One point that President Biden has put out as a justification for his signature corporate and capital gains tax hikes is that, “Trickledown economics doesn’t work.” It might be a point if we knew what he was talking about or comparing it to. Maybe he knows something I don’t, because it sounds more as if he believes that taxing the crap out of people somehow works better than anything else at “spreading the wealth”. If that what he means, then he should say it – taxing the crap out of people, especially on the heels of a COVID depression, makes for a prosperous nation full of opportunity – so that we know whether we’re dealing with a Trump of a different stripe or something else entirely.
But of course, there is no such thing as trickledown economics. What Biden is referring to, I think, is the basic idea of capitalism and government not starving it overtly with tons of taxes and bureaucracy. There is almost no business startup venture that doesn’t require at least some capital. With the Sarbanes Oxley and Dodd Frank restrictions on access to capital markets, and government increasing taxes now on capital gains that feeds private access to capital, it seems like a real no-brainer that there will be less opportunities and not more.
But even more to the point, when Republicans would talk about trickledown, it appeared to me to as if they believed that cutting taxes was some sort of silver bullet and they didn’t have to do anything else. Or maybe they just got distracted with culture wars, slashing safety nets, arguing about stuff that is out the sphere of Federal control or just doesn’t matter (Hunter Biden’s laptop), and overt coup attempts to figure out that lots more reform is needed in the regulatory apparatus, particularly in financial markets, for it to work for EVERYONE. They certainly forgot that diplomacy, consensus building, and honest leadership is essential to success. No, you can’t railroad your way into restrictive trade and tariff schemes with nasty rhetoric and vindictive behavior and see results that could reasonably be expected to serve the common good. Or perhaps they care more for the crony part than the capitalism part. If they truly cared about capitalism serving the common good, Dodd Frank and Sarbanes Oxley would have been scrapped on their watch. It didn’t happen. C’est la vie.
Tax-free dividends made the lack of real capitalistic reform even worse for average working-class people because it is just one more avenue for cash to be siphoned off corporate entities by preferred stockholders to the detriment of everyone else involved, for it to go offshore never to be seen again. What Biden is doing doesn’t address that or any other of the many ways and reasons corporations here are looted to build investments elsewhere.
No amount of extra taxation is going to fix lack of competitive investment markets and lack of access to working capital for the masses here. Biden needs new advisers if they’ve peddled to him rubbish that says it will.
PS: By the way, I don’t get the whole “let’s raise taxes” cadence in the face of a recession deeper than the Great Recession. It was tried on the heels of the Great Recession and failed – part of the reason we ended up with Trump. Do they want to get worse than Trump 4 years from now? I mean, there’s always Senator Hawley or Ron DeSantis, or Ted Cruz waiting to pick up where Trump left off after spending a campaign season pointing out the predictable utter failure of Biden’s economic plan.
There are more reasons than one to fear someone who is more competent than Trump coming to the presidency with the wrong sort of plan. Democrats need a home run on the economic front this time around, or there may not be a next time. I beg them not to waste this opportunity to do the right thing for all our sake.