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Trump’s Economics Don’t Work For The Rest Of Us

Just last week, a friend confessed that they were “saddened by the way in which honest, hard working, country folk were being duped by a rich, petulant, New York City kid, who had never done manual labor a day in his life.”

In Monday’s debate, Trump reminded me of this friend’s words and how his appeal to the working class seemed so contradictory. He is very good at taking advantage of rules that allow corporations and wealthy individuals, like himself, to skirt paying taxes here in the United States. How could this lead to support from working class America?

When Clinton suggested that the reason Trump has not released his tax returns was because it would show that he pays no federal income tax, Trump took the bait. Rather than accentuating the point that he does actually pay taxes, Trump’s kneejerk reaction was to brag about the fact that he paid no federal taxes on his $694 million income for the year 2015. “That makes me smart,” Trump said responding to Clinton’s suggestion.

No, it does not make Trump smart. It makes him selfish. Why? Because it is the middle-class that he is dependent on for votes and it is the middle-class that has to pay the dues when well-to-do people, like Trump, use loopholes to avoid paying taxes. When they do, it is the middle-class workers who compensate by paying a higher rate than Trump and his other wealthy, tax-dodging friends.

I honestly doubt Trump’s rate was zero. But, it is probable that, like the last Republican candidate Mitt Romney, he pays a much lower rate on his vast and glorious wealth than most working stiffs like you and me.

It should surprise no one, though it probably would if people actually looked into the boring details known as facts and figures, that Trump’s economic proposals are not designed to encourage or bolster our struggling middle-class. Rather, they are designed to enrich the already wealthy, continuing a multi-decade pattern of income stagnation and asset disparity.

Many of his proposals are geared around the historically debunked economic theory known as “trickle-down.” The main idea with trickle-down economics is that if a government were to lower tax rates on the top tiers of income earners and asset holders, the wealthy, that those people and/or corporate interests will create jobs, invest in growth, expand their holdings and in turn, create more revenue in taxes for the government all the while, spreading the tax burden out to a wider pool of payers.

The trickle-down theory relies heavily on the central idea that tax rates on the wealthy are too high. If they were not too high, the wealthy would already be using their assets to create jobs and expand economic growth. But, so the theory goes, the high tax rates prevent the wealthy from doing so. One main problem with this is that “too high” is a relative term. The other problem is that there is always a gap, which is rarely discussed by politicians, Trump included, between a tax rate on paper and an effective tax rate. While he may not mention this discrepancy, he is fully aware of it. It is exactly what allows him to pay a lower rate on his $694 million income than you and I pay on our income, which for the most of us is not quite $694 million a year.

The same principle can be applied to corporations and the corporate tax rate of 35 percent. Trump is well aware that not many, if any, Fortune 500 companies pay a rate of 35 percent. Corporations use loopholes to cut that rate to a fraction, often less than 15 percent. Many companies like GE, Dupont, Verizon, Boeing, Wells Fargo, Honeywell and FedEx pay effective rates well below 15 percent.

So, in reality, we have corporations paying next to nothing in taxes already and Trump proposing that we cut their rates even farther. Likewise, when it comes to wealthy individuals like Trump, they too are paying extremely low rates. Despite the low tax rates that corporations and wealthy individuals are shelling out to Uncle Sam, they are not using their tax savings to invest in the middle-class, in high-paying wages, or the nation’s infrastructure. They are leaving the middle-class out to dry.

Trump’s economic proposals will do nothing but hurt the likes of you and I. The trade war he threatens with tariffs on imports and accusations of currency manipulation will only result in one thing: more losses for the middle-class in the form of lost jobs and the rising cost of goods the middle-class purchases. A majority of imports into the U.S. are in the form of raw goods, which require U.S. labor to process into finished products. Regardless of his intentions, his proposals will further enrich the rich and further alienate the middle-class that is already feeling left out of the economic recovery.

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