How the GOP Tax Cut Will Also Shrink Your Paycheck
By Thom Hartmann A...
The morbidly rich billionaires who own the Republican Party know that when working/middle-class people get a tax cut, it means that over time working-class wages will go down - which is why they're more than happy to give us all a temporary tax cut.
This is what wealthy people know that most Americans don't: Tax cuts for truly wealthy people increase their income and wealth; tax cuts for working people actually decrease their income and wealth over time.
This is because of what economist David Ricardo referred to as the "market for labor," as well as the different ways working class versus rich people use their "extra money." Here's how it works:
If you're part of the top .1% - say you're earning a million dollars a year - and you get a tax cut, you'll keep more of the money you're earning. The main reason is because people in those income categories 1) generally have a high degree of control over their own income; and 2) they more often than not already are working under a massive tax cut - at least a lower tax rate - called the capital gains tax or carried interest.
But even setting aside Part II of that, truly super-high income earners, like the banksters on Wall Street or CEOs of large corporations, have a significant measure of control - if not total control - over their own income.
For working people, it's an entirely different story.
Read more here.
Comments
#2
There are many problems with the Republican tax bill. That said, we have had bad tax policy for a very long time. In economics, the term used to describe the negative effects of taxes on the production of goods and services or even commerce is "deadweight loss." Deadweight loss can be avoided, however, if we were to shift the tax based to what is called "rent" in economics. Rents are the exchange value associated with natural resources in the ground, locations in towns and cities, the broadcast spectrum and even take-off and landing slots at airports. These are assets not produced by individuals, assets that have a finite supply provided by nature. Urban rents are based almost entirely on locational advantage, and the locational advantages are either associated with geography (e.g., a beach or mountain lot in a thriving tourist area) or the quality of public goods and services provided to the location.
Location rents are today minimally captured by local communities via the property tax, but the property tax also heavily taxes houses and other buildings.
The federal individual income tax could capture rents by combining tax simplification with progressivity. We should exempt all individual incomes up to the national median. Eliminate all other exemptions and deductions, then impose an increasing rate of taxation on higher ranges of income. Most very high incomes are derived not from wages and salaries but from passive and speculative investments. Such gains are called and treated as "capital gains" even though actual capital goods never appreciate in value over time; they depreciate.
Edward J. Dodson, Director
School of Cooperative Individualism
#3
Just more fodder.
Ronald Reagan changed how they calculate inflationGeorge W.Bush counted McDonalds workers as manufacturing jobs and Donald Trump changed something elase that I can not recall.Anyone know what they recalculated?If so pkleae let us know.
#4
I agree that tax cuts for working people actually decreases their income, it's a measurable phenom. It's also well documented that workers aren't being rewarded for their productivity gains. That's the problem with unionless capitalism...workers remain vulnerable and oblivious to the evil that piggish employers do.
#5
america is at a juncture. tax cuts for the rich have just become law but unemployment is not yet whereit was in 1932 when america flipped from red to blue. the nation needs intelligent leadership, poised to take control of the helm when the republicans are voted out of office, and my vote is for thom hartmann. articles like this one perfectly demonstrate why he is needed in the cerebral void known as congress.
#6
Credit card debt is at all time highs and savings at all time lows, and the market has hit 1929 territory, actually beyond now....we've seen this movie before, yet still no alarm. Working people need to get out now. The Fascists are about to sucker us with economic blackmail again. I'm so ashamed of our country. ..hard to believe it's the 21st century.
#7
Thom is correct here!
To re-iterate!
The worker, the self employed, the gig worker et al have no control over the tax they MUST pay
However, big tech, giant franchise, billion and millionairs are able to CONTROL how much tax they pay
Is this democracy?
Fascism sounds more truthful
Try to remember that we, as nations together, fought against fascism in 2 world wars which caused untold human misery, desperation, sadness, agony, grief along with many lives lost
Do we want to permit such events to occur again?
#8
So, a little more money now. Less taxes withheld. Less tax money to work with at the end of the year for that big tax refund. I see disappointment on the horizon. Too bad it's so far out.
#9
Ah! The New Year and right out of the box, the leftie/socialists are busy trying to convince themselves giving the middle class more money in their paycheck is a decrease in wages. I heard Thom and many follow-up callers complain that the $1000 bonus paid by dozens of employers is actually not income. Really? What then is it?
BTW Thom, you are incorrect in your statement that no company has raised the hourly pay of its workers as a result the new tax laws. Let the duckduckgo machine be your friend.
Face the facts, when you finally run out of ways to convince Americans that more money in their paycheck is a bad thing, your biggest fear is this damn thing will be successful.
Good to see day one of the New Year Rick Steves is still fretting over other people’s money.
Note to #4 roadrunner, Nice to see you are pushing for credit card responsibility.
But your words,
"It's also well documented that workers aren't being rewarded for their productivity gains. That's the problem with unionless capitalism...workers remain vulnerable and oblivious to the evil that piggish employers do."
beg the question,
Let's say I work in a Union shop and I perform at a level that far exceeds all of my fellow union workers.
1. Does the shop steward call attention to my high level of achievement and encourage everyone else to do the same?
2. Do my fellow union workers eagerly embrace me and step up to my level of excellence all by themselves?
3. When noticed by my employer, does he/she/alphabet have the ability to raise my hourly pay over the others that perform at a much lower level of achievement?
Or,
4. Do I get the shit kicked out of me in the bathroom by my “buddies” for working too hard followed by a lecture from the steward telling me to "get with the program."
I mistakenly thought the new pot laws would have mellowed some but I suspect it will only benefit the snack industry.
#10
Happy New Year!!
#11
#10 Happy New Year to you. My experience working in a union job was just the opposite of what you describe. It was the slacker that got the shit kicked out of them. (Symbolically.) The union was actually harder on their own than the company was. Made for good relations, and better bargaining power.
#12
That's right, Willie; unions are a very good thing for workers! That has also been my experience in over 30 years of union representation. Diane obviously views the world through an opaque filter of gross ignorance about basic economics, outrageous Koched-up lies, a dearth of real-world experience, and a buttload of far-right misconceptions that has utterly destroyed her critical thinking faculty, if indeed it ever existed in the first place.
So how many of Trump's 1,950 lies in 347 days did she gobble up as gospel truth? And how many times did she sing his praises on this blog -- a sexual predator to whom taxpayers forked over 43 million $$$ in just one year so that he could waddle his lard ass around excessive, over-the-top golf getaways instead of doing the People's business, while hobnobbing in billionaire private clubs with the primary beneficiaries of a tax cut funded by the middle-class, the poor, the sick, and the impoverished worker-slaves of the future?
#13
I notice that Diane posts late all the time now.....you're not getting off easy,....I'll reply on the next blog everytime my foxmerized Kool aid drinker.
#14
Solution: Echoing the listener's response 1/4/18 program - Why don't we put a penny a trade on the Stock Market. We have to start a movement on that.
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This huge tax cut for the super wealthy ( that all ready have more money than they can spend) just gives them more money to bribe more politicians and pay for more advertisng to get them more tax cuts. They own the mainstream media, The courts, The Republican Party.
Now that they have increased the debt they have to cut healthcare and Social Security. But the spending has just begun. They want a bigger, stronger military. They want the Wall and Mexico will not pay for it. They talk about infrastructure but where is the money? At the same time we are stirring the pot in virtually every part of the world.
https://www.yahoo.com/finance/news/former-treasury-secretary-lew-says-12...