the deduction, the tax filer has had to itemize deductions. By raising the standard deduction (which cuts taxes) and lowering the maximum that can be deducted, the Trump GOP plan provides less incentive to give to charities and will likely result in charities receiving less funding. Moreover, ending the estate tax will likely lead to fewer and less generous major gifts, as the wealthiest one-fifth of one percent—the lucky few whose estates are large enough to be assessed estate taxes—will no longer feel the need to give to charities to reduce their tax burden. Thus, where once the public policy of our tax system encouraged charitable giving, the public policy advanced by the Trump GOP tax bill encourages selfishness.
The GOP tax plans rescind a number of tax credits, each of which was instituted to support a public policy deemed beneficial to American society as a whole. The credits up for repeal include the adoption tax credit, the credit for the elderly and the totally and permanently disabled, the credit associated with mortgage credit certificates, and the credit for plug-in electric vehicles. The GOP prefers lining the pockets of the already privileged over encouraging adoption, helping the elderly and disabled, supporting home ownership and building the market for non-polluting vehicles. To those who argue that the temporary (!) tax cuts partially or entirely offset the loss of credits and deductions miss the point: The changes collectively replace the use of tax policy to implement public policy with a kind of brutish and brutal lack of concern for the direction of the country.
The tax plan, of course, fits together with the budget. Proposed budget cuts to keep the deficit increase under $1.5 trillion also reflect public policy. The example of our foreign policy expenditures truly represents a turn that will be dangerous to both the United States and the rest of the world. The Trump budget calls for slashing the State Department by more than 30% while adding more than a 100 billion to the already bloated defense budget, including for the development of robot weapons and more sophisticated nuclear weapons. The social policy behind this shift is easy enough to see: We now prefer to go to war or oversee wars others fight for us than to achieve diplomatic solutions to world problems and disagreements with adversaries.
Other proposed budget cuts show a disregard for the importance of research and development, public education and environmental protection.
The tax plan provides more benefits to the ultra-wealthy than to the wealthy. It favors those whose income derives from investments over those who work for a living and get paid well for it—the Trumps and Mnuchins over LeBron James and Giancarlo Stanton. What’s the social policy there? To reward capital over labor, even high-priced labor.
We could go on, but let’s take a look at the vision of the future created by these different strands of public policy: A society of rich and poor in which most people are less educated and less healthy and live in a more polluted world than now and drive on crumbling roads and bridges to crumbling schools and shoddy public spaces, a world in which the elderly, disabled and disadvantaged are left to pretty much fend for themselves and in which no one will ever know peace as we fight or support dozens of regional and civil wars around the globe. Dystopia.
The overriding policy of Trump and the Republicans is to push the country into dystopia to satisfy the greed of a handful of billionaires. Among those ultra-wealthy are the members of the Trump family, who stand to gain tens of millions from the tax breaks right away. Upon the death of Trumpty Dumpty, that amount would increase to the value of his estate, which could be anywhere from $400 million to $4 billion or more, depending on whose estimate of his net worth you use.
In the future, when most American are living from hand to mouth trying to navigate their way along potholed roads and in broken down mass transit, the air foul with particles and carbon dioxide, their tap water undrinkable, most people in debt all their lives paying off their college degrees, the entire country running on obsolete and ramshackle early 21st century technology, the billionaires won’t care. They’ll have their own computer servers, servants, concierge medical service, security staff, airplanes and real estate in the more civilized locations of Paris, Berlin and Shanghai. It’s the ultimate end game of the politics of selfishness.