What a Crumby Thing for Cory Booker to Say
Doubling down on House minority leader Nancy Pelosi's mantra that the Trump tax cuts and corporate bonuses for individual workers are "pathetic" and mere "crumbs," presidential wannabe Sen. Cory Booker (D-N.J.) blamed middle-class Americans keeping more of their money and corporations sharing more of their profits for driving up the debt:
In a video with fellow Democratic Senators Chris Van Hollen and Tammy Baldwin, Booker slammed the Republican-led tax reform effort that cut taxes for a vast majority of Americans and led many businesses to give their employees one-time bonuses[.] ...
Booker went on to shame people who received those one-time bonuses, insisting that it is not "free money" and that it came with the cost of "driving up our debt."
Never mind the eight years during which President Obama accumulated more debt than all prior presidents combined. Booker insists that keeping too much of our paychecks and not the government spending too much is what drives up the national debt. If Booker has any plans for cutting spending outside the military, they are the only thing in Washington that has not been leaked.
Letting people keep more of what they earn is not "spending," and companies giving more of what they earn to their employees is not spending, either. Booker is typical of those who believe that all money belongs to a government that decides how much of it we will be allowed to keep in exchange for our votes. Now, that's what you call "trickle-down" economics. Or is it trickle-up taxation?
Liberal progressives deal with the distribution of wealth rather than its creation and are more worried about the distribution of the golden eggs than the health of the goose. Ironically, the rich will pay more under President Trump's tax cuts, something one would think Booker and Pelosi would applaud:
The bottom 60 percent of Americans, with earnings below roughly $86,000, will account for 27 percent of the country's income but will not pay any income tax at all. In 2017, that lower tier contributed 2 percent of income taxes.
The country's biggest earners, those who make over $730,000 and are in the top 1 percent, will pay 43 percent of all income taxes; under the prior tax regime, those folks contributed only 38 percent of income taxes.
So, where's the beef? If the tax cuts actually raise the portion of income taxes being collected from the wealthy, what do those on the left, who have been slamming the tax bill, find so objectionable?
Good question. What is objectionable about the middle class keeping more and the rich paying more, Sen. Booker, apart from the fact that the money won't pass through the hands and stick to the fingers of greedy government? The tax cuts are the reason consumer confidence is soaring, why business investment is growing, why unemployment is falling, and why the labor participation rate is increasing as people who have given up looking for work find both hope and opportunity. People are starting the small businesses of their dreams as innovation is suddenly being rewarded and not confiscated through taxation or stifled through regulation.
Economic growth is what you get when people get to reap the rewards of their efforts, and economic growth is the key to deficit and debt reduction. Government spending needs to be cut, but it is the fault of those struggling to feed, clothe, educate, and house their families.
These are people like Jessica Hodge, who teared up as she recently thanked President Trump for the tax cuts that make a big difference to families who pay taxes while being trivialized by politicians who spend other people's money:
On Thursday, President Donald Trump traveled to White Sulphur Springs, West Virginia, to participate in a roundtable on tax reform. President Trump opened up but literally tossed his notes aside, citing how it would be "boring" if he read from the planned remarks, and instead went off script.
Then a woman named Jessica Hodge took the mic and told a heartwarming story about how the tax cuts have affected her family.
She said while holding back tears:
"I just want to say thank you. I said I wasn't going to cry. I just wanted to say thank you to you for the tax cuts.
This is a big deal for our family. I think half of this audience is our family. We really support you, and this is a big deal. These tax cuts are a big deal.
Thank you for listening to us. Thank you for fighting for us. Thank you for caring enough to allow us the opportunity to come here and tell you thank you to your face."
These tax cuts to these families are not "crumbs," Sen. Booker. As Joe Biden might put it, they are a BFD. They will become so for Democrats, too, if Democrats insist on running on a platform of essentially rescinding the Trump tax cuts and recreating a tax and regulatory environment that punishes employers and employees alike.
Tax breaks have never exploded the deficit. They did not under Kennedy, Reagan, Clinton, or Bush. Government revenues exploded as workers and companies were rewarded for their labors. We have deficits not because anyone is taxed too little, but because people like Bernie Sanders spend too much.
Booker and the Democrats forget the lesson of the luxury tax. The luxury tax was a 10% tax imposed in 1991 on cars valued above $30,000, boats above $100,000, jewelry and furs above $10,000, and private planes above $250,000. Designed to make the rich pay their "fair share," it aimed at the rich and hit the working class right between the eyes.
Die-hard class warriors like Ted Kennedy and then-Senate majority leader George Mitchell crowed publicly about how the rich would finally be paying their "fair share." But it wasn't the rich – it was Joe Sixpack who suffered.
Boat-building, a key industry in Messrs. Mitchell's and Kennedy's home states of Maine and Massachusetts, was particularly hard hit. Yacht retailers reported a 77% drop in sales that year, while boat-builders estimated layoffs at 25,000.
When you tax something, you get less of it, particularly when you're talking about economic activity. Corporations, in fact, do not pay taxes; they pass on money to the government that comes from higher prices for their goods and services, lower wages and benefits for fewer workers, and lower dividends to their stockholder and investors.
Even if corporations used repatriated money to just buy back their stock, the money still changes hands, and that is called economic activity, which, as Martha Stewart would say, is a good thing. Those selling the stock will put the money to good tax-paying uses, even if it is just to buy those luxury boats and cars. There is no such thing as the unproductive use of money in the private sector. Government picked Solyndra. The private sector picked the iPhone.
President John F. Kennedy was right when he said in 1962:
It is a paradoxical truth that tax rates are too high today and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the rates now. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.
President Kennedy knew that punishing employers really punishes employees. As the late former vice presidential candidate and congressman Jack Kemp observed, "It's difficult to argue you are for working men and women when your policies prevent them from working by destroying the businesses that would employ them." As Kemp wrote in the New York Times in 1996, the historical record shows that tax cuts always increase revenues and growth:
Three times in this century the United States has significantly reduced the top marginal income tax rates. In the 1920's the top rate was lowered from 73 percent to 25 percent. Between 1921 to 1928, tax revenues rose from $719 million to $1.16 billion, an increase of over 60 percent. President Kennedy's tax cuts between 1963 and 1965 lowered the top rate from 91 percent to 70 percent. Over that period, revenues increased more than 16 percent.
In the 1980's, taxes were lowered from a top marginal rate of 70 percent to 28 percent. By the end of the decade, America's real gross domestic product surged by 32 percent and revenues grew by nearly 40 percent. True, nominal budget deficits were higher at the end of the Reagan era. But as a percentage of the gross domestic product, the deficit actually diminished during the 1980's.
So, Sen. Booker, go call the Hodge family and others like them and tell them the debt is their fault and to return their crumbs to the nearest tax-collector. You might not find them at home, however, but rather at that startup bakery down the street that just opened, hiring more workers, spending their crumbs on celebratory treats for their families.
Daniel John Sobieski is a freelance writer whose pieces have appeared in Investor’s Business Daily, Human Events, Reason Magazine, and the Chicago Sun-Times among other publications.