In June 2019, candidate Joe Biden said, “And folks, on day one, I will move to eliminate Trump’s tax cuts” while promising not to raise taxes on anyone earning less than $400,000. To date, President Biden appears not to have made good on either of those promises.
Under Biden administration policies, that’s a good thing. According to “The Atlantic” magazine, no apologist for anything related to President Donald Trump, the 2017 tax bill “failed to deliver an investment boom, but it did lighten the load of many low-income earners, as well as simplify their life.” After the obligatory appeal to envy that “the rich” benefited most from the bill, the article conceded “this measure did a real service not only to the working poor, but to many middle-income families, who can deduct more while reporting less.”
According to that analysis, eliminating the Trump tax cuts would re-institute the burden and re-complicate the life of low- and middle-income earners. It would also give lie to his promise not to increase taxes on earnings under $400,000. Let’s concede Biden’s threat to “eliminate” Trump’s tax cuts was just typical political bluster and that a replacement policy would retain what Democrats see as politically beneficial.
Still, it’s amazing to observe the economic ignorance of those on the left; the arbitrariness of their income and minimum wage categories and their myopic blindness to the unintended consequences of their one-size-fits-all policies. For example, does the highly touted, arbitrary $15 minimum wage have the same value in New York City as in Dubuque?
Does currently increasing inflation more negatively impact the wealthy or the middle-and-low-income demographic? A recent CNBC report “Wages are rising but inflation may have given workers a 2% pay cut” reveals — contrary to the claims of Modern Monetary Theory apologists — the effects of wholesale printing of dollars unconnected to wealth creation.
A recent WSJ headline indicating job gains are currently the best in a year is an indication the economy is continuing its recovery from government-imposed lockdowns and the good news is wages have improved 3.6% over last year. The bad news is that with some necessary but mostly unnecessary spending, the Consumer Price Index has jumped by 5.6%. There’s your 2% pay cut.
As always, people will decide if increases in the price of gasoline, food, and other staples of life make them better off or not. We’ll see. A more important question is will people be better off if Democrats can impose their schemes for an unattainable earthly Eden.
The recently passed $1 trillion “infrastructure” (partially) and bipartisan (marginally) spending bill has yet to impact the economy — oh, sorry — except for Wall Street. But more dollars chasing fewer goods is a recipe for more inflation — effectively a tax increase and pay cut. Again, who does that hurt the most?
That’s not all. Progressives arrogantly assume they can manipulate the economy to serve their grand designs. They think they can steal $2 trillion in new partisan taxes and add $3.5 trillion in partisan spending; believing individuals and companies will not adjust to disincentives and will simply accept working for less.
So far, we can probably thank what progressives call “average” working people for the survival of our market economy. Their innate common sense prevents most of them from being hoodwinked by socialist snake-oil salesmen (Bernie Sanders) or saleswomen (Alexandria Ocasio-Cortez).
We’re heading for Jimmy Carter inflation and interest rates with no Ronald Reagan on the horizon.