BURLINGTON, N.C. — For a peek into a world after a massive tax cut, visit North Carolina and ride along with factory owner Eric Henry. Conservative groups have hailed North Carolina as a model of a tax overhaul since it began slashing state corporate and individual tax rates four years ago. And one of the effort’s main architects, Thom Tillis, is now in the U.S. Senate, where early Saturday he joined 50 other Republican senators in voting for a $1.5 trillion federal tax overhaul — a plan that employs many of the same tactics already in use here. But as Henry drove through the conservative, rural county he’s called home all his life, he had trouble seeing many benefits of the tax cut. Business was good, but it wasn’t good enough that he could give his 20 workers significant raises. And there were growing worries that the lost tax revenue — estimated at $3.5 billion this year alone — was beginning to significantly hurt core public services such as schools.
When you live in a fantasy world in which less is more, tax cuts pay for themselves, and the benefits of cutting taxes on the wealthy will trickle down through all economic strata, you’re not going to be amenable to reality. Truth is, less isn’t more in even the most basic mathematical sense. Tax cuts can’t (and don’t) pay for themselves. And there’s no such thing as “trickle-down.” This is the textbook definition of what former President George H.W. Bush once called “voodoo economics”…and it has significant negative real-world consequences. None of the benefits which Republicans claim will rain down upon the middle class have any basis in experience- quite the opposite, in fact.
The working theory appears to be “These things haven’t worked before because our faith was insufficient to the task, and even though they’ve failed before, they’ll come true this time- BECAUSE WE BELIEVE!!” Wir sind sehr gefickt….
You could go to North Carolina…or Kansas…or virtually any other red state which has decided to implement the Far Right’s “Alice in Wonderland” economic theory– “Why, I can believe a half-dozen impossible things before breakfast!”- and find a legacy of failure. The lofty promises simply don’t hold up in the real world.
“I don’t know the people who this benefits,” Henry said of the North Carolina tax cut.
Changing the national tax code is much different from changing a state’s code. But what’s happening today in North Carolina offers potential clues about the grand experiment with tax cuts the entire nation is close to embarking on, with Republicans appearing confident they can send final legislation to President Trump by year’s end.
The tax changes in North Carolina haven’t produced the fiscal calamity that led Republican legislators in Kansas this year to reverse dramatic cuts they passed a few years earlier, but nor have they produced the kind of win-for-all economic prosperity national Republicans say their effort will spur.
Republicans have made all sorts of promises about how their tax reform bill will trigger all sorts of wondrous economic growth: Two chickens in every pot! Two cars in every garage!! Looking at North Carolina and Kansas tell a much different story, though- one which has been conveniently ignored in the rush to cut taxes for the 1%. Kansas’ tax cuts turned that state into an economic basket case (turns out less really ISN’T more) and made a liar of Gov. Sam Brownback, one of the American Taliban’s luminaries. North Carolina has been more fortunate, which isn’t exactly a ringing endorsement for the magic of tax cuts.
“There’s nothing magical that has happened in North Carolina,” said John Quinterno, an economic analyst at the Chapel Hill-based research group South by North Strategies.
Mathematical realities being what they are, there’s no credible way to make “less is more” work. Despite repeated attempts at selling “tax cuts will pay for themselves” by “turbocharging the economy” and “creating economic growth,” it hasn’t come to pass. Tax cuts don’t pay for themselves…because even in economic terms you can’t create more with less. It’s an appealing theory which has repeatedly proven itself a pie-in-the-sky dream.
The question now is whether America will end up an economic basket case like Kansas…or an economy slowly degrading like North Carolina. Taxes help pay for things like roads, bridges, schools, and hospitals; reduce the tax base for those things and there will be consequences…possibly severe ones. Less will not create more, and you can’t repair infrastructure and govern effectively with less.
Will the reality of tax cuts (I hesitate to use “reform,” because that’s just not the case) live up to the hype? Will “trickle-down” finally work? Will the Buffalo Bills finally win a Super Bowl? Will I finally discover my superpower?
I suppose all things are possible, but here in the real world, where bad policy can have significant consequences, the odds of Republicans delivering on their lofty promises are somewhere between low and nonexistent. Not to be a knee-jerk pessimist, but how can a bill which virtually no one knows the contents of be anything but a disaster looking for a place to happen?
Nice work, America.