Trump tries to sell his tax plan as an antidote to middle-class wage pressures. Woe betide those who believe him.

September 6th, 2017 at 2:47 pm

The President is jetting off to North Dakota today to sell his farblunget tax plan. This WaPo piece reveals that D Senator Heidi Heitkamp is going with him. As the article puts it:

The Democratic senator is expected to face a difficult challenge for reelection next year in a state Trump carried in 2016 by 36 percentage points, one of his biggest margins of victory. So Heitkamp may see a political advantage in being friendly with Trump and open to his ideas, even if she does not ultimately vote to pass his agenda.

I was impressed by the extent to which D’s held together to block the R’s attack on health care, but Trump’s guest passenger is a reminder that tax legislation has the potential to scramble that alliance.

The administration’s clear play here is to try to convince people that what appears to be the latest version of the standard, highly regressive Republican tax plan is actually the answer to wage and income challenges that have faced working-class people for many decades now.

For example, the Post tells us this sentence will be in the speech: “The pipe fitters and plumbers, the nurses and police officers — all the people like you who pour their hearts into every penny earned in both the offices and oil fields of America — you are the ones who carry this nation on your backs, and it is time you got the relief you deserve.”

OK, let’s see what Tax Policy Center numbers have to say about that. The TPC has patched together enough info about tax ideas floated by team Trump to run distributional tables. But they’ve also taken a useful step beyond that by looking at the impact of offsetting the costs of the tax cuts with spending cuts (I explain these tabulations here).

According to BLS data, the median plumber or pipefitter in North Dakota earns about $54,000 a year; ND registered nurses, about $60,000; police, $53,000. Assuming that’s their family income, it puts them all in the middle-fifth of the national income distribution, according to the TPC tables (average inc: $67,000).

At first blush, the Trump plan would boost their income all of 1.3%, as per the chart below, compared to over 11% for high-income households (average inc: $2.3 million). But once you factor in the payfors, assuming spending cuts hit uniformly across the income scale, the middle class, including cops, plumbers, and pipefitters, lose income, and poor families get whacked especially hard. The income of the top 1%, however, is essentially unchanged.

My CBPP colleague and tax expert Chuck Marr often focuses on the impact of tax plans on working-class people. He told me, “During the campaign, the President focused on the stagnant wages of the working class. The problem is that his and other GOP tax plans ignore working-class people.”

In that spirit, I’ve helpfully edited Trump’s ND speech:

When it comes to Trump and co. selling this tax plan as we currently understand it to the working-class voters who supported him, the old adage comes to mind: “Fool me once, shame on you. Fool me twice, shame on me.”

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4 comments in reply to "Trump tries to sell his tax plan as an antidote to middle-class wage pressures. Woe betide those who believe him."

  1. Smith says:

    This a silly critique to use, that eventually the tax cut will have to be paid for by someone. This is similar to the argument that conservatives used against stimulus. They said stimulus is no good because people will anticipate eventual higher taxes to pay for it and therefore not spend the stimulus, but you said that’s good. Whereas this argument is people will spend the stimulus (tax cuts) and ignore the eventual higher taxes to pay for it, but now you say that’s bad. You can’t be on both sides of this issue and pretend there is any logic to it.
    Try a different, simpler, and more honest tact.
    Better arguments are
    Why give more money to rich people, they already earn more than you. Are you stupid?
    Don’t we need more tax money to lower the deficit? Shouldn’t rich people pay, the ones who can afford to pay?
    Don’t we need more tax money to pay for crumbling roads, bridges, and dams? Shouldn’t rich people pay, the ones who can afford to pay?
    Trying to tell the middle class the the very poor people will be hurt the most by tax cuts is the exact opposite argument to use. You’re just reminding them how dependent the poor are on government aid, which the middle class pays for, so you’re playing into Trump’s hands. Get it? As in the last election means something?
    1% is a really big deal, even with your very low $50,000 income, it’s $500 dollars. Since when isn’t $500 extra dollars a big deal, especially for $50,000 a year earnings.

    Go to the link below and scroll down to the table “US Census Bureau figures for 2014” ignoring the seemingly out of date graphs to the right. 1 out of 3 households has more income than $85,000. I think that’s all any party needs to win, the top 1/3 income earners. They will gladly give $20,000 to the 1% to get $1,500 or $2,000 for them selves. Heck, the guy earning $50,000 will make the same deal for the $500. This is much more cash than the ill considered Obama Pelosi stimulus tax cut of 2009.
    https://en.wikipedia.org/wiki/Household_income_in_the_United_States#Distribution_of_household_income_in_2014_according_to_US_Census_data
    What is the Democratic program? The uninspiring “better deal” doesn’t cut when it ignores how Trump can win over the upper third income earners. Reagan was very successful, with Tip O’Neal and Bill Bradley rolling over, and they were in safer Democratic states.


    • Smith says:

      You can’t win by offering them nothing in place of even $500.
      You can’t win just by saying the rich get too much money in the deal. Who cares?
      You can’t win by saying that some future tax increase will offset it.
      You can’t win by saying there will be cuts in services you won’t notice until it’s too late at some future date.
      They will take their chances pocketing the money now.
      If Democrats are afraid of bucking the unpopular Trump on tax cuts, think of how weak they’d be with a normal president. They don’t have a clue.


    • Smith says:

      To be clear, the “Are you stupid?” statement is intended as an example of how the American people need to be addressed, bluntly, forcefully, just like that.
      Again, people with full time jobs earn $40,000 to $50,000 a year, and $500 extra dollars in their pocket is not chicken feed. Those are working class, the GOP cleverly does not ignore them, but the Democrats do. Democrats cater to mostly very well to do liberals, and admirably those in the bottom third, they don’t do middle class, not their thing, not their forte.


  2. William Miller says:

    Plutocrats and Republicans who are agents of plutocrats understand the propaganda of politics that sells tax cuts to drive fake supply-side economics whereas Democrats don’t understand yet. The books, Dark Money and Dream Hoarders, describe how the hidden agenda of plutocracy which sends more wealth and power to the 0.0001% who are about 400 super rich billionaire plutocrats is achieved with media and economic think tank propaganda that wins votes from the rich top 20% – the upper middle class – by giving them wealth and advantages that block upward economic mobility. The plutocrats started their attacks on FDR in the 1930’s and gained traction with fake supply-side economics and other elements of plutocracy in the 1980’s that support deregulation and privatization of public services such as for-profit charter schools that kill the public education needed in a democracy. In the 1990’s Clinton helped deregulate Wall Street and create trade deficits with free trade agreements like NAFTA. The missing factor in economics is proper consideration and protection of investments in public intangible capital.


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