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Letter to the Editor: A History Lesson on Tax Cuts

By Ralph Martire

To stimulate the U.S. economy to “levels you haven’t seen in many years”— President Trump is proposing to cut federal income taxes, for most folks in general, but predominately for really affluent families and mega-corporations. His proposal is so skewed to the wealthy that over the next 10 years, more than half of his multi-trillion-dollar tax cut will go to the wealthiest one percent. Big business does well too, gaining an estimated $4.1 trillion tax cut during the next decade. And that’s not the only justification offered for the president’s full-on, supply-side, tax cut. According to Senate Majority Leader Mitch McConnell (R-KY), this tax cut will “create so much economic growth, it [will] begin to pay down the nation’s debt.” Which sounds too good to be true—because it is.

By now, every American who is objective or can-do math should know that the proposed supply-side tax cuts won’t work as promised. Why expect certain failure? First and foremost is something called “history.” Supply-side tax cuts have never worked as promised. Never. Second, focusing tax cuts on affluent individuals and corporations is not an effective way to stimulate private sector job growth—which pretty much explains why history has proven supply-side economic theory is bogus.

Start with history first. Top federal income tax rates for individuals were very high from the end of World War II through 1980—ranging from 90 to 72 percent. During that sequence, the U.S. economy grew at an average rate of 3.8 percent per year, in real, inflation-adjusted terms. Meanwhile income distribution slightly favored the top, with the wealthiest 10 percent realizing roughly 34 percent of all growth in income over that period, leaving 66 percent of income growth for the bottom 90 percent in earnings to share. Still, these were pretty good times, that included a strong middle class and real income growth for all earners.

Then came supply-side under President Reagan, who cut the top marginal income tax rate from north of 70 percent to 38.5 percent in 1981. President George W. Bush then cut the top rate down to 35 percent in 2001, while also cutting capital gains and dividend tax rates, which all primarily benefited the most affluent. That’s nearly four decades of supply-side. And the results ain’t pretty. In fact, average U.S. economic growth from the Reagan Administration through the end of George W. Bush’s second term was 2.8 percent annually after inflation. That’s one full percentage point lower than during the previous, high-tax era, and translates to about $150 billion less in annual economic activity. There was never any trickle-down effect. Meanwhile, income inequality became much worse, with more than all real growth in income going to the wealthiest 10 percent. Everyone else earned less after inflation in 2007 than in 1980. And because the promised economic growth never materialized, federal deficits exploded. 

Which should surprise no one, because tax cuts mostly benefiting businesses and affluent families can’t be expected to stimulate job growth. Here’s why: the economy is primarily, as in around 68 percent, consumer spending. Tax cuts for affluent folks won’t generate much new consumer spending—because individuals at the top of the ladder already have rapidly growing real incomes. In economic terms, they have a low “marginal propensity to consume,” that is, they are unlikely to spend any tax relief they get. No bump in consumer spending, no job growth. 

Business tax cuts also don’t incentivize job creation, because businesses only hire more workers when they actually need additional capacity to satisfy growing demand for whatever they sell. It makes no sense for a business to utilize tax relief to hire folks if there’s no work for them to do. Excess capacity is wasteful, and cuts profits. 

Which means there’s literally no reason to believe President Trump’s proposed tax cuts will stimulate the economy, and every reason to believe they’ll grow the national deficit.


Ralph Martire is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank.  

 

 

Exquisite Conglomerate Communications LLC Announces New EPRN West Coast Operations Division President

Naomi K. Bonman

Naomi K. Bonman

LOS ANGELES, CA- Taking the Exquisite Podcast Radio Network to the next level will require demonstrations and leadership from a professional journalist that has been hosting her podcast radio network show “Purposely Awakened Radio” on EPRN. Ms. Naomi K. Bonman is a talented journalist and entrepreneur with an eye for design, ear for entertainment, and she’s committed to bringing insightful news to communities. Bonman is a graduate of Clark Atlanta University and holds a Bachelor’s degree in Journalism. She also holds a Master’s degree in Public Administration from Keller Graduate School of Management of DeVry University.

As President of West Coast Operations for the Exquisite Podcast Radio Network, division of Exquisite Conglomerate Communications LLC, Naomi will be in charge of ramping up the network show lineup along the West Coast. Currently there are 3 network shows that have been activated in California, and with Ms. Bonman’s direction EPRN will be looking to increase that number to more than 25 over the course of the next six to eight months.

The Exquisite Podcast Radio Network is looking to not only launch new shows in California, but they are also looking to reach audiences in Nevada, Washington, Oregon, as well as cities in western Canada. Ms. Bonman’s EPRN show “Purposely Awakened Radio” will be the flagship show for the Exquisite Podcast Radio Network on the West Coast.

EPRN is a unique podcast radio network that trains, develops, markets, and distributes content for aspiring podcasters and radio personalities. Since the 1st quarter of 2017, the network has taken off and can now be heard in more than 250 cities worldwide. Listeners can log onto the Exquisite Podcast Radio Network at www.eprn.us and listen to more than 20 shows with over 300 episodes of original content.

San Bernardino Valley College Hosts Second Annual WinterFest

SAN BERNARDINO, CA- On Tuesday, December 5, the San Bernardino Valley College campus will once again transform into a holiday wonderland from 3 p.m. to 7 p.m. for the college’s second annual “WinterFest.”

This campus-wide celebration of the coming of the holiday season is estimated to have attracted over 2,000 students, staff, and community members to campus last year. Visitors were especially drawn to the holiday light show, the free musical performances and theater productions, and the delicious treats offered by food trucks and the college’s culinary arts and food services programs.

The evening will be filled with fun events for all ages, including holiday film screenings, live music, theater performances, Santa pictures, and story time for children among the many activities. For those looking to pick up the perfect gift, a holiday sale with a wide range of items will run throughout WinterFest. College staff will also be on hand to provide information about enrollment and the many degree and certificate programs available at San Bernardino Valley College.

This exciting event is free to attend and open to the community. Valley College is located at 701 S. Mount Vernon Avenue in San Bernardino.