Ignore the Left’s collective scream about the new tax bill — it will confer a benefit on those who are economically in the lower half of American earners.
I’m not an economist, but I was blessed with a fair amount of common sense. Despite Democrat hysteria, it’s obvious that “the little people” will fare better under the proposed tax bill than they do now — and for a reason the Republicans ought to be speaking about a lot but, because they’re bozos, they are not.
Before getting to the most significant benefit for the less wealthy under the new tax bill, let’s look at life under the current tax laws. First, it’s helpful to define terms and the two terms I want to look at are “progressive” and “regressive”.
A Progressive tax is one that sees tax rates increases proportionately to an individual’s increase in taxable wealth. The first X number of dollars are subject to a low tax rate, the next X+1 dollars are subject to a higher tax rate, and so on for each increase in X dollars. In other words, as you make money, the government demands a bigger and bigger cut. It’s a wealth tax.
The opposite of a Progressive tax is a Regressive tax. That is a tax that places a disproportionate burden on those least able to bear it. Back in the late 14th century, England enacted a poll tax, requiring every person in the kingdom to pay a fixed amount just for being alive. That led to a Peasants’ Revolt, because the amount of the tax placed a vastly disproportionate burden on the poor, to whom a shilling was a fortune, than on the rich, to whom a shilling was negligible.
Currently, America ostensibly does not have a “Regressive” tax system. This is a lie. America’s tax code is highly regressive. This is because we have the highest corporate tax rate in the Western world. Yay, say Lefties. Let’s stick it to the corporations. That sentiment proves that Lefties are either stupid or uninformed.
The reality is that corporations don’t pay taxes. This is because the buck doesn’t stop with the corporation, meaning that corporate shareholders will take whatever steps are necessary to ensure that their return on investment is not affected by the tax. After all, once that money goes into their pockets, it will again be subject to a tax.
To avoid double taxation on corporate dollars, corporations do two things: they place a cap on employee wages and — here comes the regressive part — they pass the costs on to the consumers. The higher the tax imposed on corporations, the higher the cost of consumer goods and services.
A widget that would sell for $10 under a lower tax code is priced at $20 to offset taxes while still showing a profit. This kind of price mark-up is bad all around. It makes the product less desirable, which can hurt corporate sales and, potentially, drive the corporation out of business. It also places on poor people a disproportionate burden connected to buying the item. For Jeff Bezos, that extra $10 is as insignificant as a microscopic speck of dust falling on a $100 bill when he opens his wallet to pay. For the guy who mows my lawn, that $10 means that he cannot buy the product, even if he needs it, or that, if he must buy the product, his available money is substantially decreased.
In other words, high corporate taxes are regressive taxes that fall disproportionately on the poor. Lowering poor people’s taxes won’t help them, because they don’t pay any taxes. Lowering the corporate tax rate will help them substantially by increasing the purchasing power of each dollar they have.
Other changes in the tax code will also clarify the benefits that have been obtained on the backs of those in the lowest brackets who do pay taxes. For example, I’ve harped for years on the fact that the huge tax rebates on electric cars mean that rich people get paid to buy a car that is funded, in part, by poor people. Given that the top 20% of earners in America pay almost 90% of all taxes, one could say that it’s just a squirrelly way to refund them their own money. However, it’s still unfair as to the remaining 12% of tax payers who earn less than the rich people cashing in on their subsidized fancy cars.
Despite the whining rising from the Leftist class, it’s spectacular that graduate students will now pay taxes on their tuition credits. The reality is that the tuition credits they get from universities with multi-billion (or million) dollar endowments in exchange for part-time teaching are simply a tax scam. People outside those bastions of Blue propaganda, must pay money on earned income, even if it’s from payment in goods or services. There’s absolutely no reason middle America should have to pay more taxes so that a young Lefty can get a seven-year-long tax-free marination in Womyn’s Studies or Modern Queer Sexuality.
One of the best things to go under the new tax bill will be existing provisions allowing taxpayers to deduct their state income taxes from their federal taxes. What this has meant is that residents in such high tax states as California, Illinois, or New York have gotten an effective discount on their federal tax. To offset that discount, residents of those states that do not have high tax rates must pay disproportionately more.
If people in high tax states must bear the full burden of their taxes, maybe, just maybe, they’ll start demanding that their own governments stop funding endless useless, duplicative, Lefty bureaucracies within the state. It would be even better if Jeff Sessions would withhold all federal funds from sanctuary cities and states. No one should be rewarded for violating the law. If California can get away with thumbing its nose at the law, why should Joe Shmo go to jail for doing the same?