A few weeks ago, U.S. House Minority Whip Steve Scalise, who once described himself as “David Duke without the baggage,” got into a Twitter spat with freshman U.S. Rep. Alexandria Ocasio-Cortez, D-N.Y., over raising the marginal tax rate to 70 percent for annual income over $10 million. Scalise defended the ultra-rich with the straw man fallacy that Democrats were going to “take away 70 percent of your income,” even though Ocasio-Cortez had explicitly proposed raising the marginal tax rate only for those whose income exceeds $10 million.
Under Ocasio-Cortez’s proposal, only the millions made after $10 million would be taxed. So if you make $11 million annually, only the one million past $10 million would be taxed at 70 percent. Hence why it's called a "marginal" tax rate.
Many Democrats, such as U.S. Sen. Kamala Harris, D-Calif., have argued for middle class tax cuts that are just that: for the middle-class. Conversely, the Republican’s Tax Cuts and Jobs Act enacted in 2017 overwhelming benefited the wealthiest Americans with both the highest income tax dropping from 39.6 percent to 37 percent and the estate tax exemption being doubled to $11 million for singles and $22 million for couples. The wealthy then used the money saved from the tax decrease to invest in companies that used the TCJA’s corporate tax cut to invest a record amount of idle cash into stock buybacks and dividends instead of into capital expenditures or salary increases. In other words, the rich got richer.
This happened in spite of the insistent rhetoric from the White House that this would never happen. “The rich will not be gaining at all with this plan,” President Donald Trump said in the weeks prior to the TCJA’s formal introduction on the House floor. He and the GOP sold a Trojan horse tax cut for the rich to his undereducated, low- and middle-income base supporters.
The Twitter argument between Scalise and Ocasio-Cortez sparked an intense debate over tax policy — a debate that has now broadened to include not only marginal income taxes, but also the estate taxes for the ultra-rich. U.S. Sen. Bernie Sanders, whose ideas are often as ridiculous as they are impossible to pass into legislation, recently introduced a sensible estate tax bill that would marginally tax wealth over $1 billion at 77 percent, wealth from $50 million to $1 billion at 55 percent, wealth from $10 million to $50 million at 50 percent and wealth from $3.5 million to $10 million at 45 percent. Everyone else would be exempt.
As Republicans like Scalise reinforce the party’s deluded support for the elite and supply-side economic theory, derogatively dubbed “trickle down economics,” they seem increasingly out-of-touch with the financial duress Americans are facing, which happens to be in spite of the “ample” middle-class tax cuts of the TCJA and the lowest unemployment rate in 50 years. Real wages have been flat since the 1980s, and in distress Americans have amassed debt, which rose 6.7 percent in November of 2018 to surpass last month’s record of $3.96 trillion.
Republican voters beware: those who you elect aren’t doing a good job of representing your plight. Continuing governance by debunked economic theory will certainly not make America great again because lower income and estate taxes for the top 1 percent don’t fuel economic growth — they fuel debt spending for you and me.
Consumer spending drives GDP growth, but the top 1 percent of Americans can only purchase so many goods and services. The rest of the money is funneled into either savings or hedge funds, which starve the economy of growth. Meanwhile, the poorest don’t have money to spend and the middle-class use debt to afford anything from basic living expenses to healthcare emergencies — the latter of which sends far too many Americans into bankruptcy. Something’s wrong with this picture.
The average American is not better off after four decades of supply-side tax cuts for the wealthy. Flat wages and consumer debt is evidence enough that the vast amount of wealth created in this country has not trickled down to lower and middle-class Americans.
The preservation of the American Dream must be fought for. As the presidential campaigns for 2020 get underway, Americans need to be reminded of the opportunity they have to change course and right the ship of this American nightmare.
Patrick Gagen is a 21-year-old mass communication and finance senior from Suwanee, Georgia.