Photo credit: Huffingtonpost.com
So, I was chatting with a friend of mine, from MI, who is lower middle income, a single mother, and a Trump voter! Why? I wondered. But she kept repeating the same tired old republican lines like closing the borders, taking the guns, yada, yada, yada.
It wasn’t long before the conversation turned to taxes and the economy, where, I must say, I came up with the best analogy I could on short notice, and thought I’d share it with you guys. Feel free to use it.
Anyways, first lets get this straight, nobody would disagree with you if you stated that the U.S. Tax code is in dire need of reform. There are way too many loopholes, twists, and turns that are there just to give advantage to the wealthy and big corporations.
With that, no matter how one feels about it, is how Donald managed to take and carry forward a nearly 1 Billion dollar deduction. Personally, I think he’s a Jack Ass, taking advantage of the way things are, until it suits him to rail against the system for his advantage. But that’s just me.
Now back to Trickle Down. The Republican’s premier talking point EVERY election. The theory is (if you don’t know) that if we cut taxes on the wealthy (and call them “Job creator’s to make it sell better) and put more money in their coffers, then they, in turn, will invest it back into the economy, expanding their businesses, and that wealth will “trickle down” to the middle and lower classes to enjoy.
Sound’s great, right? There’s only one problem with this line of thinking; IT NEVER HAPPENS! Ever since Reagan sold this lemon to the American people, in 35+ years, it has never manifested like that.
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In reality, they give cuts to the wealthy in taxes. Many of the wealthy are both frugal and greedy (they got rich somehow, right?). When they find they have “extra” money they don’t have to pay in taxes anymore, they instinctively invest and save it, not hire more people into their businesses, after all, that creates risk. Wealthy people tend to be “risk-averse.”
Now, the money doesn’t “trickle down, and the middle and lower class workers don’t get more income to pay taxes on (to make up for the aforementioned tax cuts). Now we have a budget deficit.
Picture credit: quietmike.org
This is where the pizza comes in:
O.K. here’s the scenario. You and 3 friends X, Y, and Z have to order a pizza. (the pizza is non-negotiable, it HAS to be a pizza). The pizza costs $10.
Because all of you make different salaries, you split the cost up based on that (kind of like the Progressive Tax System). So you wind up splitting it this way:
You pay $1
X Pays $2
Y Pays $3
Z Pays $4
Here’s the rub though. Because Z supposedly “puts in more work,” or lost $4 on Pizza last year, or whatever the reason, Z doesn’t pay his $4.
What options does that leave us with (remember, it HAS to be a pizza, we can’t downgrade to Ramen, sorry).
Choice 1: You, X, and Y have to come up with more money to make up the difference. (i.e., paying more in taxes so Z doesn’t have to)
Choice 2: You, X, and Y could just put Z’s portion on a credit card, and figure how to pay it off later. (i.e. add it to the national debt)
According to the Trickle Down theory, now Z will take the $4 he didn’t spend, and use it to buy everyone’s drinks, an appetizer, or whatever, that will improve future pizzas for You, X, and Y. (i.e., invest in jobs and business to improve the economy)
The problem is this, we happen to live in a society where hoarding wealth is admired and rewarded. Greed is the order of the day. In practice, ever since Reagan, it has NEVER worked this way! What Z would do in reality is take his $4 and save it or buy himself bread sticks, without concern for you, X, and Y. He will enjoy the pizza, and not think twice about the three that made the sacrifices to pay for it.
If you live in North Carolina, you are intimately familiar with this effect. When the Republican led Legislature, along with a Republican Governor took over there, they took a look at the states tax code. Following the Mantra of Trickle Down, they cut taxes on the wealthiest resident’s of the state. Thus creating a gap in the budget that needed to be filled.
Now, most states are required to balance their budgets (unlike the Federal Government), and this change was made without cutting the already threadbare level of services in the state nor by “raising taxes.”
How then, you might ask, did this work? Well, since the state couldn’t cut anymore services, and had to make up the shortfall somehow, and since choice 2 wasn’t an option, you would guess correctly that the rest of the money had to come from the rest of the citizens of NC.
In what form did that take? Well, the Republican Legislature gutted the tax laws and basically eliminated nearly every personal exemption available to middle and low income North Carolinian’s. It was not uncommon to get a two to three hundred dollar refund one year, to owing six to seven hundred the next. That’s how they made up the difference! And they can do it saying that they didn’t “raise” taxes on working people!
Picture Credit: Philstockworld.com. Monopoly Man ©Hasbro.
I long for the day when the Right gives up on this failed economic theory that, in practice, does nothing but pad the wallets of the top of the pyramid, and puts more of a burden on the ones who do the work for a living.
Picture credit: unknown, Peanuts ©Shulz
One thing is for sure, if the states are the “laboratories” of democracy, then you need look no farther than North Carolina, Kansas, Wisconsin, etc. to see how much of an impractical “solution” this is to anyone’s economic problems. True, there are many facets to the problem, but let’s not solve it by repeatedly shooting ourselves in the foot.
And to add, make no mistake about it, if Republicans win the White House, both houses of Congress, and any states equivalent, then were in for another four years of this!