Politics is a game: it has winners and losers, and at the end of the day politics is a contest of interest where concepts such as morality and integrity take second place. My colleague — the assistant editor for the Opinion section — wrote an opinion piece that I thought I would add on to, because I feel like there is a perspective missing in her piece.
First, let’s address this false narrative that the tax bill redistributes wealth: as it stands, the oligarchy that is our current administration opened the door for the rich to get richer. Yes it may be true that corporations are raising their wages, although a recent poll says differently; however that is half the truth and a half truth is still a lie.
While these companies did raise their wages and benefits, they used the savings from the GOP tax plan to fund layoffs. Walmart, on the very same day it announced raising wages, also closed 63 Sam’s Club locations, laying off thousands of workers.
Kimberly-Clark, the owners of Kleenex, also cut 5,500 jobs — approximately 13 percent of its workforce — and is using the savings from taxes for restructuring.
Layoffs are one thing, but there are even more corporate shenanigans; the fact that, despite rhetoric by business leaders saying they are investing in their workers, they’re actually investing in their shareholders. Companies gave the proceeds from the corporate tax cut to shareholders through share buybacks. These benefits from the tax plan favor shareholders, not workers as promised by Trump and business leaders.
The rich getting richer is not a shocking concept; it’s capitalism as usual, or as others like to romantically phrase it, “business” as usual. Class conflict is a fundamental part of capitalism. While we do live in a mixed economy, for all intents and purposes, this is a capitalist nation. Whether you like that or not does not matter — the facts are still the facts.
Wealth inequality, as American history has shown, is intrinsically linked with capitalism. The rich use their economic power to grasp political power, swaying the interest of public servants to serve the private interest.
Second, it’s impossible to evaluate Trump’s policies since it’s only been one year. It is very unbecoming, especially when dealing with economics, to look at short-term consequences of policy. In the words of lauded economist Henry Hazlitt, “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”
There is also the fact that Trump has been passed down a good economy, which should be nothing new for the Donald, as he should be used to being handed and enjoying the fruits of other’s labor. All jokes aside there is short-term good news with this tax plan but that is what it is — short-term — and economics is a long-term game.
Third, I agree that the corporate tax rate should go down; however, lower corporate taxes should be paired with raised taxes for the rich, along with estate taxes which would make the corporate tax cut revenue neutral, reduce waste and move some of the tax burden from the middle class to the rich.
That is, however, a Band-Aid for a very wicked problem. American economics is still in need of reforms. Reforms such as a land-value tax, and other reforms to the economy need to happen so the economy can finally serve the people. As Noah Smith explains in an article in Bloomberg, “A land-value tax, or LVT, is like a property tax, but with a deduction for the value of buildings and other improvements. The tax would reduce land prices and increase the incentive to build more, which in turn will help drive down rents, making a city more affordable.”
The economy is booming, there is no denying that, but there are also some troubling trends that are not getting enough attention. Allison Schrager explains in her article at Quartz, “The economy may be booming now, but there are plenty of reasons to be skeptical it will last. Productivity numbers don’t justify the headline growth figures. Many people think the stock market is overvalued and due for a correction. It has been eight and a half years since the last recession, and the natural oscillation of the business cycle suggests we may be due for another one soon. Low saving rates are often seen before a recession.”
Also, as I was writing this, the Dow Jones dropped 666 points amidst wage growth picking up. The Department of Labor has reported 200,000 jobs were added. Great news, but it all sets the stage for the Federal Reserve to continue raising inflation rates, making credit cards, mortgages and car loans more expensive. In fact, the next hike is predicted to happen in March.
This tax plan is a political victory for the Trump administration and the GOP. Whether this is a win America can celebrate, only time will tell. Yes, thank Trump for the small handout he adds to your check and please save it, but do not let desperation blind you. Wealth is still in the hands of the elite, not the people. While this tax bill has many winners, it also has many losers, so let’s hold on celebrating until all Americans win.
