Jayne: Time to dispense with belief that tax cuts equal jobs

By Greg Jayne, Columbian Opinion Editor

Published:

 

Greg Jayne, Opinion page editor

Let’s get this out of the way: The best path for improving your lot in life and reducing your personal income inequality is to develop marketable skills for which somebody is willing to pay.

Attaining an education, securing an apprenticeship to learn a trade, building a better mousetrap — any of these can help you get all boot-strappy to increase your income and improve your future.

That, after all, is the American way — well, that or winning the lottery. Or so we like to think. But the reality is that the current system is not working for too many people, and in the process that system cannibalizes itself.

A year ago, a Harvard University study surveyed millennials — young adults between 18 and 29 — and found that 42 percent of them support capitalism while 51 percent do not support our economic system. In additional to making Alexander Hamilton roll over in his grave, this does not bode well for the future of a system that has served us pretty darn well for about 245 years.

But rather than decry this as the inevitable result of an everybody-gets-a-trophy, everybody-wants-something-for-free generation that has produced a collective group of special snowflakes, there is a more productive response.

You know, like maybe asking, “Who can blame them?”

This question was driven home in a recent article from Columbian reporter Patty Hastings. Using numbers from a variety of sources, Hastings detailed how income inequality has grown in Clark County over the past decade. To summarize: The rich are getting richer faster than the poor are getting richer, in case you had not noticed. Last year, a study from the Economic Policy Institute found that, nationally, the top 1 percent of income earners enjoyed 85 percent of the nation’s income growth during the post-recession years of 2009 to 2013.

Theory doesn’t meet reality

That would seem to be a problem, and the guess is that 99 percent of Americans agree with this assessment. Well, maybe more than 99 percent. As Bill Gates, the world’s richest man, wrote in 2015: “High levels of inequality are a problem — messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal. Capitalism does not self-correct toward greater equality — that is, excess wealth concentration can have a snowball effect if left unchecked.”

And yet many cling to the notion that an unfettered market economy will, indeed, correct excessive inequality. Republican orthodoxy, handed down from the Church of Reagan, suggests that reducing taxes will allow “job creators” to hire more people and benefit everybody.

Never mind that Reagan cut taxes and then raised them 11 times; never mind that Kansas hired a governor to enact this philosophy and now is a raging dumpster fire; never mind that the highest marginal income tax during the 1950s — presumably when American was great — was 91 percent.

The fact is that we have a theory Reagan espoused nearly 40 years ago against nearly 40 years of evidence that it does not work. And still there are those who embrace this theory.

All of this is relevant as President Trump prepares to release a tax-reform plan next week, promising tax cuts for individuals and businesses that will be “bigger, I believe, than any tax cut ever.”

Given that Trump has only a passing acquaintance with reality, we’ll take this statement with a grain of salt. But we’re pretty sure that most of those tax cuts will not benefit you or your children or most of your neighbors. And we’re pretty sure that they will do nothing to protect the environment or build affordable housing or construct bridges or retrain displaced workers. You know, the kinds of things that are needed to Make America Great Again.

Many people will welcome this news, with the phrase “tax cut” serving as a modern-day Pavlov’s bell. But for all too many people these days, that bell simply rings in another reason for them to lose faith in our economic system.