Since the passage of the 16th Amendment to the U.S. Constitution in 1913 the federal government has been funded mostly by taxes on income. Federal income taxes since their inception have always been progressive, that is, income above certain thresholds is taxed at higher marginal rates. The thresholds and the rates have varied, but the general principle is that higher earners earn more than others because they have benefitted more from the common good—for example, roads, general infrastructure, and an educated workforce—than have the rest of us. Having benefitted more, a higher percentage of their total income should go to pay taxes that will benefit that common good. “To whom much is given, much is expected.” (Luke 12:48) The progressive income tax came to be during the Progressive Era, a movement which itself was partly in reaction to the wealth disparities of the Gilded Age, disparities very similar to where we are now.
From its inception in 1913 the progressive income tax was anathema to people who rejected the “common good” reasoning, people who subscribe to a doctrine of “rugged individualism,” people who believe that theirs or their family’s accumulation of wealth is purely a mark of their righteousness and superiority over those who have succeeded in accumulating less wealth.
For my entire life the Republican Party has railed against taxes in general and progressive income taxation in particular. The effort to shift from progressive to regressive taxation is now baked into every one of the MAGA economic policies. The effect of every MAGA initiative, if passed and sustained, would shift the cost of supporting the legitimate government functions away from the wealthy and onto the backs of the common people. Let’s explore that.
The “Tax Cuts” of the Big, Bad Billionaire Bill
Issue number one for Trump and the Republican members of Congress is extending the changes in the tax code passed in the “Tax Cuts and Jobs Act of 2017”, the signature piece of financial legislation passed in Trump’s first term. The net effect of the myriad of regulation changes in that bill was to disproportionately reduce the amount of income tax paid by those in the highest tax brackets. The TCJA of 2017 was sold to any who would listen with a bald-faced misdirection of attention to their own wallets, “Money in your pocket,” while the wealthy and corporations smiled all the way to the bank. The personal income tax provisions of the TCJA are due to expire this year, and Republican leadership is hellbent on keeping them. is engaged in similar hand-waving and misdirection now that they trying to sell the extension of those cuts. Codifying those cuts would solidify a huge shift toward regressiveness in the federal income tax code by keeping the TCJA’s cuts to the top marginal tax rates. Don’t be fooled.
Trump’s Tariff Lie
Peter Navarro, one of Trump’s economic advisors, claims on a White House webpage that the revenues from tariffs would balance (pay for) the extension of the wealthy’s TCJA tax cuts. Assuming for a moment that tariffs might bring into federal tax coffers the sort of money Mr. Navarro claims, who would be forking over that money? Tariffs are paid by importers at ports of entry. The costs are inevitably passed through to consumers in the form of increased prices. Of course, the line from the increased costs of importation to rising prices is neither straight nor immediate. It takes a while for the costs to work their way from importer to consumer, so the effect won’t be immediate or necessarily obvious. Moreover, when prices rise as a result of tariffs the rises won’t come with a label. Republicans are betting on voters’ ignorance and Trump’s big lie that tariffs are paid for by the countries that export to us rather than by us the consumers. Net result: Trump’s tariffs, especially his blanket tariffs, are a new regressive tax, a hidden regressive tax that Navarro disingenuously poses as a wondrous and worthy replacement for progressive income taxation.
The Republican States’ Rights Gambit
Thought experiment: For decades has been a lot of talk in Republican circles about transferring responsibilities to the fifty states for programs currently funded and overseen by the federal government, like the Federal Emergency Management Agency (FEMA). Hmmm. Every state will then need to deal with its own weather-related and other disasters. Each state will need to invest in its own bureaucracy necessary to manage emergencies and, importantly, each state will need to raise money via state taxation to pay for all this—and then to provide funds to cover the actual emergencies. Now repeat this scenario for dozens of other functions Republicans would cost-shift to the states, including functions like weather prediction that are best achieved in broader cooperation.
Guess what? Overall, state tax structures are far less progressive than evenfederal income tax structure put in place by the Tax Cuts and Jobs Act of 2017 . Nine states have no income tax at all. Instead, they rely on sales taxes, property taxes, and a variety of other non-progressive tax mechanisms to fund their operations. Income taxes in states that have an income tax are considerably less progressive than the federal income tax. Voila! The costs of Trump/DOGE touted spending cuts, after all the dust settles, will, of necessity, be picked up by the states and paid for with predominantly flat or regressive taxation, further enriching the wealthy few at the expense of the rest of us.
And then there’s venue shopping. Moving from one state to another to take advantage of a more favorable tax regime or looser oversight is far easier than moving your family or business operations to another country. No immigration barriers, no border checks, no monetary requirements. Elon Musk highlighted this game a few years back when he moved operations to Texas from California. Wealthy, highly mobile citizens play off one state’s tax regimen against another by spending just over half the year in a no-income-tax state like Florida and the rest of the year in, for example, their native New York. No longer technically a resident, this gambit saves paying New York State taxes.
Republicans want everyone to believe that their touted $1.6 trillion in tax cuts in the Big, Bad Billionaire Bill as well as the DOGE cuts are all based on “fraud, waste, and abuse”. It’s a lie that disguises a massive wealth transfer to the wealthiest people in the country from the rest of us by systematically shifting the net total of taxation toward regressive taxes. Don’t let them get away with it.
Use 5Calls.org to contact your Congress people. Plan to turn out in protest this coming Saturday afternoon, June 14th.
Keep to the high ground,
Jerry
P.S. Ironically, some of the most prominent leaders of the Progressive Era and champions of the progressive income tax, e.g. Theodore Roosevelt and Woodrow Wilson, were members of the Republican Party of the time—a party that modern day Republican leaders wouldn’t recognize. I found this Wikipedia article on the history of the Progressive Era a fascinating read.