The Short Version: Proposed Tax Cuts
The point of it all is to break down the headlines, determine why an issue is important, and reveal the best arguments on each side of the story. Recently Cleo Abram explored the Harvey Weinstein scandal and asked what we can do to prevent sexual predators.
This week her subject is the Republicans’ proposed tax cuts. Cleo asks: Does cutting tax rates for corporations and high-income individuals create jobs and increase wages?
Note: If you have missed any of Cleo’s blogs, just go to our Home Page, type “The Short Version” into Search (magnifying glass icon) and poof, like magic, all her blogs will appear.
Last Thursday, Republican leaders in the House put forward their tax plan. One week later, Republicans in the Senate did the same. Here’s what those plans do—and what we should really be debating.
The plans have similar goals and generally follow the framework set forth by the Trump administration in September. Both would:
Cut taxes on corporate income, which would also benefit wealthy people who earn a disproportionate percentage of their income from investments in stocks and dividends (i.e. capital gains)
• Reduce the tax rate for people making over around half a million per year, who are in the top income bracket
• Eliminate or reduce taxes on people inheriting over $5 million (the estate tax)
• Lower the rate on “pass-through companies” owned by individuals or families, like the Trump Organization
The House and Senate get there in different ways. For example, the Senate bill keeps seven tax brackets despite changing rates while the House bill strips them to four. The Senate plan also delays the cuts to the corporate tax rate until 2019.
Why is it important?
It’s easy to get caught up in the important differences between these two bills, and the critical changes both would make to our current tax system.
But let’s take a step back for a minute. These two plans—in fact, major Republican plans since President Reagan’s 1981 tax cuts—rests on one central claim: that cutting tax rates for corporations and high-income individuals creates jobs and increases wages for everyone. It’s the basis for supply-side economic theory, sometimes called “trickle down” policies or “Reaganomics” (you’ll see why).
This claim has shaped American tax reform for decades. Legislators began to slowly decrease the total number of tax brackets in the 1960’s. In other words, based on the economic claim that it would benefit everyone, they removed the system that ensured the immensely wealthy paid a higher rate than the well-off. Most drastically, in the 1980s, President Reagan slashed the number of tax brackets to only two.
Today, we have seven brackets. The highest marginal rate is $39.6% for people making over $416,700, meaning everyone who earns more than that pays the same rate. This is what our tax brackets have looked like over the last 100 years, adjusted for a modern dollar value:
Does cutting tax rates for corporations and high-income individuals create jobs and increase wages?
Why The Short Version on TIO?
Over nine years ago, Telluride Inside…and Out began as a lifestyle webzine. Today, in the full knowledge that Telluride is a window on the world, we continue to bring the “zazz” (short for “pizzazz) of the region to a local, national, and global audience by covering everything from Telluride’s robust cultural economy – major events and festivals – to health and fitness and outdoor adventure. When Telluride travels, we write about places to go, people to meet too. (That’s part of the “Out” part of our handle, the other, obviously, Outdoors.)
And now, this weekly column, “The Short Version,” which offers simple summaries of issues of national and global importance.
“The Short Version” is written by Cleo Constantine Abram, the daughter of Telluride locals Eleni Constantine and Jonathan Abram (and therefore an honorary local and regular visitor) and a digital strategist.
Why “The Short Version”? Because, though we live in Shangri-La, our bubble is not impermeable and the rest of the world is only a click away. Because there is no inconsequential action; only consequential inaction. And because information is power in a moment so many of us are feeling powerless.
More about Cleo Constantine Abram:
Cleo grew up in Washington D.C., lives in New York City, and loves to visit her parents in Telluride. She authors “The Short Version,” a newsletter that explains each week’s most important issue and both sides of the debate around it.
Cleo is a digital strategist now working at Vox, a general interest news site for the 21st century. Its mission is simple: Explain the news. Politics, public policy, world affairs, pop culture, science, business, and more.
Cleo’s work focuses on ways to share, educate, and inform using online platforms. While in college at Columbia University, she guided the school’s entrance into online education through her role as the youngest elected representative to the Columbia Senate, which makes university-wide policy.
She continued her work on online education at TED-Ed, the educational branch of the nonprofit, building new programs and online tools to support high school teachers worldwide.
Continuing her work with TED, Cleo founded and led an early TEDx conference, the organization’s community-specific series.
Recently, Cleo returned to school, studying video storytelling at Columbia Journalism School.
Most importantly, Cleo loves to ski.
Latest posts by Cleo Abram (see all)
- The Short Version: Proposed Tax Cuts - November 12, 2017
- The Short Version: Title IX Guidelines for Sexual Assault - September 24, 2017
- The Short Version: DACA - September 11, 2017