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Hammer-down Economics

In response to the their new tax bill “talking points” released by the Republican solons in Congress yesterday, permit me to quote Suzanne Dealy, the principal female character in my new novel, The Piketty Problem.

“I know all about the extraordinary concentration of income and wealth, not just the ten percent or the one percent but the one-tenth of one percent, and especially the concentration of capital, which is the financial hammer that the one percent and one-tenth of one percent will use to keep beating the rest of us down, because hammer-down works and trickle-down doesn’t…keeping us heading towards being a nation of serfs or going to debtors’ prison, because they never believe that the people are truly capable of revolution, because of all the crap they let them buy without any money—credit cards trumping, so to speak, the barricades.”

As usual, Suzanne is being a little emotional about the problems of ordinary people in the face of The Great Stagnation, when for 90 percent of Americans, real income, adjusted for inflation, hasn’t increased one iota in thirty-five years. But she’s nailed a basic truth—that the guiding principle of the powers that be is hammer-down economics. To pay for slashing corporate income taxes almost in half, eliminating the “death tax,” not increasing the tax rate of the highest-income workers, and preserving the “carried interest” loophole that allows many of the richest Wall Streeters to be taxed at substantially lower capital gains rates, here’s what the rest of us will get, if the “greatest middle-class tax reform ever” becomes law…

…if we live in states and neighborhoods where we pay substantial taxes to support vibrant public education and help the less fortunate among us, our state and local income and property tax deductions will be capped at a level suitable for Kansas

…if we, or our children, want to buy a house, and we live in the states or neighborhoods cited above, we’ll have to lower our expectations, or be willing to increase our monthly expenses because of a lower mortgage deduction

…if our children and grandchildren want to succeed in an economy where higher-level education is increasingly a must, they’ll no longer be able to deduct interest on their student loans

…if our alma mater wants to admit more scholarship students, it will have less money to do so, because of a new excise tax on university endowments

…if we care about global climate change and want to make a little contribution to reduced carbon emissions, we’ll no longer get any tax credit for buying an electric car

…if we’re sick and struggling to get affordable medical coverage, we’ll no longer be able to deduct any unreimbursed medical expenses

…if we have a rare disease, a cure will be slower in coming, if ever, because a tax credit for clinical testing by drug companies will be eliminated

…if customarily we donate to charities to both help those less fortunate and reduce our taxes, we may have to think twice because all of the other “reforms” will have driven us to use the standard deduction

…if we worry about the staggering national debt load we are leaving our children and grandchildren, we’ll be increasing it by about another $5,000 per capita, or almost 10%

…if we’re worried that we won’t have enough money to support ourselves in our “golden years,” we should be grateful that the trial balloon of slashing the deduction for retirement savings is not included in the final bill.

Will the benefits of “tax reform” to corporations and the wealthiest incentivize them to behave in ways that will stimulate the economy and bring more prosperity to the rest of us? Sadly, the evidence that trickle-down economics is “voodoo economics” is overwhelming, the latest proof coming from the Republican tax-cutting debacle in the aforementioned Kansas. Conversely, the evidence that hammer-down economics works is all around us. In the case of this tax-reform bill, I can only hope that our dysfunctional lawmakers will carry on their tradition of settling for inchoate, nonsensical blather rather than getting anything done.

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