To most anti-Trump people in the US, this administration has been a train wreck from the beginning. There have been legislative and leadership failures, inane and threatening tweets and less than presidential behavior from a man that none of us wanted to be president in the first place. The casual observer might think that there is no way he gets reelected at this pace. But, I warn you: Trump, should he escape Mueller’s wrath, is on the verge of putting together enough political capital to be a dangerous incumbent in 2020. First, there was the Democrats’ deal on raising the debt ceiling and funding the government. Next, there might be a deal on the Dream Act. And finally, with a procedural maneuver, Trump could pass through Congress his promised tax reform plan. Democratic Congressional leaders should think long and hard about stopping Trump’s momentum. And, not just because it is the politically savvy thing to do, but also because it is the right thing to do for the country.
Trump’s tax reform plan is a combination of personal and corporate tax reductions that we need look no further than Kansas to understand how it would work. Kansas is now ground zero for Republican tax plans as we had enough time there to see how the true economic effect of massive tax reductions manifest. In 2011 Sam Brownback was elected governor of Kansas after promising an array of tax cuts much like what Trump is proposing. Kansas went on to make large cuts in both the personal and corporate income taxes. Brownback wanted Kansas to serve as a petri dish, growing his economy through an experiment with tax reform that Republicans had long dreamed of. And, Kansas did serve as an experiment. The results, however, were less than impressive.
Like the Trump tax cuts, Kansas Republicans promised that government revenue would grow as the economy grew, now unburdened by high tax rates. Revenue did not grow and, in fact, shrunk considerably. The economy did not grow. Corporations did not raise wages or create new jobs. Kansas’ economy collapsed. Four years after the tax cuts were enacted Kansas faced a $350M budget gap. That same year the Fed of Philadelphia ranked Kansas 50th in the nation for employment growth, manufacturing hours worked, unemployment rate and wage growth. Predictably, the biggest winners from Brownback’s tax cuts were the wealthy, while legislators were forced to find cuts in programs like education to balance Kansas’ budget.
Tax cuts like Trump is proposing do not grow the economy. They will drive a deficit increase, force cuts to entitlements and ultimately slow our economy. Trump’s proposed tax cuts raise two concepts in my mind: 1) the wealthy should pay their fair share and 2) corporations when given more revenue can not be trusted to share profits with workers. This is exactly what we saw in Kansas. The wealthy got tax cuts and became more wealthy. And, corporations took in more profit and passed it on to executives and shareholders. Corporations in most cases must be forced to raise wages, create better jobs and share their gains with workers. This is partly why I support raising the minimum wage to a level above the poverty line. Otherwise, corporations will continue to take advantage of workers.
Democrats should hold firm against Trump’s tax reform plan and explain to the public how devastating the plan is for our economy. We were given a gift of sorts in the way Kansas’ experiment imploded. Now, use it to illustrate to the public exactly how Trump’s plan would work. After five years of Brownback’s tax experiment, Kansas’ legislature passed legislation with a veto override to undo his tax cuts. The ads against Trump’s tax cut wrote themselves when Kansas’ legislature was forced to reverse Brownback’s experiment. Now, we just need to inform the public.
Let us remember that in 1990 George H.W. Bush raised taxes and GDP grew steadily for the next five years. Then, in 1993 Bill Clinton raised the top marginal tax rate and GDP grew again for the next five years. The longest period of economic expansion in American history was preceded by a set of tax increases, not cuts. GDP grew more than two times faster in the 1950s when the highest marginal tax rate was above 90% than it does now when the highest rate is 35%. Tax cuts are more closely associated with income inequality than they are with economic growth and the American public must be informed. Trump’s tax proposal is disastrous policy and Democrats would be smart to get out and start talking about why.