Taxes
Trickle-down extremists have claimed for years that cutting taxes is an economic panacea. If we just cut taxes, the story goes, rich people and profitable corporations will use the money to make investments and create jobs. But all the empirical evidence shows that this story simply isn’t true — and it isn’t popular either.
There’s no reason for Democrats to be afraid of confronting this issue head on. By talking taxes from the middle out, and leaning into growth, Democrats can win the debate, and win elections.
Force a Choice Between Two Different Stories About Taxes and the Economy
What to Talk About
When You Talk About Taxes
1) Be explicit about raising taxes on the rich.
Closing loopholes and raising taxes on the rich is incredibly popular. However, many people are suspicious of new tax proposals and worry they’re the ones who will end up paying, because they feel like the tax code is rigged against them — and they’re not wrong about that. So when leaning into taxing the rich, it’s important to repeatedly emphasize who will be paying more, and who won’t. Follow the lead of the president and be explicit about the fact that you support raising taxes on the rich, and that nothing you propose will affect any American making less than $400,000.
Our broken trickle-down tax code leaves teachers paying higher tax rates than CEOs, and grocery checkers paying more than the giant corporations that employ them. It’s time to make sure the ultra-rich pay their taxes while making sure that nobody making less than $400,000 a year pays a penny more.
2) Connect taxing the rich to investing in hardworking Americans..
Support for raising taxes is strongest and most durable when it’s connected to how those tax dollars are spent. While simply taxing rich people is popular, tax rates in and of themselves aren’t a particularly salient issue for most voters. The precise rate of the top tax bracket matters less than the idea that rich people are getting away with paying less than everyone else. And what those taxes get spent on matters even more.
Tax breaks for the rich rob the American people of trillions of dollars that could be used to invest in America. When rich people pay their taxes just like everybody else, we have the resources we need to rebuild our infrastructure, invest in the jobs of the future, and strengthen Social Security and Medicare.
3) Talk about taxes as a source of economic growth.
The choice about whether to tax the rich or give them tax breaks is a choice about whether we want to grow the economy from the middle out, or cross our fingers and hope trickle-down finally works. We raise wages and create jobs when we use public dollars to strengthen our schools, make housing more affordable, and invest in America. If instead we let the rich hoard more and more of the country’s wealth, the money doesn’t circulate through the economy, and the benefits never trickle down.
When we give tax breaks to rich people, they simply hoard the money. When corporations get tax breaks, they blow it on stock buybacks. But when we tax those who can afford it, we can invest in America, create good jobs, and provide hardworking Americans with the tools and opportunities they need for a good life — and grow the economy in the process.
DON’TS
Don’t call them “the Trump tax cuts”. Trump’s tax law has never been popular, but the general idea of a tax cut is and probably always will be popular. So it’s counterproductive to refer to the “Trump tax cuts.” Far better to leverage the unpopularity of the trickle-down tax agenda by using terms like “trickle-down tax cuts” or “Trump’s tax law.”
Don’t primarily focus on taxes as a matter of fairness or a moral good. Just like on other economic issues, there’s no need to choose between growth and fairness or public responsibility and the general preference to pay lower taxes. The good news is that no such tradeoff is necessary; more equitable tax policies spark more growth.
Don’t avoid talking about the impact of raising taxes. When trickle-downers claim that taxing rich people will make them run away or destroy their companies, we can point to the ways that taxing the rich will incentivize them to increase investment, raise wages, and boost the economy.
Don’t amplify the idea that taxes are necessarily confusing and complicated. Confusion about the tax code makes it easier to stoke resentment and manipulate public opinion in favor of rich and powerful people who can afford fancy accountants. We should instead embrace the idea that taxes are simple, straightforward, and necessary: they’re about everyone pitching in to pay for the things we all need.
From the Pitchfork Economics podcast…
The True Cost of Trump’s Tax Plan
(with Samantha Jacoby)
How rich people dodge taxes
(with Gabriel Zucman)
A Tale of Two Tax Systems
(with David Cay Johnston)
How American tax policy fosters racial inequality
(with Dorothy A. Brown)