Let’s start with the big picture. House Republican leaders just put out their tax plan—after, of course, negotiating only with other Republicans on its provisions. The plan distills Republican economic philosophy perfectly: take lots of money and give it to the people at the top, while pretending that doing so will help everyone else.
This claim derives from a fallacy known as trickle-down economics, one that data has proven to be as false as Jeff Sessions’ statement that he knew nothing (nothing, I tell you!) about Trump campaign officials having contact with the Russians. Just ask one of the architects of Ronald Reagan’s tax cuts, who pointed out that the 1990s—which included tax hikes on the rich passed in 1990 and 1993—had stronger growth than the 1980s and the 2000s, each of which began with big tax cuts for the rich.
On trickle down, the International Monetary Fund—not exactly a bunch of socialists—found in 2015 that increasing income at the top end reduces overall economic growth, while increasing income for those nearer the bottom improves a country’s overall economy. They even quantified the effect: a 1 percent increase in income for those in the top 20 percent leads to an economic shrinkage of 0.1 percent over a period of five years. On the other hand, when those in the bottom 20 percent experience a 1 percent growth in their income, overall economic growth is 0.4 percent higher over five years. Did House Republicans act on this knowledge and produce a plan that will increase growth? Of course not. Their plan does the opposite.
House Speaker Paul Ryan, at a press conference where he rolled out the plan, was asked a pretty good question about the supposed benefits of trickle-down tax cuts for the rich:
The Bush tax cuts did not result in growth or higher wages or more jobs. Why are you certain that this will be different?
The Republican answer was essentially a word salad built around the notion that “simplicity, fairness, and competitiveness” would do the trick. The biggest difference, however, between this Trump-Ryan tax cut and the George W. Bush tax cuts is that this one will actually raise taxes on plenty of middle-class families and households, in particularly cruel ways.
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