This analysis makes clear that the vast majority of Americans will be better off with the likely tax reforms that will emerge from a Biden administration than they would be by sticking with Mr. Trump’s ill-conceived tax bill. You might well ask: Why didn’t Mr. Trump just give everyone a tax cut? The Republicans — who suddenly lost their grasp on their self-described fiscal conservatism when they came into office in 2017 — saw a chance to give their rich friends and corporations a big thank you for campaign contributions. But the tax cuts they promised these donors produced projections that the resulting budget deficits were well beyond $1 trillion.
To reduce that stomach-churning amount, they had to phase-in higher taxes on ordinary Americans. While this kind of budget gimmickry has been used before under President George W. Bush’s administration, Mr. Trump carried it to a new level.
The Republicans have one more feeble defense: their old friend trickle-down economics. The tax cut to the corporations would, they promised, trickle-down to citizens at the bottom of the income ladder. We’ve now seen how that hasn’t happened. In fact the money gushed up to those at the very top in the form of stockholder dividends, chief executive bonuses and a record level of stock buybacks (nearly $1 trillion in 2018 alone.)
Some economic models predicted the Trump tax law would lead to significantly higher wages because of more investment and higher growth. But projections showed that when the 2017 bill’s temporary tax cuts changed to tax increases, growth would likely slow significantly and wage increases would be anemic. And those calculations were made before the pandemic hit.
Mark Zandi and Bernard Yaros of Moody’s Analytics have done the most credible and thorough analysis comparing the Biden and Trump plans, including Mr. Trump’s stealth increases and other promised tax and expenditure changes. Mr. Biden’s plan wins by an enormous margin: 7.4 million more jobs and a much quicker recovery from this recession. That means higher wages and incomes for most Americans.
Elections matter. Elections gave Republicans the power to enact these tax shenanigans. Neither conscience nor principles stopped them.
The problem now is that unless the Democrats win a majority in the House and the Senate and clinch the presidency, these Republican tax increases, already legislated, are likely to go into effect. The increases, unfairly aimed at the vast majority of Americans who are disproportionately suffering in the pandemic, will cause even more hardship.
They must be stopped.
Joseph E. Stiglitz (@JosephEStiglitz), a university professor at Columbia University, is a 2001 recipient of the Nobel in economic science, chief economist of the Roosevelt Institute and the author of “People, Power, and Profits: Progressive Capitalism for an Age of Discontent.”
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