Joseph Stiglitz, winner of a Nobel prize in economics, describes the foolishness of enacting further tax cuts for the wealthy in America, and the structural impediments that stand in the way of Trump's pursuit of this foolish goal.
For example, any tax policy that changes net tax revenues would require a 60-senator majority, meaning that Democrats would have to go along with the game. Alternatively, Trump could just hike taxes on one group of businesses or people in order to give another group a cut — but the losers in that trade would lobby the hell out of Congress to fight it.
And Paul Ryan's idea to institute protectionist policies by taxing net imports will send Walmart and its competition to the Hill with guns blazing, as they lose access to cheap labor markets overseas.
Good thing tax cuts for the rich are a terrible idea, otherwise we'd be totally screwed.
It won't, because it never has. When President Ronald Reagan tried it in the 1980s, he claimed that tax revenues would rise. Instead, growth slowed, tax revenues fell, and workers suffered. The big winners in relative terms were corporations and the rich, who benefited from dramatically reduced tax rates.
A politically astute president who understood deeply the economics and politics of corporate tax reform could conceivably muscle Congress toward a reform package that made sense. Trump is not that leader.
Trump has yet to advance a specific tax proposal. But, unlike his administration's approach to health-care legislation, lack of transparency will not help him. While many of the 32 million people projected to lose health insurance under the current proposal don't yet know what's coming, that is not true of the companies that will get the short end of the stick from Trump's tax reform.
Why Tax Cuts for the Rich Solve Nothing
[Joseph Stiglitz/Naked Capitalism]
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