I'm a Depression historian. The GOP tax bill is straight out of 1929.
"There are two ideas of government," William Jennings Bryan declared in his 1896 "Cross of Gold" speech. "There are those who believe that if you will only legislate to make the well-to-do prosperous their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous their prosperity will find its way up through every class which rests upon them."
That was more than three decades before the collapse of the economy in 1929. The crash followed a decade of Republican control of the federal government. During that time trickle-down policies, including massive tax cuts for the rich, produced the greatest concentration of income in the accounts of the richest 0.01 percent at any time between World War I and 2007 (when trickle-down economics, tax cuts for the hyper-rich, and deregulation again resulted in another economic collapse).
Yet the plain fact that the trickle-down approach has never worked leaves Republicans unfazed. The GOP has been singing from the Market-is-God hymnal for well over a century, telling us that deregulation, tax cuts for the rich, and the concentration of ever more wealth in the bloated accounts of the richest people will result in prosperity for the rest of us.
The party is now trying to pass a scam that throws a few crumbs to the middle class (temporarily - millions of middle-class Americans will soon see a tax hike if the bill is enacted) while heaping benefits on the super-rich, multiplying the national debt and endangering the American economy.
As a historian of the Great Depression, I can say: I've seen this show before.
In 1926, Calvin Coolidge's treasury secretary, Andrew Mellon, one of the world's richest men, pushed through a massive tax cut that would substantially contribute to the causes of the Great Depression. Republican Sen. George Norris of Nebraska said that Mellon himself would reap from the tax bill "a larger personal reduction (in taxes) than the aggregate of practically all the taxpayers in the state of Nebraska." The same is true now of Donald Trump, the Koch Brothers, Sheldon Adelson and other fabulously rich people.
During the 1920s, Republicans worshiped business. Coolidge remarked that, "The man who builds a factory builds a temple," and "the man who works there worships there."
That faith in the Market as God has been the Republican religion ever since. A few months after he became president in 1981, Ronald Reagan praised Coolidge for cutting "taxes four times" and said, "we had probably the greatest growth in prosperity that we've ever known." Reagan said nothing about what happened to "Coolidge Prosperity" a few months after he left office.
When Bill Clinton proposed a modest increase in the top marginal tax rate in his 1993 budget, every Republican voted against it. Trickle-down economists proclaimed that it would lead to economic disaster. But the tax increase on the wealthy was followed by one of the greatest periods of prosperity in American history and resulted in a budget surplus.
When the Republicans came back into power in 2001, the administration of George W. Bush pushed the opposite policies. Predictably, economic calamity happened again in 2008.
Just how disastrous would the proposed reincarnation of the failed Republican trickle-down policies be for the nation? A few ways:
- Repealing the estate tax — a tax not on the dead, but their heirs — would reverse an important aspect of the American Revolution by establishing an American hereditary aristocracy. If your estate is not above $11 million, your benefits from this portion of the GOP's tax cut will be a nice round number: zero.
- Eliminating deductions for state and local taxes; ending deductibility of state and local taxes would tax income that has already been taxed away from a taxpayer. It is double taxation.
- Repealing the Alternative Minimum Tax, which assures that wealthy people who hire accountants to find all the obscure ways to avoid taxes cannot escape taxation altogether. Repealing it would save Trump millions.
- Extending the "pass-through" provision to noncorporate businesses, including some 500 entities Trump owns. It would allow the owners of these businesses to pay taxes at 25 percent, instead of 39.9 percent. This provision would allow Wall Street fund managers, among other very wealthy people, to pay a lower tax rate than many middle-class Americans pay.
- Taxing waived tuition for college students, ending deductibility for student loan payments, and even disallowing teachers from deducting what they spend on school supplies for their students.
The analysis of the nonpartisan Congressional Budget Office found that people making less than $100,000 a year (approximately 80 percent of American households) will have their taxes increased while the millionaires and billionaires will make off like bandits.
As in the 1920s, Republicans are sprinting toward an economic cliff. The American people must call a halt before it's too late.
Robert S. McElvaine teaches at Millsaps College. He is the author of "The Great Depression: America, 1929-1941."
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