By Elena Delavega, Ph.D., Associate Professor of Social Work, The University of Memphis
“Taxes are what we pay for civilized society.” Supreme Court Justice Oliver Wendell Holmes, Jr. (1841–1935).
I happen to like civilization, and as a reasonable person and responsible adult, I understand that it is important to pay for the things we like. The thing about civilization is that it is not possible to limit it to a few. Either we live in a society in which the benefits of civilization accrue to all, or we don’t really live in a civilized society. Ultimately, if the social infrastructure is not there for all, it is not there at all. We cannot stay in our gated enclaves forever.
A historic overview of marginal tax rates since 1913 when the federal income tax was established through the 16th Amendment shows the importance of taxes and the relationship between tax rates and American accomplishments of the 20th century. When tax rates were lowered below 30%, we suffered the Great Depression. When marginal tax rates were highest, we laid the interstate freeway system and we went to the moon. If we want to make the sort of investments that allow us to accomplish great things, taxing those who most can afford it at higher rates will be necessary.
Tax cuts are a central element in trickle-down economics. The idea that keeping more money in the hands of the wealthy will somehow help everyone else has permeated the American culture over the past 40 years, and through neoliberal ideology, has started to affect the rest of the world as well. However, we now have 40 years of experience with trickle down, and clearly, it has not delivered on promises of growth and shared prosperity. While Wall Street is doing better than ever, Main Street is not. Wages have stagnated, and those at the lower end of the economic spectrum find it even harder to move up the economic ladder. Only 4% of those who are born in the bottom quintile will move to the top quintile. Those numbers belie the idea of America as a land of opportunity.
With the proposed tax cuts, we are promised that there will be economic growth at some undefined time in the future. However, there is absolutely no guarantee that the promised growth will materialize, and there is even less of the gains helping the middle class and poor. In fact, the enormous gains in the stock market in recent years while wages stagnate suggest precisely the opposite. Even if the economy grows, there is little chance that it will end up helping regular hard-working Americans. So right now, the tax plan hurts the people first with promises of some nebulous future gains. It is the same promise as “pie in the sky when you die” if you help the rich get richer now.
By and large, most households will not only not benefit from the tax cuts at all, but they will actually be worse off, significantly in some cases. The poorest households will actually see a 20% increase in their taxes, but all low-income households will see some increase. Students will see the value their stipends decrease because they will be taxed, and this will make it harder for some students to graduate, generating a vicious cycle of poverty and lowered opportunity.
States and communities would receive less money with which to pay for essential services such as police, education, and infrastructure; and because the middle class will lose incentives to contribute to such public goods as museums and other charities, many organizations will find great difficulty performing their valuable missions. At the same time, churches will be allowed to make political endorsements without paying any taxes. This essentially means that churches would be given representation without taxation. If that sounds backward, it is because it is backward. Tax—exempt entities should not meddle in politics.
What helps regular working people are wages and work supports. Things like high-quality free and subsidized education at all levels, even beyond K-12; high-quality subsidized public transportation; single-payer subsidized healthcare; guaranteed retirement income (Social Security); subsidized child care; paid sick and family leave; subsidized mortgage and small business loans; and common-good investments such as museums, libraries, and parks. These crucial investments in a strong and stable society need to be paid for with taxes. Cutting taxes cuts these important supports for working people.
It is not only that lower-income people and community will suffer. We will also be hurting Americans for generations to come. According to the Congressional Budget Office, the proposed tax plan will add 1.5 trillion (yes, with a t) to the debt over the next ten years.
The proposed tax cuts will only help those who need the least help, the very wealthy, while hurting everybody else. The working class and middle class will assume a greater and greater portion of the risk of creating a viable society, and many will fall by the wayside. The proposed tax cuts will insure that the body count will be great. Does it matter that so many will suffer so a few can have so much?