The proposed tax brackets for 2017. (Courtesy of kitces.com)
For the past 50 years, America has been suffering from an increase in economic inequality; the wealthiest individuals are accumulating a greater share of the national income and capital assets than at any time since the 1920s. The median wage has not increased relative to inflation since the 1970s despite substantial increases in worker productivity. In general, the rich are getting richer, the poor are getting poorer and the middle class is shrinking.
In the midst of this trend, the Republican tax proposal seeks to give the extremely wealthy the gift of lower corporate tax rates and lower marginal income tax rates while increasing the tax burden of the middle class and eliminating popular tax deductions for families. The GOP claims that reducing taxes on the wealthy will enable more investment and growth in business, leading to wage growth and more job creation. However, the economic data contradicts this prediction.
When corporate taxes have been cut in the past, the money is used for stock buybacks and dividends to investors, not increased wages. The Reagan tax cuts in 1986 reduced the corporate rate, and the trends of wage stagnation and concentrated wealth continued. When the U.K. lowered its corporate rates, wages fell consistently.
If Republicans were truly interested in benefiting the average worker, they could raise the minimum wage or provide cash infusions directly to families. Providing higher wages to the working class would enable families to purchase more goods and stimulate commerce without unfairly favoring the wealthy.
Instead, Republicans assert that executives and owners will distribute their tax savings altruistically, even though all prior data predicts they will behave selfishly. These tax cuts are motivated directly by the lobbying of wealthy donors and industry groups, not by any sense of concern for the well-being of working constituents.
The men and women who work daily to provide for themselves and their families need help, not those wealthy enough to invest in stocks and real estate. We should be taxing the income that American corporations make overseas and closing the loopholes in the tax code to make sure every company is paying their share.
America does need to reform its tax system, but in a way that redistributes the excess wealth from the sedentary assets of the rich to the workers struggling to survive. Tell your political representatives to oppose any tax legislation that gives handouts to corporations at the expense of working people and the national deficit. America should live up to the promise of equality of opportunity, not make it easier for the rich to hoard wealth.