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:
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:
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:
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:
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