Despite some buzz about his proposals to raise taxes on hedge fund managers and to lower deductions, Jeb Bush’s tax plan is just another iteration of the same tired trickle-down policies conservatives have been pushing for decades. As our colleague Mike Konczal points out, removing the carried interest loophole is a good idea, but it matters a lot less when top tax rates are slashed.
Like other recent Republican tax plans, Jeb’s is long on tax breaks for the wealthy and large corporations and short on investments in the middle class. He proposes to cut the top marginal income rate from 39.5 to 28 percent and the corporate rate from 35 to 20 percent (laughable because the effective corporate tax rate is already just 12.6 percent). So, beneath the high-minded rhetoric about simplifying tax forms and promoting growth, the plan’s main goal is to give large sums of money to the richest Americans and the largest corporations while starving Americans of the long-term investment we need and doing little to level the playing field. The plan’s few policy tweaks that stray from this trickle-down orthodoxy are less indicators of a conservative willingness to propose novel ideas and more a distraction from conservatives’ continued failure to recognize the need for economic policies that benefit everyone and not just the wealthy.
Bush claims his strategy will deliver sustainable 4 percent growth—a target the American economy has hit on only three occasions since 1980. But for decades policies like those in Bush’s plan have yielded no discernible benefit to growth or investment. Rather than a booming economy that provides opportunity and security, we have built an economy where short-term gains take precedence over the long-term investments that drive growth, innovation, and shared prosperity. We’ve seen median incomes stagnate and the promised growth failed to materialize. It’s time to end our experiment with trickle-down economics and try policies that work.
In Rewriting the Rules, the Roosevelt Institute lays out the foundations of a tax agenda, supported by recent economic evidence, that would level the playing field, allow us to invest in America’s future, and grow our economy. Higher taxes on the wealthy and on large corporations will do much to rebalance our tax code, as will other measures, like a financial transactions tax aimed at reducing short-term trading.
When the tax code is geared to work for average Americans, we all benefit.
Nell Abernathy is the Roosevelt Institute’s Director of Programs. Eric Harris Bernstein is a Program Associate at the Roosevelt Institute.