Two Very Different Models are in Play. The Differences in Effects are Overwhelming
A Tale of Two Taxes
No one especially likes to talk about taxes. Politicians really, really don’t like to talk about them. Only if it is to say they think they can reduce them or make them fairer are they willing to talk. But taxes are a necessary reality, and how they are devised is important. We have two models under national discussion that could not be more different. We should take note.
Tariffs are Taxes
First, we have Donald Trump’s tariffs on Mexican products. Mexico is about as likely to pay for this as they were for the wall. American consumers will pay for this. It is a tax by any reasonable definition. Estimates are that the average household could be out somewhere between $800-$1000 a year to pay for this.
I say “estimates” because no one knows. The Administration did no analysis of this action. Trump did not get estimates from experts and did not consult within the cabinet or with the Congress. He just had a temper tantrum and threw this on the table. No one thinks it will do anything for its stated purposes. Having fun yet, Congressional Republicans?
In summary, the Trump Mexican tax will not accomplish its purpose. It will be paid by working people who can least afford it. If you buy a car, car parts, a TV, fruits and vegetables – you will see this cost soon and at noticeable levels.
A Very Different Approach
Second, we have Elizabeth Warren’s model of taxing wealth. Even if you are not inclined to support Warren’s candidacy, you cannot deny her defining quality. More than any candidate, she has articulated detailed plans to address our challenges. She is unafraid to call out what she feels needs to said and done. Her plans for a host of issues are well crafted, detailed, paid for, and doable, in my view.
Her wealth tax plan is an example (https://elizabethwarren.com/issues#rebuild-the-middle-class). She makes it clear that she has no interest in “soaking the rich” or in punishing success. She is interested in people carrying their fair share of the load. Every analysis makes it clear that the 1% have made out like bandits (note that choice of words). They did this through their influence to shape tax laws and other legislation.
During the same period, the middle class and workers have lost ground. There are several reasons for these losses (weakening of unions, automation, etc.). The end result is clear. As we stand today, it is a bad joke to refer to our country as a land of opportunity. About 130,00 families in America control more wealth than the bottom 117 million families combined. One does not earn that sort of imbalance, one engineers it. We are not keeping our promises, by choice.
Warren’s proposal is to tax the wealthiest, about 1% of the top 1%. We are talking about only 75,000 people that would pay these taxes. The rate would be two cents on the dollar AFTER the first $50 million. Not exactly a terrible burden to bear, is it?
That single proposal would pay for universal child care up to age five. It would put serious money into student debt relief, expand Medicare, and more. The tax burden is modest and assigned to those best able to pay it. The benefits go to the entire country. She built this proposal on the basis of sound economics and workable policy.
Taxes are necessary. We need to build, maintain, and secure the country. Taxes pay for that. These two leaders offer us very different tax models. Consider as well how they made those policy decisions. Which approach do you think looks out for America?
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