It looks like progressives are going to be massively disappointed in President Donald Trump again.
Treasury Secretary Steven Mnuchin revealed that the Trump administration will not raise taxes on the wealthiest Americans. Speaking in an interview with ABC News’s “This Week,” Mnuchin dismissed a recent report that Steve Bannon, White House Chief Strategist, is calling for a 40% tax break for the nation’s richest as a way to pay for the administration’s plan to cut taxes for middle-class Americans.
Mnuchin told the network:
No, it’s not [on the table]. I have never heard Steve mention that. It’s another example of a false leak that’s been reported. It’s not on the table.
According to the Axios report, Bannon wants the top income tax bracket to “have a 4 in front of it.”
Is this another case of fake news?
Currently, the Trump tax proposal, which is slated to be released in September with an end-of-year Congressional vote, sees three tax brackets: 35%, 25% and 10% with nearly every deduction eliminated. The primary objectives for tax reform include middle-class income tax cuts, simplifying the tax code and reforming business taxes.
As expected, the response to Mnuchin’s denial was fierce. Here are just some of the Twitter reactions:
— Frederick C. Trump (@TrumpFrederick) July 10, 2017
Are tax cuts for the wealthy really worth selling your souls & loyalty to Russia, Trump supporters?
— Aღanda (@GrnEyedMandy) July 8, 2017
Mitch McConnell is bought and paid for by the Koch Bros. His only goal is to give tax cuts to the wealthy. Impeaching Trump would intefere
— Serenity (@serenityatsea) July 10, 2017
This is further evidence of fact-free platitudes.
For years, we have heard the constant banalities of making the rich pay their fair share and taxing the rich at obscene rates – Senator Bernie Sanders (I-VT), for instance, wants a top tax rate of 90%. Should we pay attention to any of this? Not really since it’s in their nature to be mythopoetic.
First, the rich already pay their fair share. In fact, they pay more than their fair share. The top 1% pay half of federal income taxes and the top 20% pay 84% of federal income taxes. To highlight just how much the affluent pay in taxes, the top four-hundred taxpayers paid as much as the bottom 50%.
As the Congressional Budget Office (CBO) pointed out last summer, the federal tax code is “the most progressive it has been since at least the mid-1990s.”
Shouldn’t this please the progressive left? Apparently not because their definition of fair keeps moving like a slide rule – in the age of envy, nothing is ever fair. But, like economist Ludwig von Mises accurately pointed out — nothing makes a desultory demagogue more popular among his peers than the repeated plea of soaking the rich.
Rather than being resentful, Mark Perry of the American Enterprise Institute (AEI) thinks everyone should send a “Thank You” note to the top four-hundred taxpayers:
When you have only 400 Americans paying almost as much in federal income taxes as the entire bottom 50% of Americans filing income tax returns, and only 1,400 taxpayers paying more income taxes than the bottom half of taxpayers, I think we can dismiss any notion of the rich not paying their “fair share” of taxes. In fact, maybe the IRS should publish the names and addresses of the Top 400 taxpayers (or provide a forwarding service to protect anonymity), so that we can all send them “Thank You” letters to express our gratitude for shouldering such a disproportionately large share of our collective tax burden.
Second, raising the wealthy’s tax rates won’t do much except compel them to go elsewhere. Remember, the rich have the means to relocate their homes or their businesses to low-tax sanctuaries. Sooner or later politicians learn that you won’t have the rich to kick around anymore.
Everyone has witnessed tax-the-rich policies at a state level. Maryland adopted a so-called millionaire’s tax that would impose a rate of 6.25% on incomes of more than $1 million per year. The result was a mass exodus of wealth as 31,000 residents departed the state between 2007 and 2010, which also meant $1.7 billion in lost tax revenues. Thankfully the tax expired in 2010, but the damage had been done.
The same situation is unfolding in Connecticut, where the wealthy have had enough.
Today, several states with gaping budget holes are considering similar soak-the-rich tax policies, including Massachusetts, where critics are already warning about the dangers of implementing their own fatuous millionaire’s tax.
The chief aim of any society is to lower taxes as much as possible, even for the rich. For some reason, though, many on the left see a tax as a virtue and not what it really is: institutional legalized theft.
In the end, it comes down to basic economic illiteracy. This was presented to the entire world by New York Times columnist Maureen Dowd, who opined over the weekend:
Bannon [one of Trump’s closest advisers] is right to challenge his colleagues’ claim that the rich pour money from tax cuts back into the economy… If you give a tax cut to people who make a million a year or more, they save the money. But if you give a tax cut to working – class and poor people, they spend the money. So, the multiplier effect for the economy is much higher with tax cuts for people who don’t have a lot of money.
What is she talking about? This Keynesian multiplier effect has been debunked long ago. First, savings and investment are what drive any economy, not simple consumption. Second, the rich don’t take their tax cut and bury it in the ground or count it all day long a la Ebenezer Scrooge: they spend, save/invest or allocate it to a T-bill or checking account. Third, they park their money in charitable organizations or non-profit entities that do more for the impoverished than government.
Tax cuts are great and they should be given to everyone, regardless of income. What should really be argued for are spending cuts, taking a chainsaw to the multi-trillion-dollar federal budget.
And if you’re speaking of fairness, then how come these very same people aren’t whimpering about the fact that 60% of U.S. households receive more in government transfers than they pay in federal taxes?
Taxes have metastasized into WMDs – it’s time to disarm these instruments of economic devastation.