The Grand Illusion
As some readers know, I’ve never cared much for the word “truth,” largely because, these days, it has come to hold a moral and political certitude that goes far beyond facts and their accuracy. In fact, for most people, whether something is “true” depends more on their beliefs than upon any accuracy.
Most Trump voters believe that the tax cuts have benefitted them, and to some degree they did, but nearly 70% of the tax cuts went to the top 20% of American earners, and that doesn’t count the $437 billion in stock buy-backs, which raised stock prices, benefitting the well-off. Last year average CEO compensation rose 18%, while average worker compensation grew just two tenths of one percent. Even with tax cuts, most Trump supporters are falling behind economically, but the vast majority don’t see it. And with the annual federal deficit headed toward one trillion dollars, the best those Trump supporters can hope for from Social Security and Medicare and Medicaid is that they won’t be cut drastically.
So far, Trump is averaging five false statements every day, and some are blatantly and obviously false, such as denying the thousands of hurricane deaths in Puerto Rico or claiming that the refugee “convoy” headed to the U.S. is filled with Middle Eastern terrorists or that he can nullify the 14th amendment to the Constitution with an executive order [which even Paul Ryan declares is legally and Constitutionally impossible]. Does any of this register with firm Trump supporters? Of course not.
Nor do they doubt his claims that Hillary or Nancy Pelosi ought be locked up, despite the fact that while there’s evidence of a different political agenda and some incompetence, those aren’t crimes under current U.S. law, unlike failure to pay taxes, which just might be a problem for Trump.
On the other side, there’s far less distortion, but it’s still there. Cries about the “disaster” that Trump is creating with his increase of tariffs on Chinese goods haven’t yet come to pass… and probably won’t, except for possibly farmers and parts of the auto industry, simply because the Chinese import far less from us than we do from them, and they’re already running out of U.S. imports to tariff more, especially if they don’t want to throttle their own computer industry. In a similar vein, Trump apparently pushed through a more favorable NAFTA trade agreement with Canada and Mexico, but I don’t see much about that.
But with everyone holding to their own truths… the facts have long since been discarded by those who want to believe otherwise… and we’re all likely to lose as a result.
The United States-Mexico-Canada Agreement, has now been endorsed by Mexico and Canada. The new trade agreement inhibits future trade deals with other countries, for Canada and Mexico, if the US does not agree to them. This is after Trump/US has unilaterally opted out of other international agreements/contracts. It is not just the US electorate that has been taken in by Trump.
Considering that the top 1% paid more income tax than the bottom 90%, any tax cut that isn’t entirely avoiding the top 1% will necessarily benefit them.
Whether you redistribute massively or you don’t, either way, the middle class will not be much better off, because the rich can afford lots of accountants and tax lawyers and investment options that the middle class can’t.
A considerably simplified tax code (like modified flat tax, which, despite the name, is still progressive) would take away that advantage. But it would also take away the bread and butter of lobbyists and politicians, so good luck with that.
A Pew Research Center analysis of IRS data from 2015, the most recent available, shows that taxpayers with incomes of $200,000 or more paid well over half (58.8%) of federal income taxes, though they accounted for only 4.5% of all returns filed (6.8% of all taxable returns). The top 1% paid only 37% of federal taxes.
A flat tax is a flat tax. If this modified it cannot be a Flat tax. The top 1% would love a flat tax.
If there was a single deduction for subsistence, and the flat tax covered all income, capital gains, and inheritance equally I think a lot more people would support it.
A Flat Tax would be fine if all had the same gross income. Otherwise a Flat Tax constitutes a burden to those with a low income. 50% FT on 1M a year I can live on: a 50% FT on 100 000 a year – not.
Is the concept of ‘subsistence” the same as Universal Basic Income? If so then that aims at doing away with poverty and does not address national income for support of society.