Thursday, May 04, 2017
The Real Effect Of Trump's Tax Proposal
In true trickle-down tradition, Trump says this tax cut will cause massive economic growth and create millions of new jobs. It won't. The only thing that creates new jobs (or causes economic growth) is an increase in demand (for goods and services). The problem is that giving tax cuts to the rich doesn't increase demand. They already have enough money to buy anything they want, so giving them more will not cause them to buy more (and even if it did, there aren't enough of them to affect total sales).
Tax cuts could create more demand -- if huge cuts were given to the bottom 90% (and especially the bottom 50%, who live within 150% of the poverty line and would spend any new income). But those people are not going to be the recipients of Trump's tax cuts. The few who get a small cut will not be enough to affect the economy.
That doesn't mean Trump's tax cuts won't have an effect on our economy though. It will have an effect -- a negative effect. It will speed up the growing gap between the income/wealth of the rich, and that of the rest of America.
The United States is already one of the most unequal nations in the world, with the worst inequality in the developed world -- and that inequality is growing larger with each passing year. We currently have as big a gap in wealth and income between the rich and the rest of us as existed in the 1920's, and we know what that caused -- the Great Depression. Trump's massive tax cuts for the rich will be like a shot of steroids to that wealth/income gap -- causing it to grow much faster (and turning us into a nation of haves and have-nots).
Only a brain dead Republican could think this would be a good thing. It's not. It's a recipe for disaster.