Massive tax cuts for the wealthy are expected to be signed into law, supported exclusively by the party that has championed tax cuts for the wealthy at the behest of a president who is himself a wealthy leader of that party. But the opposing viewpoint wasn’t “don’t cut taxes”, but rather whose taxes should be cut.
It’s safe to say that, politically speaking, tax cuts feel good. They give us an immediate rush of excitement. And tax increases make Americans anxious and dissatisfied. Despite knowing, at least on some level, that cutting taxes will hurt America in the long run by decreasing support for domestic programs and increasing the national debt, people are driven to demand them anyway, and politicians push them on us every chance they get, reminding us of how much we need them.
This pattern of behavior isn’t strange or inexplicable. We recognize it immediately in any other context. It’s addiction — one that’s slowly ravaging and destroying us. A really expensive addiction. An addiction we fell in love with in the 1980s and just can’t seem to shake.
Tax cuts are the cocaine of the American public.
The reason we like tax cuts isn’t hard to explain. The cuts are usually not a huge amount more as a percentage of our annual income, but the immediate benefits are tangible. Not economic benefits — a Brookings Institute study debunked that along with an analysis by Forbes. Even the Congressional Research Service has found no evidence of economic benefits from tax cuts. But there are emotional benefits.
“Let’s get real. No one likes to pay taxes, particularly more taxes. Discussions about tax rates rouse emotions almost as much as discussions about where those taxes are spent,” wrote Forbes contributor Barnet Sherman. “The proverbial bottom line is that the influence of tax rates isn’t as significant as the emotional response to them might suggest.”
Despite this, we see things that make us optimistic. Markets are riding high, AT&T is giving out bonuses that are being falsely attributed to the tax plan. We see these indicators and think this shows that cutting taxes on businesses is already having a benefit. It couldn’t. The tax plan won’t have noticeable effect until 2019, and even then it won’t improve the economy. The feeling of improvement is an illusion.
So without meaningfully changing the reality of the American economy, tax cuts make us feel good about it. This unfounded feeling of well-being meets the medical definition of euphoria — one of the effects of a cocaine high. Euphoria is a common cause of addiction, as people seek to experience that feeling again.
Euphoria can make you feel special. Combined with the long tradition of belief in American exceptionalism, the euphoria of lower taxes can conjure impressive delusions of grandeur. The American people, particularly the white working class, are spectacularly bad about seeing themselves as disadvantaged. Republican “dealers” push the politics of resentment — that government spending is for people morally lesser than you — as a way of playing into this to convince the popular notion that tax cuts will make everything better.
As is often attributed to the author John Steinbeck: “Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires.”
Cocaine works the body hard. The result of cocaine is often aches, pains, and flu-like symptoms. Tax cuts do the same for the budget — as the budget is forced to perform harder to accommodate the euphoric tax cuts, it will ache. Republicans in Congress are already showing us what those aches will be for the Trump tax plan.
“Republicans have been telling themselves for years that they wanted to get into power so they could balance the budget, reduce the debt, cut spending and fix entitlements,” Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget told the New York Times. “They’ve just made it harder, not easier.”
The tax cuts will be stressing an already extreme budget deficit. To even make a move toward correcting this means drastic and extreme spending cuts to begin to offset the strain of the tax cuts added to that deficit. And it’s clear from Republican priorities where those cuts will be felt.
If the tax plan is passed, giving huge breaks to the 1% and raising the deficit $1.5 trillion, Republican leaders will rediscover "the deficit crisis" and move aggressively to cut Social Security, Medicare and Medicaid.
— Bernie Sanders (@SenSanders) November 22, 2017
Former presidential candidate Sen. Bernie Sanders (I-Vermont) projected in a November tweet exactly what House Speaker Paul Ryan (R-Wisconsin) would say two weeks later — social programs would need to again be cut to deal with a massive deficit created by the cuts Republicans forced through over the past thirty years.
The specific aches and pains this particular hit of tax cuts costs us are being projected already. The president of the LBGT advocacy group GLAAD pointed to the way the impacts of the tax plan on healthcare will adversely impact marginalized groups. Vice explored the ways the expected cuts will impact transportation in President Trump’s hometown of New York City.
And this has been the pattern over that time — reduce taxes, reduce investments, shrink government programs. Like a body ravaged by cocaine abuse, over thirty years America has suffered the ravages out of love of its drug of choice.
The Long-Term Side Effects of Addiction to Tax Cuts
This is where things get scary.
Looking at the history of the highest tax rates in the United States compiled by the Bradford Tax Institute, we can map where higher tax rates lead to high investment in government and when that investment was slashed. From World War II to the 1980s, the highest tax rate in America was phenomenally higher than it is today – never dropping below a whopping 70 percent and reaching as high as 94 percent. It was slashed to 28 percent by President Ronald Reagan and hasn’t broken 40 percent ever since.
Bloomberg actually compared our standing globally on tax burden with our standing globally on higher education costs and healthcare costs, which can show us a connection between tax investment and costs of other major expenses. Health expenses have skyrocketed faster than income resulting in costing an average of 4 percent of income in 1960 and 6 percent of income today.
But looking specifically at higher education, Forbes found that the cost of tuition has risen nearly 500 percent. At least a portion of that rise is directly attributable to states reducing investment in higher education in recent years.
Interestingly, the story is different for primary K-12 education where a common misconception is that America’s top-tier status has slipped. In fact, we never had it at all. But there is an unquestionable trend of cutting funding for primary education in response to tightening budgets.
What we did have after World War II was an amazing expansion of infrastructure.
The interstate highway system was built during a period of high taxation, and is literally falling apart during a period of low taxation. 58,000 bridges were found to be structurally deficient in 2016 — a shocking improvement from 2014, when 61,000 were.
“It’s less a case of wanting to get something done, than coming up with the hundreds of billions of dollars needed to do it,” 60 Minutes correspondent Steve Kroft said in a 2014 infrastructure investigation.
The American Association for the Advancement of Science compiled data on funding for research over the last forty years as well. The end of the cold war didn’t just bring a cut in the military research, but a small and short-lived boon to non-military research, which quickly fell away. Research priorities of the government now make up a very small sliver of the rapidly shrinking pie of non-military spending.
Meanwhile, consulting the Bureau of Labor Statistics shows that job growth, a key benefit purported by tax cuts, has remained more or less even over the past forty years. And unless you’re an exceptionally high-earner in general, wealth increases over time have been rather sluggish.
But we’re still looking for our next hit.
Chasing the high can make everyday life feel duller, worse than the euphoria. We might, say, believe that America has the highest tax rates in the world which isn’t just untrue, it’s massively untrue. But because the high feels so good, when it fades the resulting reality feels excessively oppressive.
The Benefits of Getting Clean
A conservative Supreme Court Justice, Oliver Wendell Holmes, Jr. once said “Taxes are the price we pay for civilization.” In fact, there was a period of time at the turn of the last century that people actually wanted taxes, even passing a constitutional amendment to protect the concept of the federal income tax.
It’s true. Taxes are how we show our values, and how we invest in what matters to society at large. Without taxes, the government lacks the funds needed to invest in things like repairing those failing bridges and helping the sick. Taxes fund education, affordable housing, research, and innovation.
Life is just better with taxes. Taxes pay for things like what happens to your poop when you flush the toilet and why the garbage you put at the end of your driveway disappears. They pay the people who take your kids to school, the people who teach them, the people who protect them from crime and fires. Taxes pay for parks and economic development plans and places with higher taxes tend to have better roads to drive on.
Tax cuts, on the other hand, are the engine of national debt. Bush-era tax cuts resulted in the conversion of trillions of dollars in budget surplus to trillions in deficit. And that balloon of debt matters. There is a reason that we can’t just cut taxes and increase spending forever. It’s called interest.
The idea that China will call America’s debt obligation and we’ll default is unrealistic, but what does happen is that just like you have a minimum payment on your credit cards, America makes minimum payments on the debt. The interest on the national debt takes an increasingly large role in what is mandatory spending in the federal budget, which shrinks what can be set as our priorities — the values that our investments represent. The current tax cuts totally ignore this problem, leaving it for future legislators to worry about.
But with Medicare set to go broke in 2026 and Social Security drying up in 2033, that shrinking discretionary budget is going to need to heft up larger and larger programs essential to keeping people alive. Like cocaine, if we don’t get clean of our tax cut addiction, people are going to die from it. We can keep Medicare and Social Security going for much longer, but only if America breaks her dangerous habit.
So We Have to Pay Higher Taxes?
In short: yes.
No one wants to hear that, and no one wants to be the person to say that, but it’s also impossible to operate a national government for free. There are, of course, some people who should pay more than others. We already know that. The idea that the rich should pay higher taxes is actually catching on, and is a major source to the popular opposition to the Trump tax plan.
But it’s a dangerous game to be gasping for your own tax breaks as well. No one is going to want to pay taxes, everyone is always going to think their taxes are too high. For over a generation, American politics has been about promising something for nothing, and that’s a deal that once floated is hard to take away. It always is a rough road, getting clean of a bad habit.
And it’s harder when you’re constantly reminded of that euphoric high you get with a big IRS reimbursement. With politicians in both parties promising you’ll feel that high again, and it’ll be better. “Vote for me, I’ll get you a hit of the good stuff.” We’re being sold to and enabled by the people we elect, and we need to resist the allure of our addiction and find people who will be honest with us.
Or, as the old comedy Mystery Science Theater 3000 once said, we can do a lot of coke and vote for Ronald Reagan.
Katelyn Kivel is a journalist and political scientist in Kalamazoo, Michigan. Follow her on Twitter @KatelynKivel.