Josh Hoxie: The U.S. economy is stacked against young people
Via OtherWords.org
BOSTON
The mechanics of wealth building are fairly simple. Save more than you spend, invest those savings to generate more money. Lather, rinse, repeat.
There’s one big problem for younger people trying to do this: The rules are rigged against them. Here are five facts showing the unfair burden millennials carry.
1. Wages are stagnant.
Today’s rising generation earns 20 percent less, on an inflation-adjusted basis, than their parents did at their age, despite being better educated and more productive. In fact, Millennials are on track to become the first generation in modern American history to make less money than their parents did.
The federal minimum wage, $7.25 an hour, is lower than the cost of living in every city in the country — and hasn’t gone up in 10 years. It’s hard to save when the money coming in doesn’t come close to covering the basics.
2. Student debt is out of control.
The cost of attaining a college degree leaps annually, with aggregate student debt now topping $1.5 trillion. Savings that could’ve gone to a down payment on a house, starting a business, or saving for retirement are eaten up by monthly student debt obligations.
This is largely the result of state governments disinvesting in public colleges and universities, shifting the costs onto families. Since student debt is the only form of debt not discharged in bankruptcy, you either pay it off or die trying.
3. Everything else costs more too.
Millennial wealth problems aren’t due to avocado toast, lattes, or any other consumer spending habits. Millennials spend less than previous generations on food, alcohol, shelter, utilities, transportation and entertainment.
A few of these things are cheaper today than a few decades ago. But these are far outpaced by the skyrocketing cost of buying a house, rent, health care, college, child care, cars and insurance — and wages aren’t keeping up at all.
4. Buying a house is out of reach.
Starter home prices have increased by nearly 60 percent over the last five years, while inventory has dropped by over 20 percent, according to Zillow. Buying a house has become a punchline for many millennials who don’t have the privilege of family members who can help with a down payment.
Homeownership has historically been the greatest generator of middle class wealth, but millennials are buying houses at a lower rate than previous generations. The top reason they cite isn’t lack of interest or lust for living in a converted van. It’s inability to save for a down payment.
5. Traditional money advice is laughably out of touch.
The standard personal finance advice doled out these days is to save at least three months of expenses, save for retirement, and spend less than a third of your income on housing.
But when you don’t have enough to cover rent, student loans, and insurance, not to mention groceries, where’s all this saving going to come from? What’s the advice for the 40 million of us earning under $15 an hour, whose jobs don’t cover the cost of living?
The good news? Last year, for the first time ever, young voters outpaced Boomers at the ballot box, with millennial turnout nearly doubling from 2014. This year, they overcame baby boomers as the biggest voting bloc.
Bold solutions to un-rig the economy are on the table, like Medicare for All, college for all, student debt forgiveness, first time home buyer programs, and a Green New Deal. Millennials are in a position to benefit the most from these programs — and to contribute the most to ensuring they become law.
Josh Hoxie is a Boston-based associate fellow at the Institute for Policy Studies.
Josh Hoxie: How the age of billionaires ends
Avarice (2012), by Jesus Solana
From OtherWords.org
Every month or so there’s a stunning new headline statistic about just how stark our economic divide has become.
Understanding that this divide exists is a good start. Appreciating that a deeply unfair and unequal economy is problematic is even better. Actually doing something about it — that’s the best.
As 2020 presidential hopefuls start trying to prove their progressive bona fides, serious policies to take on economic inequality are at the forefront. These ideas don’t stand much of a shot of becoming law in the Trump era, of course. But if the balance of power shifts, so too does the potential for these paradigm-shifting new programs.
Let’s take a closer look at the problems they’ll have to address.
A new billionaire is minted every two days, according to a recent Oxfam study. As a result, the top 0.1 percent owns a greater share of the nation’s wealth than the bottom 90 percent combined.
The richest dynastic families in the United States have seen their wealth expand at a dizzying pace. The three wealthiest families — the Waltons, the Kochs and the Mars — increased their wealth by nearly 6,000 percent since 1983.
In other words, the rich in the United States have accumulated a metric crap ton of money. And what are they doing with this immense wealth and power?
Dan Gilbert (#71 on the Forbes 400) just bought the world’s first mega-yacht, with an IMAX theater on it, for $100 million. Hedge-fund billionaire Kenneth Griffin (#45) just broke the record for the highest price ever paid for a house — $238 million — for an apartment in Manhattan’s “Billionaires’ Row.”
Add in a few private jets, a couple of absurd presidential runs, and those Trump tax cuts, and you get a pretty accurate depiction of the priorities of billionaire spending.
Meanwhile, the rest of the country isn’t shopping for yachts and jets. Most families are forced to work longer hours for lower wages.
Despite massive increases in GDP and productivity, the median family saw their wealth go down over the past three decades, not up. The proportion of families with zero or negative wealth (meaning they owe more than they own) jumped from 1 in 6 to 1 in 5.
Relatedly, our roads and bridges our crumbling and our public schools are desperately underfunded.
It doesn’t take an economist to tell you this isn’t sustainable. So what about those policies to do something about it?
Sen. Bernie Sanders has proposed a robust addition to the federal estate tax. Billionaires under his plan would pay a top rate of 77 percent on whatever they bequeath to their heirs over $1 billion. Far from a new idea, Sanders is merely proposing reinstating the top rate that was in place from 1941 to 1976.
Sen. Elizabeth Warren, not to be outdone, has proposed a direct tax on concentrated wealth targeting modern day wealth hoarders. Her plan would impose a progressive annual tax starting at 2 percent on assets over $50 million and rising to 3 percent on assets over $1 billion.
And at least one member of Congress who isn’t running for president, Rep. Alexandria Ocasio-Cortez, has gotten in on the action. She’s proposed raising the top marginal tax rate to 70 percent (only on income over $10 million, contrary to what you might hear on Fox News).
Three bold ideas to stem our skyrocketing economic inequality, three ways to tax the ultra-rich, three policies unlikely to become law given the current administration.
Yet these ideas are more than mere platitudes. Poll after poll shows big majorities of Americans ready to see the rich pay their fair share — and worried about the economic and political power consolidating in the upper echelons.
When the political moment arrives, we won’t have to wonder what’s coming.
Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies.
Josh Hoxie: No one should be poor in America
Via OtherWords.org
The federal minimum wage hasn’t gone up in nearly 10 years. Yet with a stroke of his pen, Jeff Bezos of Amazon raised the wages of hundreds of thousands of the company’s lowest paid workers.
In an age of extreme income inequality, this is leap in the right direction. It’s also a stark reminder of how far we as a nation are from caring for our most vulnerable people.
Consider the story of Vanessa Solivan, an East Trenton mother of three struggling in and out of homelessness. Vanessa is “working homeless,” an increasingly common phenomenon as the gap between wages and cost of living grows wider.
In the richest country in the world, millions of families shouldn’t have to struggle every day to get by while wealth concentrates into fewer and fewer hands at the top.
Workers’ fates shouldn’t be at the whims of billionaire CEOs — that’s why the minimum wage was introduced in the first place. Yet today’s federal minimum wage of $7.25 is less than the cost of living of every major city in the country.
Vanessa shared her story with Matthew Desmond in a recent New York Times feature story titled, “Americans Want to Believe Jobs Are the Solution to Poverty. They’re Not.” Desmond, author of the Pulitzer Prize winning book Evicted, and a Princeton sociologist, shows that working is no longer an antidote to poverty.
Vanessa holds down a job as a home health care aid for 20-30 hours a week while juggling her parenting and childcare duties, and also managing her own health. For her efforts, Vanessa earns about $1,200 in a good month. Last year she made just $10,446.81.
Desmond relays Vanessa’s constant struggle to feed, clothe, and house her family, navigating the byzantine patchwork of public programs designed to help her, but not too much.
Despite tax credits that increased her income by $5,000, she remained well below the poverty line. And when did find herself with a little more money than usual, like when her daughter qualified for Social Security Disability Insurance, other cuts were often made — in that case her Supplemental Nutrition Assistance Program funds were slashed.
Vanessa’s story is far from unique. The average income for the bottom half of wage earners is just $16,000, according to economist Thomas Piketty.
Despite major increases in productivity, the buying power of average hourly wages hasn’t gone up in four decades. Meanwhile, rents continue ticking upward, and more Americans join the ranks of the “working homeless.”
Given such poverty, one might logically assume the United States is poor. Quite the contrary. If we split the nation’s combined wealth equally among households, the country has enough money for every family to have nearly $800,000.
So where’s all that money?
Consider Bezos, the founder of Amazon. He’s the wealthiest person in the world, with a net worth around $165 billion. For context, that means he has enough money to spend $20 every second, every day — for the next 261 years.
One way Bezos got so rich is that until recently, he paid his workers the lowest rate he could legally get away with. He left many to depend on public assistance programs for food, housing, and other essentials. So too did the Waltons of Wal-Mart, who also built their riches on the backs of low-wage workers.
If companies pay workers less than it costs those workers to live, it’s their billionaire owners who benefit the most from government subsidies. Why on earth would we subsidize billionaires in an age of extreme inequality?
The time is past due to end poverty. Dramatically raising the minimum wage is just one step. Also needed are a host of other interventions to help all of us live dignified lives.
As Desmond points out, it’s no longer enough to say any “Nobody who works should be poor.” Nobody in America should be poor, period.
Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies.
Josh Hoxie: The industrial-strength tax scam continues apace but citizens are waking up to it
Carnival barker at the Vermont State Fair in 1941.
Via OtherWords.org
It’s no fun being scammed.
I distinctly remember looking for my first big city apartment and finding an ad that looked perfect. Beautiful picture, cheap rent, great location. It sounded too good to be true and, sadly, it was.
Just send a check in the mail, and don’t forget to send over your Social Security number, they said. We’ll mail you a key.
Fortunately, I didn’t take the bait. I’ve also managed to dodge the countless “Nigerian royalty” looking to make me rich via e-mail, and the endless robo-calls about lowering my utility bills.
Not everyone is so lucky. If there’s one constant of scams, it’s that given enough opportunities, they’ll get somebody to give up the goods.
Today, that somebody is the United States.
As their W-2s arrive in the mail, U.S. workers are starting to see the minimal impact of the new tax changes passed by Congress late last year. While the budget-busting package was a boon for millionaires, it means next to nothing for ordinary people.
Still, there’s a massive public relations campaign being waged right now by Republican donors backing the Trump tax cuts. Make the rich richer, they say, and we’ll all benefit.
And while you’re at it, they’ve got some swampland in Florida for sale.
The Koch Brothers alone will spend $20 million on ads selling the tax bill. This is a drop in the bucket compared to the $1.4 billion they stand to gain every year in tax breaks. It’s also a tiny fraction of their overall campaign spending on the 2018 midterms elections, which is projected to reach $400 million.
The Kochs have their work cut out for them. A new poll from Politico shows most workers report seeing no increase in their take home pay after the new tax laws took effect.
This is important.
The whole premise behind adding $1.5 trillion to the debt, giving massive handouts to the ultra-wealthy, and giving a tax break to the nation’s most profitable corporations was that working folks would also get a bit of cash.
Turns out, they’re not seeing that money. But the PR push is having an impact.
While majority of the American people never supported the bill, most polls have shown an uptick in support since December. The most recent poll — from GBA Strategies — found that 44 percent of voters oppose the law, compared to just 40 percent who support it.
The GBA study had another interesting finding: Voters are incredibly susceptible to messaging on this issue. That’s why the GOP donor class is spending unprecedented sums on ads.
The tax law is also getting a boost from corporations’ public relations departments, who are making splashy announcements about bonuses for their workers.
Many of those bonuses, it turns out, are being doled out to garner political support for the tax bill, not for the benefit of the business or as a thank you to workers. They’re also supposed to distract the public from the massive onslaught of layoffs that came in the wake of the tax cuts — from Walmart to Coca-Cola to Comcast and many more.
The Trump tax cuts are a scam, benefiting the wealthy at the expense of everyone else. If you happened to find yourself caught up in the scam, don’t blame yourself. The sales pitch was mighty impressive.
But also, don’t get scammed twice.
Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies.
Josh Hoxie: Past time for a sociopathic generation to leave the political scene
Baby Boomers watching TV in the late '50s.
Via OtherWords.org
Historians won’t look fondly on 2017.
The news cycle was dominated by sexual assault, widespread anxiety, the unedited musings of a mentally unstable president, rising economic inequality, and an opioid epidemic. And in case you forgot, the planet is still on track to boil.
In short, things were bad.
This year, it’s time to transition from despair to action.
We saw the beginnings of this transition as hundreds of political newcomers came out of the woodwork to run for state and local office last year. And thousands more started the process to run in 2018 and beyond.
Democracy isn’t a spectator sport, and it’s good to see a younger generation more politically engaged than their parents. Unfortunately, the younger folks will have many messes to clean up left by their elders.
Bruce Cannon Gibney goes so far as to depict Baby Boomers, those born between 1946 and 1964, as sociopaths in his book, A Generation of Sociopaths: How The Baby Boomers Betrayed America.
Not all of them, of course.
Gibney limits his analysis to mostly white, native-born, powerful Baby Boomers — the ones in position to make decisions on behalf of everyone else. At each critical juncture, Gibney argues, these Boomers looked after themselves at the expense of everyone else.
Thanks. For. Nothing.
We saw this play out most recently in the tax cut package just passed by Congress. Regardless of the bluster coming from the White House, this bill was nothing more than a wealth grab by the already ultra-wealthy. Over 80 percent of the tax cuts go to the top 1 percent.
Poll after poll showed the majority of Americans understood this. Yet congressional Republicans chose to work on behalf of their donors instead of their constituents.
We see this playing out again as they threaten the Medicare and Social Security of future beneficiaries. That’s millennials they’re targeting, not Baby Boomers. That’s not a coincidence.
In case you couldn’t tell by the abundance of wrinkles and white hair on C-Span, the people making the decisions in Washington are not young. The average age in the Senate is 61, eight years older than 1981. More than a quarter are over 70. The last four presidents have all been Baby Boomers. They oversaw the greatest expansion in economic inequality in modern history.
Young people are inheriting an economy in which it’s all together common to start adulthood tens of thousands of dollars in debt, thanks to a higher education system rooted in exploitation. Meanwhile wages are generally stagnant, and the federal minimum wage falls below the cost of living of every major city in the country.
Young people are rightfully outraged at this inequality and are ready to take bold action to address it. Or, as legendary Republican pollster Frank Luntz put it, millennials are “terrifyingly liberal.”
Naturally, age isn’t everything. Paul Ryan, born after the Baby Boomers, wants to completely destroy the social-safety net. Bernie Sanders, technically too old to be considered a Boomer, might be the biggest advocate for young people in Washington.
Bernie also has massive support among youths. More Millennials cast a ballot for him in the 2016 presidential primary than both Clinton and Trump combined. Unfortunately, Sanders is the exception, not the rule, among his cohort in Washington.
Young people are ready, willing, and able to take a leadership role in healing our deeply broken society and environment. It’s time for the “olds” in Washington — either of age or of ideology — to make way for the rising generation.
Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies.
Josh Hoxie: Tax cuts for the rich only help the rich
Via OtherWords.org
Soon you’re going to hear a lot about taxes.
You’ll see images of families flashing across your TV screen while a soothing narrator assures you that the tax plan being debated in Washington really is good for you. The newspapers you read, the social media apps you scroll through, the websites you frequent, and the snippets of radio you catch will all feature ads talking about it.
That’s what a marketing blitz looks like, and there’s one coming for the Trump tax plan. It will be well-produced, well-orchestrated, and completely devoid of facts.
President Trump started his sales pitch for his tax-cutting agenda in Missouri in August, where the assembled audience was treated to a fact-free sermon on the virtues of his plan. Gone were any specifics of what’s in it, or who gets what.
Looking at Trump’s tax plan from the campaign, as well as what the Republican majority in the House of Representatives have proposed, we can see the basic outlines of what’s coming.
Corporations will see their nominal tax rates drop from 35 percent to 20 or even 15 percent. Individual rates will go down — possibly for everyone, but definitely and most strikingly for the very wealthy. Overall tax revenue will tank, potentially by as much as $10 trillion over 10 years.
What does all this look like in the real world?
On the corporate side, we know for sure that lower corporate taxes do not create jobs.
In the ads to come, maybe you’ll see a guy in a hard hat claim that corporate tax cuts will put him back to work. He’s lying.
A recent Institute for Policy Studies report looks at 92 profitable companies that already pay an effective 20 percent tax rate, thanks to loopholes. On average they’ve cut jobs, even as the rest of the private sector saw a 6 percent jobs increase.
On the individual side, half of the proposed cuts will go to millionaires, according to the Institute on Taxation and Economic Policy. Less than 5 percent go to families with household incomes below $45,000.
This is probably the biggest wealth grab in American history by the wealthy, for the wealthy. Selling it as a middle-class tax cut, regardless of the images in the ads you see, is just old-fashioned lying.
And finally there’s the revenue. Trump claims his tax cuts will pay for themselves with increased economic growth. That theory’s been debunked many times over and yet remains stubbornly in play.
So what happens when trillions of dollars of tax revenue get slashed?
Congress currently bans itself from passing bills that increase the deficit in one of their better acronyms — Pay As You Go (PAYGO). That means the tax cuts Trump proposes will have to come out of public programs.
No matter how much hype you hear, you’d better believe those cuts are gonna hurt. From food assistance like the Women, Infant, and Children (WIC) program to Head Start, and from clean water protections to unemployment insurance — it’s all on the line.
It’s hard to keep an eye on the truth when savvy marketing campaigns are hell-bent on deflecting your attention away from it. Don’t buy it. The Trump tax-cut plan is disastrous for working families and for anyone who cares about a fair and just economy.
Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies.
Josh Hoxie: The mathematical and moral mess of the Trump budget
Via OtherWords.org
Federal budgets, while boring and wonky, can have a serious impact on our lives. They dictate our collective priorities for how we choose to spend our public resources in support of the common good.
That is, good budgets do that. But you’d be hard-pressed to call the most recent budget from the Trump administration good.
To be clear, it’s hard to even refer to this budget as serious. Sure, it’s written in official-looking thick blue books, and it outlines spending figures using precise numbers. But that’s about where the formality ends.
Tucked into the formal budget is a set of assumptions that present a fantastical approach to simple arithmetic.
Take the estate tax for just one example, also known as the inheritance tax. The estate tax is a pretty straightforward idea: a levy on the inter-generational transfer of immense wealth that only the very wealthy pay. It’s been on the books for about 100 years.
If left untouched, it will generate an estimated $174 billion over the next 10 years, precisely $0 of which will come from anyone who could reasonably be considered middle class.
The Trump budget proposes to eliminate the federal estate tax. Trump’s own family stands to benefit enormously from this gift to the wealthiest households.
The budget also proposes to dramatically cut federal student loan programs by about $143 billion. Notably, the Public Student Loan Forgiveness program is eliminated, a program that hundreds of thousands of graduates signed up for expecting their student loans to be eliminated after 10 years of service in the public sector.
Trading a massive tax cut for the ultra-rich in exchange for massive cuts to programs that help young people go to college is bad enough. But then there’s the math.
The Trump budget, despite proposing to eliminate the estate tax, still counts the estate tax revenue as part of its revenue projection. In fact, the administration expects estate tax revenue to top $300 billion, nearly double the normal projection. This lie is critical to their absurd claim that their budget will balance.
News flash: If you cut taxes, it means you don’t get the revenue from said taxes.
The estate tax double-count is just one of the many mystical components of their mathematical menagerie.
A poll of top-tier economists by the University of Chicago (which has among the most conservative econ departments in the country) found practically unanimous agreement that there’s no way the budget will balance. The administration’s assumptions are just too far-fetched — no matter how many times you spin in a circle, squint, and pray that the numbers on the page change.
Unfortunately, while the administration’s struggle with basic arithmetic can be amusing, the potential impact of this budget is far from humorous.
It will mean millions of families pushed off their health coverage, millions of mothers blocked from receiving nutritional assistance for their babies, and millions more families in our northern states forced to choose between heating their house and affording their groceries.
Long-time Rep. Barbara Lee of California put it well: “I have never seen a budget so devoid of compassion and empathy for families struggling to make ends meet,” she observed.
There appears to be no law barring Congress from enacting a budget with fundamentally bogus assumptions, and many of Trump’s supporters on Capitol Hill are happy to play ball. One hopes their constituents will be much less willing to go along with the morally bankrupt mathematical mess this administration calls a budget.
Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies.
Josh Hoxie: Repealing the ACA another windfall for the rich
Via OtherWords.org
Great magicians are masters of diversion. They attract our attention with one hand while using the other to trick us into thinking a supernatural act is taking place.
But even the best street performers could learn a lesson from the folks in Congress who are trying to repeal the Affordable Care Act, also known as Obamacare.
When we talk about repealing Obamacare, we almost never talk about the windfall payday it would bring to multi-millionaires and billionaires. In fact, this massive tax cut is the proverbial card hiding in the sleeve of lawmakers pushing repeal.
A new study from the Center on Budget and Policy Priorities shows the 400 richest Americans, a group whose average annual income tops $300 million each, would get a combined annual tax cut of $2.8 billion if the Affordable Care Act is repealed.
In other words, people who already have more money than they could spend in a dozen lifetimes would get a massive pile of cash.
Meanwhile, those who make less than $200,000 per year — also known as “the rest of us” — would see no benefit. That’s because the two taxes that funded the expansion in healthcare coverage included as part of Obamacare don’t extend to these moderate-income households.
And many of us would do worse.
In fact, about 7 million low-income people would actually see their taxes go up if the law’s repealed, since they’d lose insurance premium tax credits that were enacted as part of the bill.
So, to be perfectly clear on this point, repealing Obamacare equals payday for the wealthiest households and higher taxes for the poorest households — millions of whom would also lose their health coverage.
Remember the story of Robin Hood? It’s just like that, but backwards.
Poll after poll shows Americans have no idea how concentrated wealth inequality is today — it’s far worse than most suspect.
A report I co-authored last year looked at the 400 wealthiest individuals in the country. This group together owns more wealth than the entire GDP of India, a country with over a billion people.
The report also showed this great concentration of wealth splits largely, although not exclusively, along racial lines. The 100 wealthiest Americans, none of whom are black, today own more wealth than the entire African-American population combined.
Unsurprisingly, most of us would like to live in a much more egalitarian society. If we can’t swing it, economist and author Thomas Piketty warns, we’re heading towards a hereditary aristocracy of wealth and power, where the children of today’s billionaires will dominate our economy and our government.
As we look back at the Obama legacy, we see a number of efforts aimed at beginning to bridge that massive wealth divide. From expanding opportunities for low-income children and families to asking the ultra-wealthy to pay their fair share, progress has been made on this front in the past eight years.
The Affordable Care Act was one of these efforts, and it touched directly on issues of life and death.
Don’t be fooled by the smoke and mirrors of today’s illusionists: Repealing it will directly counteract this progress. It will further concentrate wealth into fewer hands and strip low-income families of what little resources they have.
Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies.
Josh Hoxie: GOP platform includes more tax breaks for the rich
Via OtherWords.org
It was easy to get caught up in the circus that was the Republican National Convention. Rousing speeches (plagiarized and original) and raucous floor votes make for great television and funny Internet memes.
Unfortunately, as we’ve come to expect from events organized by Donald Trump, the convention was decidedly light on substance. For an inkling of what a Trump administration might actually do, we have to look elsewhere.
Let’s start with Mike Pence, the newcomer to the ticket and a relative unknown to most voters.
The self-described Tea Partier served six terms in the House of Representatives and one term as governor of Indiana. He’s best known for his staunchly conservative stances on social issues, notably on reproductive health and LGBT rights.
But Pence also stands way outside the mainstream on economic issues, with a clear track record of coddling the wealthy. He’s an ardent supporter of trickle-down economics, the debunked idea that giving more money to the rich will somehow help the rest of us.
As a congressman in 2010, for instance, Pence made the bizarre claim that raising income taxes would decrease federal revenue. Unsurprisingly, Politifact — the Pulitzer Prize-winning fact-checking group — rated that false.
More recently, Pence put his ideas into action in Indiana, enacting a major tax cut that helped give his state one of the most regressive tax structures in the country.
Indeed, on taxes, Pence is largely in line with Trump, who’s shown significant support for massive tax cuts for wealthy people like himself.
During the primary, Trump released a tax plan that would cost a whopping $24 trillion over the next two decades, the nonpartisan Tax Policy Center calculates — most of it in cuts for high earners. Now in the general election, reports indicate he may be promoting a more modest package of cuts, but an unmistakably regressive one nonetheless.
Under the soaring subtitle “Restoring the American Dream,” page one of this year’s Republican Party platform dives straight into ideas around tax reform. The tax code, it claims, “has the greatest impact on our economy’s performance.”
“Getting our tax system right,” it goes on, “will be the most important factor in driving the entire economy back to prosperity.” What Trump and Pence consider “getting it right” is massive tax cuts for the ultra wealthy.
How do the American people feel about this?
I’m sure many see cutting their tax bill as a great thing — the adult equivalent of an elementary school class president promising to end homework or double the length of recess. But most see past this.
Cutting taxes means major cuts to programs that millions of families depend on. It means slashing budgets or perhaps completely eliminating child nutrition programs, senior prescription health plans, and early-childhood education programs. And the list goes on.
Perhaps that’s why for the third year in a row, an annual Gallup poll shows that most Americans agree with the statement, “Our government should redistribute wealth by heavy taxes on the rich.”
Further, a recent poll from Pew Research showed 78 percent are either “very bothered” or “somewhat bothered” by the “feeling that some wealthy people don’t pay their fair share.”
Trump’s candidacy has been anything but predictable, and there’s a long way to go before Election Day in November. But with Pence on the ticket and the GOP platform in place, it’s clear tax cuts for the wealthy are part of the plan.
Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies.
Josh Hoxie: Forget Panama: Delaware will suffice for hiding money from tax authorities
The first thing you notice on the cab ride from the airport to downtown Panama City is the skyscrapers. They’re architecturally beautiful, but jumbled together as if there was no plan or consideration for how they might look next to one another.
What you might not notice is that they’re nearly all empty.
Panama, a small Central American country with just 4 million people, has dominated the news in recent weeks.
For that you can thank the Panama Papers — a massive leak of private documents from the Panamanian law firm Mossack Fonseca, which serves well-heeled companies and individuals all over the world. The leaks exposed a vast global system of shady offshore tax shelters and the global elites that benefit from them.
A few months before Panama landed on the front pages of nearly every newspaper in the world, I visited the country and got a look at those empty buildings firsthand.
Unlike many travelers, I wasn’t in Panama City to launder my ill-gotten cash or to hide my profits from meddling tax collectors (not least because I have neither). I was in search of beautiful beaches and perfect waves, both of which the country is well known for.
It was striking, however, that the most attractive resource the country advertises to the global elite is a hands-off business and tax climate seemingly designed for exploitation.
According to my cab driver (and Reuters), drug cartels are responsible for much of the building boom in Panama City.
For cash-laden criminals unable to drop their funds in a checking account, investing in a Panamanian commercial building makes a lot of sense. They carry excess cash into the country by hand and convert it into an appreciating asset that can remain empty for years. Never mind that many Panamanians live in rickety shacks and dire poverty.
Many who take advantage of Panama’s lax business climate never have to step foot in the country. Named in the Panama Papers were 12 current or former world leaders, 128 other public officials and politicians, and hundreds of other elites — from well known celebrities to enigmatic businessmen — from over 200 countries.
They each in some way used Mossack Fonseca to create hard-to-trace shell companies to hide their assets. Those companies helped their owners evade taxes, public scrutiny, legal action, or all three.
Iceland’s prime minister, Sigmundur Gunnlaugsson, was forced to step down in the face of massive public protests after he was named in the leak. British Prime Minister David Cameron, Russian leader Vladimir Putin, and famous soccer player Lionel Messi have faced significant public scrutiny as well.
Notably, few American names have been listed to date. That could change in revelations to come, but it also might not. States like Delaware offer very similar hands-off approaches to regulation that individuals and companies can exploit to hide their business dealings without going overseas.
One single address in Wilmington, for example — 1209 North Orange Street — is listed as the headquarters for 285,000 separate businesses exploiting Delaware’s lax laws. Indeed, both Hillary Clinton and Donald Trump have firms registered in that two-story office building.
In fact, the Tax Justice Network ranks the United States third in the world for financial secrecy, behind only Switzerland and Hong Kong. Panama is No.13.
As the saying goes, behind every great fortune is a great crime. And the Panama Papers provide the tools to begin prosecuting some of the more egregious crimes of tax evasion and corporate irresponsibility. Many countries have already begun to take action on this front, the United States included.
Perhaps more importantly, the leak provides an impetus for much-needed public pressure to fix our rules so they work for everyone — not just the tax-dodging elites and their shady shell corporations.
Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies (IPS-dc.org). Distributed by OtherWords.org.