
I’m a Depression historian. The GOP tax bill is straight out of 1929 - aaronbrethorst
https://www.washingtonpost.com/news/posteverything/wp/2017/11/30/im-a-depression-historian-the-gop-tax-bill-is-straight-out-of-1929/?undefined=&utm_term=.a78d136d1704&wpisrc=nl_most&wpmm=1
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perl4ever
What I find conspicuous by its absence in the author's list is that the tax
bill removes the $4,050 exemption for dependents. It seems like that would be
a major tax increase for large families. It's very peculiar that Republicans
would be mounting an assault on families with children, presumably a core
constituency, and also odd that people opposed to the GOP aren't emphasizing
it more.

~~~
jrs95
Perhaps that's what the Senate bill was like, but last time I checked the
House bill did the opposite by expanding the child tax credit. Based on what
we've seen them advocating for within the last decade or so, I would expect
the end result will include a bigger deduction/credit for children.

~~~
perl4ever
The House bill seems to expand the child tax credit and add a family tax
credit, but it also removes the personal exemption, so it's unclear to me how
that nets out. But it sure creates uncertainty if nothing else.

[https://www.nytimes.com/interactive/2017/11/15/us/politics/e...](https://www.nytimes.com/interactive/2017/11/15/us/politics/every-
tax-cut-in-the-house-tax-bill.html)

~~~
jrs95
The credits and the expanded standard deduction outweigh the removal of the
personal exemption, especially with the rate changes. The House bill is fairly
straightforward in regards to low to middle income families.

~~~
perl4ever
From the NY Times link I provided, I see the following: +1.6 trillion
repealing personal exemption -0.64 trillion adding child and family credits
-0.92 trillion increasing standard deduction

So it does not seem as though the new credits and standard deduction outweigh
the personal exemption overall. The net for these things is a small tax
increase. And then there are the other deductions that are going away, so it
seems like a net increase for average people, to provide AMT cuts, corporate
cuts, and estate tax cuts.

~~~
jrs95
Thats not the full picture though. You've got the rate changes and the
increased standard deduction. Most of the changes you've mentioned are bad for
upper middle income people who are going to benefit the most from the lower
rates in the new tax brackets. Plus, lowered corporate tax rates are likely to
drive prices on goods down as well. It seems that very few if any people will
end up with a net tax increase. Seems graduate students at prestigious
universities won't do well in the short run. But I have a feeling they'll
probably be fine when they graduate and get six figure salaries.

Overall, I'm still not a huge fan of the proposal though. Too many cuts for
the rich and not enough for everyone else.

~~~
perl4ever
I mentioned the increased standard deduction. That's a major factor in making
it almost break-even.

I'm not sure any reputable economist would tell you that cutting corporate tax
rates will necessarily drive prices of goods down.

If a business gets more money, there are a bunch of things they can spend it
on besides lowering prices - they can invest, they can raise wages, they can
put the money into dividends and buybacks. It seems like the way the stock
market has been appreciating recently, that dividends and buybacks are what
the smart people are banking on.

The most direct way to cut the price of goods would be to cut sales tax - that
isn't federal, but perhaps the federal government could induce states and
localities to reduce or eliminate sales tax. If that could be done, then it
would be an enormous boon to interstate commerce too. But of course the
revenue would have to be made up through increasing income taxes. Anyway, if
there was a political movement for this, I would like to join it - kind of the
opposite of the flat tax, national sales tax, or VAT advocates.

------
UncleEntity
Or, you know, maybe his ideas aren't really based on any sound theory at all.

I personally believe that the Austrian business cycle theory has a much better
chance of being right than "look, the Republicans did this then the economy
crashed 2 decades later" but what do I know, I'm neither a economist nor a
historian _.

_ ok, to be totally honest, I'm actually an _art_ historian.

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pc2g4d
The author's connections between trickle-down economics and
depression/recession seems simplistic. It's really not clear that the wealth
disparity is what caused the depression or the great recession either. That
said, I found his elucidation of what's actually contained in this tax plan to
be useful, and strengthens my perception that it will lead to increased wealth
concentration.

~~~
pc2g4d
Here's a more balanced take: [https://www.thebalance.com/trump-s-tax-plan-how-
it-affects-y...](https://www.thebalance.com/trump-s-tax-plan-how-it-affects-
you-4113968)

------
southphillyman
From my perspective trickle down doesn't work, so my question is...what's the
long term benefit of this to rich people? Is it as simple as increase wealth
as much as possible in the short term and figure out the rest later?

~~~
gwbas1c
It's just short-sighted greed.

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jrs95
I was under the impression that underconsumption was basically a discredited
theory of what caused The Great Depression.

~~~
rndmize
I'd be interested to know more on this. Sources/links?

~~~
jrs95
It's been forever since I've read about this, so I don't have much, but even
just looking at the wikipedia page[1] the view expressed in this article seems
to sort of fit with the Keynesian and to a lesser extent Marxist views listed.
However, even those are a lot more complicated than what's in this article,
which seems to be an oversimplification at best. What I was reading many years
ago was likely from the perspective of a Monetarist, so it could have been a
bit biased. Even so, the Keynesian view doesn't really seem to boil down to
"tax cuts caused/exacerbated underconsumption which helped lead to The Great
Depression".

[1]
[https://en.wikipedia.org/wiki/Great_Depression#Mainstream_ex...](https://en.wikipedia.org/wiki/Great_Depression#Mainstream_explanations)

------
RickJWag
The author is a speech-writer for Democratic candidates. (Huffington Post
reports this.)

Meanwhile, MSNBC has this title today: "An open letter to Congress signed by
137 economists supporting GOP tax reform bill"

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tmaly
I would call this current incantation of a tax bill the "Squeeze the Middle"
it seems they will be hit the most.

I would have love to have seen a better pass through rate for mom and pop
small businesses. I cannot understand why we need to give large conglomerates
a break, places like GE paid almost zero taxes in recent years due to
loopholes. How is lowering the corporate rate to 20% going to change that?

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Miner49er
Right now, the stock market is hitting all time high's just on the idea of a
tax cut. Is it possible that it's investor's faults? They propel the market
too high on tax cuts, and then it corrects in a crash?

~~~
mkovach
The market is at an all-time high because there is simply no other place to
put money and see any reasonable interest.

~~~
RickJWag
With thinking like that you'll probably be wealthy some day.

Good analysis.

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RickJWag
From the Huffington Post's bio of the author: "Robert S. McElvaine is the
Elizabeth Chisholm Professor of Arts & Letters and Professor of History at
Millsaps College and the author of ten books and hundreds of articles and op-
ed pieces. He has contributed to the speeches of several Democratic
presidential candidates."

Of course he doesn't see any good in the bill. History will tell us if he's
right or just wrong in his biases.

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ry4n413
Wonder if he is putting his money where his mouth is.

