aside Republican Senators, This Is What A Tax Cut For The Middle Class Looks Like

Editorial cartoon on tax cuts

We all want economic growth. So let’s ask: what’s the bottleneck on growth?

Ask one of today’s republicans, and you can expect to hear a host of false-fact fantasies, such as that we would grow faster if only American companies had competitive tax rates (spoiler: they do), or if they had more money for hiring (spoiler: corporate cash is at record levels), or if they had more money for investing (spoiler: ditto), or perhaps if the rich had more money that could magically trickle down to the masses (spoiler: LOL).

But here’s reality: America’s economic growth turns on how much our companies produce, not how much wealth they accumulate.Editorial cartoon on college graduation and jobs

Which raises the question: why do companies produce?

Is it the size of their corporate treasure chests? If you hand Apple a few hundred million extra dollars, will that make it want to produce more iPads? Of course not.

When cash-flush companies get extra funds, they don’t produce more. They park the money overseas to earn tax-sheltered interest. Or they pay dividends, mostly to institutional investors (who then park that money overseas to earn tax-sheltered interest). Or they buyback their stock, which mostly enriches those same institutional investors, who then get the pleasure of watching their paper gains grow. None of this drives the production of extra goods.Editorial cartoon on President Donald Trump and tax cuts

Rather, to state the obvious, companies only produce what they expect consumers will buy. Apple makes the number of iPads that it expects to sell, and no more. And consumers, in turn, can only be expected to buy what they have money to purchase.

So we can give money to the very rich (who are already buying whatever they want), and we can watch them take that money and invest it (often in those tax-sheltered overseas accounts). Or we can give money to average Americans and watch them actually buy stuff, which in turn would cause our economy to produce more.Editorial cartoon on U.S. economy and taxes and Donald Trump

For most Americans, the single biggest thing keeping them from buying the amount of stuff that they’d like to buy is a lack of money. The very rich don’t have this problem–they already buy the stuff they want. And the very successful companies don’t have this problem either–they are already using record-levels of cash for mergers, stock buybacks, international investments, and the like.

So our economic bottleneck isn’t a lack of funds in the hands of the rich or on the part of American companies. It’s the lack of funds in the hands of consumers. Which means the easiest, most surefire way to grow the economy is to get funds to those who will spend them.Editorial cartoon on Panama Papers and economy

On October 3, 2017, Derek Thompson of the Atlantic penned what a middle class tax cut looks like, “This Is What a Real Middle-Class Tax Cut Would Look Like.”


“If one takes the White House’s word for it, tax reform is all about a single goal—helping the middle class, not the rich.”

“Gary Cohn, the White House’s chief economic adviser, says the president’s tax cut is “purely aimed at middle-class families.” Steve Mnuchin, the Treasury secretary, promised Congress that tax reformwouldn’t benefit the rich. House Speaker Paul Ryan says the plan’s “entire purpose is to lower middle-class taxes.”

“But the promises don’t fit the plan. As my colleague Annie Lowrey has written, the still-unfinished GOP policy would deliver half of its benefits to the top 1 percent, according to an analysis by the nonpartisan Tax Policy Center (TPC). Meanwhile, America’s poorest families would get a minuscule tax benefit—less than 1 percent growth in after-tax income. One in five Americans making the median household income would actually see a tax hike, particularly if they live in high-tax states and have lots of kids. (When Senator Rand Paul discovered this fact, he sharply criticized the plan on Twitter.)”

From the Atlantic, here’s an example (THE ENTIRE ARTICLE) of what that- might look like: This Is What a Real Middle-Class Tax Cut Would Look Like – The Atlantic


    • Dear Suzanne,

      This is not what we are getting and those republican flim-flam artists know this. Thanks a million times over for all of your support and for this reblog.

      Hugs, Gronda


  1. Not dissimilar towards the end of WWII and Goring using armed forces resources to transport his looted treasures out of the way of advancing allies; of course eventually he found there was nowhere to run.

    Liked by 1 person

    • Dear Roger,

      This is sound analogy. The republican US Congress representatives are looting the US Treasury to enrich their greedy donors at the expense of the average Joe worker.

      Hugs, Gronda

      Liked by 1 person

      • We went through it in the 1980s although it was more a case of ‘Everyone get greedy! Grab what you can and devil take the hindmost’ so you could say even a dishonest and pushy person of humble origins had the opportunity to make it ‘big’. Surprising how many became quite wealthy under the guise of opposing Thatcherism.

        Liked by 1 person

  2. Gronda, setting aside the debt issue that is being worsened by the Tax Bill, Senator Hatch is incorrect in his reason for fuming at a Democrat colleague. Of course, this Tax Bill is for the wealthy and corporations, as per every nonpartisan financial organization concerned about the debt and taxes. He can feign offense all he likes, but I am offended that we are not only not addressing the debt, we will be making it worse. I am offended that this thing is being jammed through without detail hearings and due diligence.

    I am all for reforming the tax code, but I firmly believe it needs to increase revenue to help pay for the debt. We are beyond those who say they want a balanced budget – we need more revenue than expenses. To do otherwise is malfeasance. Our $20.5 trillion debt is expected to increase by $10 trillion per the CBO without the Tax Bill. Adding the Tax Bill consequence would put us at $32 trillion in 2027.

    Now, the economy has been percolating pretty well with over 100 consecutive of economic growth. Could it be better – yes? Could it be much better – no? If we truly want to stimulate the economy and create jobs I have a suggestion. The thing that creates jobs is quite simple – customers. So, increase the minimum wage to be on par with a living wage of just over $10. That will create more spending by folks who need to spend it creating more customers.

    I would also suggest the better use of public/ private investing to improve infrastructure. This is the first thing Trump should have done. This would have started him off on a path of bipartisan legislation that would have fueled the economy. This has to be done judiciously with our debt concerns, which is why we need to get the right mix of public and private money.

    Thanks, Keith


    • Dear Keith,

      I couldn’t agree more. We need to pay down that debt while investing in infrastructure so that we can compete on the world stage. This means some people pay more. Keeping the AMT RULE, the estate taxes in tact; getting rid of carried interest loophole for hedge-fund investors, narrowing the usage of the pass-through tax loophole, would have allowed for increased revenues. Targeting any tax cuts to help start-up small businesses which do the expanding, investing and hiring would be a compromise that could work.

      But what cannot work is doing a tax cut to help wealthy greedy donors which would explode the deficit / which then would lead to cutting entitlement programs.

      The republican tax deficit hawks are in hiding. They need the donor money as well. They are addicted to it.

      Hugs, Gronda


  3. This post is really well done, Gronda. It’s true – Capitalism runs amuck with a little help from the friends in the GOP and Oval Office. Happy Thanksgiving, dear!

    Liked by 1 person

    • Dear John Fioravanti,

      This republican tax cut plan is Capitalism on steroids. It is not well planned and NOT truly designed to spur economic growth, AND IT IS IRRESPONSIBLE AS IT ADDS SIGNIFICANTLY TO THE DEFICIT. It is a wet kiss to the republican donor class.

      I hope you had a great Thanksgiving Day as well.

      Hugs, Gronda


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