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tax day
All I Want for Tax Day Is a Reversal of Trump’s Regressive Tax Cuts
Like the Bush tax cuts before it, the Trump tax cut was a trickle-down failure.
Apr 15, 2024
Happy Tax Day. As Supreme Court Justice Oliver Wendell Holmes said, “Taxes are the price we pay for a civilized society.”
But who should pay the most for this civilized society? As Adam Smith, the father of modern economics, instructed in his The Wealth of Nations, a tax system should be based on the principle of equal sacrifice. This means the richer should pay a larger share of their incomes in taxes than the poorer.
But today’s wealthy Americans are paying a much smaller share of their incomes in taxes than most Americans.
Which is why the debate that’s already begun over the 2025 expiration of the Trump tax cuts is so illuminating and important.
Whenever you hear Republicans complain about the federal budget deficit, bear this in mind: The Bush and Trump tax cuts are the major culprits.
The major reason some very wealthy people are backing former President Donald Trump is they want the Trump tax cuts to become permanent and not expire as scheduled in 2025.
As this debate unfolds, you should know four basic facts. The Trump tax cut that went into effect in January 2018 is:
- Skewed to the rich. Households with incomes in the top 1% will receive an average tax cut of more than $60,000 in 2025, compared to an average tax cut of less than $500 for households in the bottom 60%, according to the Tax Policy Center. As a share of after-tax income, tax cuts at the top—for both households in the top 1% and the top 5%—are more than triple the total value of the tax cuts received for people with incomes in the bottom 60%.
- Expensive. The Congressional Budget Office estimated in 2018 that the Trump tax cut would cost $1.9 trillion over 10 years. Recent estimates show that making the law’s individual income and estate tax cuts permanent would cost another $350 billion a year beginning in 2027.Together with the 2001 and 2003 tax cuts enacted under George W. Bush (most of which were made permanent in 2012), these laws have severely eroded America’s revenue base.
- Budget-busting. Federal tax revenue as a share has fallen from about 19.5% of the total economy in the years preceding the Bush tax cuts to just 16.3% of the economy in the years following the Trump tax cuts. Whenever you hear Republicans complain about the federal budget deficit, bear this in mind: The Bush and Trump tax cuts are the major culprits. Moreover, the relatively smaller share of the economy financing the federal government is not enough to pay for the nation’s investment needs and our commitments to Social Security and health coverage.
- Based on a “trickle-down” lie. Trump claimed that the corporate tax cut would “very conservatively” lead to a $4,000 boost in household income.Research shows that workers who earned less than about $114,000 on average in 2016 saw no change in earnings from Trump’s corporate tax rate cut, while top executive salaries increased sharply. Similarly, research has shown that the law’s 20% pass-through deduction, which was skewed in favor of wealthy business owners, has failed to trickle down to workers in those companies who aren’t owners. Like the Bush tax cuts before it,the Trump tax cut was a trickle-down failure.
More generally, trickle-down economics—the abiding faith on the political right that tax cuts as well as deregulation are good for an economy—continues to live on, notwithstanding its repeated failures. Ever since former U.S. President Ronald Reagan and former British Prime Minister Margaret Thatcher first tried them, trickle-down policies have exploded budget deficits and widened inequality.
Reagan’s tax cuts and deregulation at the start of the 1980s were not responsible for America’s rapid growth through the late 1980s. His exorbitant spending (mostly on national defense) fueled a temporary boom that ended in a fierce recession.
Yet the U.S. never restored the highest marginal tax rates before Reagan. And deregulation—especially of financial markets—is a continuing harmful legacy.
The result? From 1989 to 2021, typical working families in the United States saw negligible increases in their real (inflation-adjusted) incomes and wealth.
Over the same period, the wealthiest 1% of Americans became $29 trillionricher. The national debt exploded. And Wall Street’s takeover of the economy continued.
Meanwhile, and largely as a result, Americans have become more bitterly divided along the fissures of class and education.
So why is trickle-down economics still with us? What explains the fatal attraction of this repeatedly failed economic theory?
The easiest answer is that it satisfies politically powerful moneyed interests who want to rake in even more. Armies of lobbyists continuously demand tax cuts and “regulatory relief” for their wealthy patrons.
But why has the public been repeatedly willing to go along with trickle-down economics when nothing ever trickles down? What accounts for the collective amnesia?
The answer is that the moneyed interests have also invested a portion of their gains in an intellectual infrastructure of economists and pundits who continue to promote this failed doctrine—along with institutions that house them, such as The Heritage Foundation, Cato Institute, and Club for Growth.
Consider Stephen Moore, the founder and past president of the Club for Growth and a leading economist at The Heritage Foundation, whose columns appear regularly in The Wall Street Journal and who is a frequent guest on Fox News.
Moore helped draft and promote Trump’s trickle-down tax. He is now advising Trump on making that tax cut permanent, if Trump returns to the White House next year.
Moore and others like him are happy to disregard the evidence and history of trickle-down’s abject failures. They simply repeat the same set of promises made decades ago when Reagan and Thatcher set out to convince the public that trickle-down would work splendidly.
The public has so much else on its mind and is so confused by the cacophony that it doesn’t remember—until immediately after the next trickle-down failure.
If Democrats take over both houses of Congress in 2024, and President Joe Biden gets a second term, they must reverse the regressive tilt of the Trump tax law—raising more revenue while advancing the interests of low- and moderate-income families across the country rather than those of the wealthy. To achieve this:
- Tax cuts for people making over $400,000 should end on schedule in 2025. The Trump tax law’s provisions primarily benefiting high-income households are costly and do not trickle down.
- The tax system must raise more revenue from wealthy people and profitable corporations to offset tax cuts extended or expanded for those with incomes below $400,000, to finance high-value investments in people and communities, and to improve the federal budget outlook.
- New progressive tax policies should be enacted to reduce the ability of the wealthy to avoid taxes on their large unrealized capital gains and roll back the special breaks they receive when they do pay tax. Policymakers can also generate progressive revenues by extending and making permanent the mandatory IRS funding enacted in the Inflation Reduction Act, which supports revenues by increasing tax collections primarily from high-income households.
- Top priorities for extending and expanding tax provisions in 2025 should be the Child Tax Credit, the Earned Income Tax Credit for adults not raising children, and the enhanced premium tax credits for Affordable Care Act marketplace coverage. These credits have a long history of success—in stark contrast to the record of failure of the corporate tax rate cut and regressive tax cuts on wealthy individuals. This includes a marked drop in the child poverty rate in 2021 under the American Rescue Plan’s expansion of the Child Tax Credit—a policy that should be made permanent in 2025.
- Additionally, some 16 million people who work for low wages and who are not raising children in their homes received help through the Rescue Plan’s EITC expansion in 2021, and there were historic gains in the number of people receiving health coverage in the ACA marketplaces during the 2024 open enrollment season, with most enrollees able to find coverage for less than $10 per month. These should continue.
- Revenues also can be used for additional services Americans need. The costs of childcare, home-based care for older adults and people with disabilities, and housing remain unacceptably high for millions of families, and federal investment in these areas falls far short of need. Higher taxes on the wealthy will help offset these costs.
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Our Budget Priorities Should Reflect the People's Agenda, Not Hasten Nuclear Oblivion
This fiscal year 2024, the United States will spend $94.485 billion on all nuclear weapons programs, an increase of over $4 billion from last year.
Apr 15, 2024
Today, April 15, is the day we fund our nation's priorities as determined by our elected leaders.
Last month the United Way released its 2023 211 Impact Survey of roughly 16 million requests, offering insights into the trends and challenges faced by households and communities across the country. Topping the list were housing, utilities, and food assistance as the top needs of people seeking support nationwide. Similarly, a Gallop poll released last month listed the economy, inflation, hunger and homelessness, and healthcare costs in the top five priorities.
Where do nuclear weapons fit in? They're not even on the radar of most people, and particularly not mainstream news outlets. Yet this fiscal year 2024, the United States will spend $94.485 billion on all nuclear weapons programs. This is an increase of over $4 billion from last year. This expenditure is for weapons that can never be used without posing a threat to all of humanity. Yet these expenditures continue to grow out of control, year over year. It is fueled by the mythology of nuclear deterrence, the major driver of the arms race. Not to be outdone, every country feels driven to exceed the nuclear forces and capabilities of their adversaries. We spiral out of control toward nuclear oblivion, ever increasing the potential for nuclear war either by intent, miscalculation, or accident.
The nuclear abolition movement is here and growing.
Nuclear weapons threaten us every moment of every day. There are 12,119 weapons in the global nuclear arsenals. We know that the use of even a tiny fraction, less than one-half of 1% of these weapons over a single populated region, could cause catastrophic climate change lasting years and potentially putting 2 billion people at risk.
With this nuclear famine knowledge, the new arms race shifts from the paradigm of (MAD) Mutually Assured Destruction to (SAD) Self Assured Destruction. These weapons rob our communities of precious resources that could be redirected to the many needs that our communities cry out for. The very existence of nuclear weapons and programs is an economic, environmental, social, and racial justice issue. Yet this is a situation that does not have to be.
Back From the Brink is a growing movement across this nation. It calls for a no-first-use policy, ending sole presidential authority to launch nuclear weapons, ending "hair trigger alert," canceling the plans to replace the entire arsenal with new weapons, and most importantly, resumption of negotiations for a multilateral, verifiable treaty for the elimination of nuclear weapons. This campaign is supported by U.S. House Resolution 77, which embraces the goals and provisions of the Treaty on the Prohibition of Nuclear Weapons and each of the precautionary measures in the Back From the Brink campaign. The resolution currently has 44 cosponsors in the U.S. House of Representatives.
This past year has seen heightened awareness of the threat of nuclear weapons moving into the mainstream with the release of the Academy Award-winning film Oppenheimer; The New York Times series "At the Brink," with an in-depth overview of the risk and potential impacts of nuclear war; last week's Boston Globe editorial "We Need to Start Worrying About the Bomb;" and the recently published books Nuclear War: A Scenario by Annie Jacobsen and Countdown: The Blinding Future of Nuclear Weapons by Sarah Scoles.
The nuclear abolition movement is here and growing. It is time for our budget priorities to reflect the people's agenda and to abolish nuclear weapons before they abolish us.
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Voters Want Tax Day to Look Different for Billionaires
New polling from the National Women’s Law Center and MomsRising found that nearly 80% of respondents supported increasing investments in the caregiving agenda by raising taxes on the wealthiest and big corporations.
Apr 15, 2024
Women and families shouldn’t have to struggle to meet caregiving needs while billionaires buy their third yacht and mega corporations see record profits. This Tax Day, while most of us are stressing about filing our tax returns correctly, many billionaires will laugh all the way to the bank as they pay
a lower tax rate than their secretaries.
New polling from the National Women’s Law Center and MomsRising shows us that respondents are sick of this status quo, and that they overwhelmingly support raising taxes on the richest to invest in care priorities.
For years, lawmakers on both sides of the aisle have insisted that if we give tax cuts to those at the top, everyone will feel the benefits. Fifty years of research has decidedly disproven this theory.
Imagine instead a tax system where the richest pay their fair share, which allows us to invest in our shared priorities.
Tax giveaways for the wealthiest and biggest corporations don’t create jobs or raise salaries; instead, they help pad bonuses for top executives and boost payouts for wealthy shareholders. And in some cases, profitable companies can avoid paying federal taxes entirely.
Meanwhile, families are struggling to hold it together.
Childcare prices h+ave continued to surge as childcare programs grapple with waning resources after the expiration of federal childcare funding in September.
Women, and predominantly women in low-paid work, are forced to choose between caring for a loved one or keeping their job.
And a lack of robust public investment has decimated our ability to provide good quality home and community-based care for aging and disabled people.
Furthermore, the people who work in these care roles and who are—you guessed it—predominantly women, are driven into poverty or out of the workforce by unsustainable wages and poor working conditions.
Yet, instead of collecting more tax revenue from those at the top so that we can invest in our chronically underfunded care systems, Republicans have decided to double down on the disastrous course of more tax cuts for the wealthiest.
All of us will need to care for ourselves or a family member at some point in our lives, and many of us provide care for a living. If the wealthiest individuals and corporations simply paid their fair share in taxes, there would be more than enough to invest in childcare, paid leave, and aging and disability care, which would help our families and our economy thrive.
President Joe Biden knows this. Just last month, he stood before Congress and declared: “If you want to make—or can make—a million or millions of bucks, that’s great. Just pay your fair share in taxes.”
He proposed a minimum tax of 25% on billionaires, which would raise $500 billion in 10 years, and called for investing that revenue in paid leave, home care, and childcare.
It’s no surprise that line prompted thunderous applause. The president knows that connecting taxes to the investments that would make a difference in the lives of women and families is a winning message. New polling from the National Women’s Law Center and MomsRising found that nearly 80% of respondents were supportive of increasing investments in the caregiving agenda by raising taxes on the wealthiest and big corporations.
Women are disproportionately burdened by our lack of equitable caregiving investments, and this polling reaffirms that focusing on how taxes can support gender justice priorities could sway voters to Biden’s side. For instance, two key voting demographics, Black women and Gen Z women, consistently and strongly support the care agenda that President Biden is pushing according to this poll.
In stark contrast, the Republican candidate, former President Donald Trump, has been privately talking about cutting the corporate tax rate even further, similar to what he did in his 2017 Republican-passed tax bill, the Tax Cuts and Jobs Act. This is not only a terrible idea for our country and our economy, but also for his campaign.
The new survey results showed that two-thirds of voters across party lines agreed that we need to get rid of the disastrous 2017 tax cuts for the wealthiest, a sentiment that is consistent with poll after poll over the past five years.
Since this bill was signed into law, billionaire wealth has increased by more than $2 trillion (a 77% increase) at a time when the child poverty rate has more than doubled. What’s more, since 2017, this tax law exploded the national debt and decimated federal tax revenue.
Imagine instead a tax system where the richest pay their fair share, which allows us to invest in our shared priorities. That’s the future tax code that President Biden wants to create. And our polling shows that voters overwhelmingly want to increase investments in the care priorities that families need by raising taxes on the wealthiest.
Tax Day may be in April, but voters will be thinking about taxes until November.
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