The Trump Tax Bill: The Illusory Pay Bump | FREE WHITEWATER
FREE WHITEWATER

The Trump Tax Bill: The Illusory Pay Bump

In the spring, before and after a local election, the Whitewater Community Development Authority issued two press releases praising a part of the Trump tax bill as good for Whitewater.  CDA executive director Dave Carlson presumably wrote the releases, and Larry Kachel, the CDA chairman, stars in one of them as offering gratitude for gerrymandered congressman F. James Sensenbrenner’s supposed public largesse.  (See press release 1, press release 2.)

Looking at the full Trump bill, even in the best light, it’s clear that it offers Americans only paltry wage gains.  Whitewater’s had a generation-long record of public policy failure, of wasted public spending that has done nothing to boost wages or alleviate above-average poverty in the city.  Larry Kachel’s merely the latest CDA chairman (his immediate predecessor is never far behind, in proximity as well as chronology) who has been part of a long train of public policy failures of this sort.

Tory Newmyer writes The GOP’s tax cut hasn’t delivered a pay bump yet. Defenders say: Just wait for it:

Be patient. That’s the message from economists defending the Republican tax cut package against charges it has already failed on one of its core ambitions to boost wages.

The right-leaning Tax Foundation argues in a new report that the slashed corporate tax rate at the heart of the law will take years to yield a pay bump for workers. That’s because rather than sharing in the immediate windfall that shareholders and executives are seeing from stock buybacks and dividend payments, employees will only see their benefit fully realized once businesses complete a lengthy cycle of investment.

Even then, the think tank calculates, workers will collect a 1.5 percent wage gain over the long run — or a bump of $1,247 for a household earning $83,143 a year, the average income in 2016. That is a fraction of the $4,000 to $9,000 boost that Trump administration economists touted when they were selling the tax cuts last fall.

The longer one waits, however, the more uncertain are both gains and their putative causes:

And while economists say they need more time to judge the tax cut’s effect on wages, they acknowledge a longer window will introduce other factors that complicate the picture. “The further out we go, the more evidence we have to judge whether we’re really higher than we might otherwise have been,” Joel Slemrod, director of the Office of Tax Policy Research at the University of Michigan, tells me. “But it gets harder to separate tax reform” from other economic forces — namely, at the moment, Trump’s trade offensive. 

Indeed, [Nicole] Kaeding [director of federal projects for the Tax Foundation] says the Tax Foundation estimates if the administration moves ahead with all of the tariffs it has threatened, it will eliminate the job gains from the tax cuts and then some. In the meantime, she questioned the wisdom of the tax cut’s champions cheerleading the bonuses earlier this year as proof of the law’s benefit to workers. “I’m not sure that was the best approach,” she said.

(In both passages, emphasis in original.)

Even an advocate of the Trump tax bill can’t be sure it will amount to workers’ income gains.

Any socialist, state capitalist, crony capitalist, or publicly-employed ‘development professional’ can build things. Even the Soviets could build things; a free and productive economy builds voluntarily and cooperatively with positive gains by consequence for the economic well-being of the many, not the chosen (& choosing) few.  Indeed, these widespread gains from voluntary exchange are the practical and moral advantages of a free market economy.

This brings us to the weighty problem facing advocates of the last thirty years’ local economic approach in Whitewater (Kachel, Knight, Allen, etc.): if one cannot show positive wage growth for individuals and families, after a generation of project spending, how has there been meaningful ‘community development’ for Whitewater?

PreviouslyAbout that Trump Tax PlanOn the Whitewater CDA’s Press Release (A Picture Reply Is Worth a Thousand WordsA Candid Admission from the Whitewater CDAMore About that Trump Tax Bill, The Trump Tax Bill: That’s Not Reform, The Trump Tax Bill: The Wrong Incentives, and The Trump Tax Bill: Massive Federal Deficits.

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments