The Big Lie: Tax Cuts for a Better America

I'm sitting in my office, watching an NPR interview with Zohran Mamdani which is largely focused on the feasibility of his policy proposals, but this is coming on the back of a broader, much more pervasive narrative than any one policy issue or promise the New York assemblyman turned mayoral candidate is proposing. In the past days, I've fielded comments which largely boil down to "why should rich people have to give you their money?" I assume, if we translate this into layman's parlance, it means "why should rich people pay taxes?" This isn't anything new, and this line of logic isn't going anywhere, any time soon. I heard it frequently across the three years I spent working and living in Alabama. I heard it growing up in rural Minnesota. I still hear it in mixed spaces in Philadelphia, where I live now. But this narrative ignores critical details that, intentionally or unintentionally, tend to get ignored by the establishment wing of the Democratic Party, while also being relentlessly demonized by the right wing in general.

The pervasive idea is that we shouldn't tax rich people because they have earned their money. They've worked hard for those dollars. They've built whole business empires by the sweat of their brow, scratched and clawed their way into extreme wealth! Why ought any of us at the ground level have an opinion on what they do with that money, or how it should be allocated. It's just jealousy, say the supporters of this ideology, that you insist they part with some of their fortune; and if you pick yourself up by the bootstraps and put your nose to the grind, you might one day amass a fortune, too.

The problem with this line of logic seems obvious on its face, but it's deeper than a disconnect between cause and effect for these people. This ideology represents a personally held belief which is common and counterproductive that the only way to solve our societal problems is to cut government spending and allow the private sector to do what it wants. This idea was popularized most effectively by Ronald Reagan, but as I wrote in my article on Class Warfare, the concept is a lot older than that, going back at least to the mid-1800s and masquerading under different names.

The issue with this line of logic is that it willfully ignores a simple truth. Our national debt crisis, and the resultant socioeconomic issues that afflict our society writ large cannot be reasonably mended by cutting government spending alone. Neither can they effectively be managed by reducing taxation. In fact, we're overdue for an across the board tax increase, explicitly because we are spending substantially more money than we are taking in, and even before Trump's Big Beautiful Bill was signed into law, both parties had coalesced around so many cuts to programs, so many impossible to pay back loans and so many tax cuts that we were already settling on a pain point. Cut government spending where? Medicaid? Social Security? Health and Human Services? How do you continue to make cuts without systematically eliminating life saving support for your own constituents.

You see, both parties are guilty of pandering to their audiences in order to secure reelection, and reducing taxes, in particular on the middle class, is a popular but dangerously delusional idea for fixing the problems we face. Reducing taxes ultimately only serves to benefit the rich, because it frees up resources the middle and lower classes can use to spend on their goods, and they lose none of the wealth they've already amassed in the shuffle. It's no wonder corporations are so infatuated with the idea of tax cuts, but to offset these cuts, the government has no other choice than to eliminate safety net programs that benefit those lower classes, and this ultimately increases costs for the average person, meaning their money isn't going into the economy in productive ways. It's going into covering medical care costs they weren't having to field before, in paying rents and utility bills they have no more help with, and in covering exploding grocery costs each month to feed their families because they no longer qualify for food assistance. It's going into paying the extra cost of public transportation that has gone chronically underfunded for years, as transportation authorities seek to recoup their losses by charging more money to their consumers. They're not buying cars, as Ford, and Chevy and Dodge want them to, because they can't afford them. They're not earning a strong enough wage to live. They're barely surviving.

So, what's the solution? Our politicians, in particularly the career politicians who have been in government for decades and stopped caring whether their constituents could afford to live in this country many decades ago, tell us the solutions are these quippy, manageable things like "bringing down drug prices", and "reducing the price of housing", and "making childcare more affordable." Those programs all sound great on their face, but when they try to effect them, it never fails; someone always comes out and votes against the proposal at the eleventh hour, and this is precisely why we can't have nice things. The problem, they say, is almost always that implementing these programs is too expensive, but the truth is the way our taxation system works, the way our government allocates funds, is nothing short of robbery.

So let me propose a solution to the problem at hand. A simple approach, but a wildly unpopular one within the echelons of "those with power." I'm putting that in quotes for emphasis, explicitly because it is the billionaires and the politicians, the corporate executives, the court officials, etc. who don't want to implement it. For the average American, I think what I have to say will make plenty of sense.

There are two ways to cover the issue of our government spending more than it takes in. The first is the way I've mentioned above. You slash spending and taxes with the same butcher's knife. You reduce taxes on the voting public and thus free up money they can use to engage with...well, their basic expenses. Inflation has been killing any possibility of actually using that money on luxury goods like cars and a shiny new mortgage, after all. Reduce taxes, make cuts to safety net programs because there's nothing left to squeeze out of the government in order to recoup those losses. In this way, everyone loses but the fat cats at the top of the pyramid get to keep their vast riches.

Or, you increase taxes and raise the minimum wage. The reasons for the former probably seem pretty obvious. We pay a percentage of our incomes each year to the government in order to fund programs we serve to benefit from. Clean and safe streets, roads in good repair, affordable healthcare, unemployment assistance, retirement funds, food assistance, good public schools...all of these things come out of the money we pay into the system. In theory, our money comes back to us in the form of certain assurances that we won't have to deal with too much hardship in the long run, that we can have access to a good education for our children, etc. Raising the minimum wage has the added effect of raising the available taxes for the government to use. If everyone is making more money, then the government is making more in taxes on the whole. At around 20% of your income, the taxes you pay on $7.25 are $1.45 per hour worked. Up that number to $20 and the government's take is $4 per hour worked. The government doubles its revenue, making it easier to afford those programs you stand to benefit from, and this is without that first prong of raising your taxes. The reason they don't is because that money has to come from somewhere. Namely, out of the pocket of business owners. While small businesses may not be able to afford the added cost, large corporations absolutely can. The workaround to ensure small businesses can meet that demand is to increase the wage incrementally, perhaps over a span of three years, as was done the last time Minnesota raised its minimum wage. You needn't do any such thing for corporations.

Now, it may be bold of me to say so, but I personally feel that if I'm paying taxes, the highest earners in the country should damned well be paying at least the same percentage of their income as I do. That means plugging up loopholes and flat out raising the tax threshold for them to reflect that of the lowest earners, who have, over the last few decades, been the ones keeping the government's coffers filled. Going back to that 20% number, if Jeff Bezos and Elon Musk by themselves were forced to pay at that percentage rate, then Jeff Bezos would be paying out $221,760 per hour worked ($1,108,800 x .20 = $221,760), and Elon Musk would be paying $4,622,400 per hour worked (23,112.000 x .20 = 4,622,400), There are currently 801 billionaires in the U. S. with an estimated combined wealth of $6.22 trillion dollars, up $1 trillion from the previous year. For purpose of argument, we're going to assume $1 trillion is their combined annual gross income. So again, increase the minimum wage, fix the corporate tax rate at 20% reflecting what the bottom earners pay out of their pockets to keep the government funded, and we're going to do one last bit of math. The formula we're using? $36 trillion [U.S. national debt] / ($1 trillion [combined annual gross income of the 801 top earners in the country] x .20 [estimate of tax rate for lower income earners]) = 180 years. That is to say, 801 people by themselves could pay off the entire national debt in 180 years time all things held equal if they were taxed at the same rate you and I pay. But there are around 360 million people living in this country. Even at a flat tax rate, with a median income of around $70,000, we're looking at a scenario in which the national debt could potentially be paid off at current taxation levels and with all other things held equal, just assuming those high earners are also paying those taxes, in just under 7 years. (36 trillion / ((1 trillion x .20) + ((70,000 x 360 million people) x .20)) = ~6.8 years).

What that tells me, and perhaps I'm alone in this, is that increasing taxes on high earners to reflect what low earners pay by itself is already enough to wipe out the national debt in very little time without making major cuts to our entitlement programs. I realize this is an extreme example, but once again the solution is twofold. You don't have to increase the real taxation rate on billionaires to that threshold if you increase the minimum wage and leverage higher taxes against the entire population. This is a viable solution. The reason it never comes to fruition is because rampant lobbying by the billionaire class won't allow these common sense measures to take hold. So we can't have nice things. Instead, we can have the most expensive healthcare system in the developed world, inadequate safety nets for when we do find ourselves in financial trouble, and about 538 people up on their shiny hill telling us they're going to do something about it while on the campaign trail, to then behave as if their hands are tied as soon as their seats are secured.

It's one big, fat lie, and a persistent one, that we can't climb out of our looming debt crisis without kneecapping the economy and screwing over our elders through a kaleidoscopic array of spending cuts. The most fiscally responsible thing to do under the current circumstances would be to raise taxes, not just on the rich but across the board, and then increase the minimum wage dramatically to compensate for that tax increase. Setting the debt issue aside, it's really only fair.

I ask you, if you've made it this far, two simple questions.

Do you think it's fair that rich people don't have to pay taxes when you do?

And, why should you, a gainfully employed but painfully average person, have to struggle just to scrape by?

Truly, we don't have to live like this. I'm just tired of hearing the question I started this post with. "Why should rich people have to give you their money?" Well, Jan, they shouldn't. I just think if I have to give my money to the house, they should have to, too. After all, they use the same roads I do.