Saturday, November 18, 2017

A Clever Democratic Response to the Republican Claim That Corporate Tax Cuts Will Increase Middle Class Wages

I am in the Murray Rothbard camp on tax cuts. I am for them always and everywhere.

That said, there is no denying that Trump tax reform leans heavily toward breaks for the rich and corporations. It is claimed that the corporate cuts will benefit the middle class becasue corporations will use the cuts to bid up wages.

However, as I have previously pointed out,
without a cut in government spending, only the method of draining from the private sector will change. Cutting taxes, without cutting government spending, will result in more government borrowing which will crowd out corporate borrowing, putting the economy back in the same place it currently is before tax "reform." There will be no trickle down benefit to the middle class.

Enter  Sen. Ron Wyden (D-Oregon) who has offered up a clever amendment to the tax bill.

The current Senate bill would cut the corporate tax rate from 35 percent to 20 percent.

The amendment would undo the tax cuts on corporations if wages don’t grow.

Bang! The Republicans are livid.

The Washington Post reports:
Sen. Sherrod Brown (D-Ohio) engaged in extended sparring with committee chairman Orrin G. Hatch (R-Utah) over who would benefit from the Senate bill, with Brown insisting that it fundamentally represents a tax cut for the rich and not the middle class. This drew an enraged response from Hatch, even though Brown’s argument was 100 percent correct...
The amendment called the GOP’s bluff for messaging purposes.
And it worked. Indeed, Brown’s questioning of this Republican argument is exactly what ticked Hatch off. Brown claimed that “this tax cut really is not for the middle class, it’s for the rich,” and that the GOP argument about tax cuts on corporations leading to higher wages is just a “good selling point.
Brown went on to make some shaky lefty points to justify his point,  but the foundational point that middle-class wages under this tax reform will not rise is correct.

The tax reform bill is what you would expect from a street hustler like Trump, a lot of positive noise,  an advantage for him and his crony buddies, and for everyone else just new angles of taxation.

In the end, it is a scam that won't mean much if it is passed (except for Trump and his cronies).



  1. But won't wages rise anyway,thanks to Fed pumping?

  2. The only tax a lot of people pay are payroll taxes so it makes it difficult to really offer a "tax cut" to the bottom half of wage earners. And do we really want to get into reducing the payroll tax? It is the only reasonably flat tax out there. Repeal it or markedly reduce it and you will reduce our society to 51% living off of the other 49%. And it is close enough to that already.