In 2008, President Obama was hammered for going off-script about working class voters, saying, “They get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”
In 2016, Hillary Clinton was hammered for calling half of Trump’s supporters as “deplorable”.
In either instance, reactions and outrage from the Right were swift and both Obama and Clinton were forced on the defensive.
But a double standard is surfacing with a top Senate Republican, Sen. Chuck Grassley (R-Iowa), saying:
I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.
In making that statement, Senator Grassley of Iowa, a state with a good number of working-class Americans, mind you, unveils an elitist confirmation of economic inequality in America and who the Senate Republicans care more about.
It’s a flawed and twisted worldview for a United States Senator that the only people deserving of massive tax breaks are those who need it the least: The super-rich.
One such tax break is the repeal of the estate tax, which currently levies a 40% tax after a person’s death for estates valued at $5.5 million for an individual or $11 million for a couple.
None of this benefits working or middle-class taxpayers. In fact, the only households large enough to reach the current thresholds ($5.5 million for individuals; $11 million for couples) only 0.2% of the population. In other words, 99.8% of American households, you and me, see no benefit.
The changes to the estate tax along with other tax changes in both the Senate and House versions are based on the disproven theory that tax cuts create jobs. Instead, they lead to concentration of wealth at the highest echelons of high society.
The estate tax has become a major platform piece for Republicans, who deride it as a “death tax”. But despite their trumping of free-market values, one of their heroes, Adam Smith, an 18th-century Scottish economist, considered the inheriting of estates, then known as “primogeniture”, as “manifestly absurd”:
A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural… There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death.
Indeed, many of our Founding Fathers agreed with Smith. Which is not entirely unsurprising given that the Revolutionary War was fought against the British Empire, its King, dukes, barons, and lords of every sort. The Boston Tea Party? That was a protest against the Tea Act of 1773, which was pushed through by the British Parliament to bail out the failing East India Company.
So it is quite natural and befitting that the Founding Fathers would thumb their noses at anything that resembled aristocracy. A 1784 North Carolina law stated that preserving large, familial estates served “only to raise the wealth and importance of particular families and individuals, giving them an unequal and undue influence in a republic, and prove in manifold instances the source of great contention and injustice.”
Thomas Jefferson, one of the leaders on repealing the laws of primogeniture, and a staunch opponent of concentrated wealth, stated in a letter to James Madison:
Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise.
But the Senate and House bills do neither of those things. Instead, they are raising taxes on low- and moderate-income Americans to fund massive tax breaks for the Top 1%, Wall Street, and foreign investors (I’m sure Trump’s Russian friends will love this). It will only serve to increase and concentrate wealth at the top.
But the Senate and House Republican tax bills, headed now to “reconciliation”, go against the idea of equal opportunity (then known as equality of property) woven into the fabric of America.
And Senator Grassley’s statement that the working class fo America “spend every darn penny” on “booze or women or movies” exposes what the Republicans really think about the hard-working and minimally paid workers of America.
The real investors are the average working men and women in America. They buy, they build, they raise families, they put kids through schools and colleges, and save and spend money in retirement. While trickle-down economics is a disproven theory, as admonished in a nonpartisan Congressional Research Service report which finds:
“The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”
However we know for a fact that when the working and middle class in America is strong and growing, then our economy, likewise, is strong and growing. That’s because the average person in America spends money on things that drive our economy; they don’t park their money away to be passed on to their heirs in perpetuity.
It’s ironic then that the White House Economic Advisory Gary Cohn was caught flat-footed when he was at a Wall Street Journal forum for CEOs. The moderator had asked whether the CEOs present would expand their businesses and invest in capital if the tax cuts went through. Only a few hands went up, prompting Cohn to ask “Why aren’t the other hands up?”
In a consumer economy, consumers, i.e. the working and middle class of America, grow the economy.
But that’s not what or who the Republican tax bills are about. It’s plainly and painfully obvious who these massive tax breaks are benefitting: The wealthiest of families and Wall Street.