Tax historian Josh Mound speaks about the disastrous more-tax-cuts-for-the-plutocracy bill passed by Trump administration. Key points:
This Republican tax bill will produce the greatest upward redistribution of income since at least the 1920s.
The Republican tax bill is a class war. Corporations and the very rich win and average Americans lose.
But it didn't work in 1980s and it didn't work in the 2000s.
Republicans know it won't work now either, that's why they are already proposing to fix the budget problems caused by their tax cuts for the rich by cutting Social Security, Medicare and food stamps. That means average Americans will lose twice from the Republican tax bill. Once, when Republicans cut taxes for the rich and a second time when Republicans pay for those tax cuts by cutting vital programs for everyone else.
History tells us that the only thing the GOP tax cuts will produce is an increased in the US already enormous level of income inequality. In the 1920s, Republican presidents Warren Harding and Calvin Coolidge worked with Treasury Secretary Andrew Melon to slash taxes on the very rich. The top income tax rate on the very rich fell from 73% in 1921 to 25% in 1925, and income inequality soared.
In the 1980s, Ronald Reagan cut taxes on the rich again and income inequality soared again.
In the 2000s, George W. Bush cut taxes rates on the rich even more and income inequality went up even more.
From the 1930s until the 1980s, the rich paid much higher tax rates that they do today. In the 1960s, the very richest paid about 70% in taxes. Today, they pay about half that. Not coincidentally, the decades with the highest tax rates on the very rich were also the decades with the lowest levels of inequality and the greatest levels of shared prosperity.
High tax rates on the very rich, like CEOs, discourages them from focusing on maximizing their own income and instead, they incentivises investing in business and the wages of workers. In other words, high taxes on the rich, not low ones, actually produce benefits that trickle down to average Americans.