The GOP’s controversial new tax plan has been called many things — confusing, anti-populist, an unprecedented windfall for the wealthy, and, according to House Minority Leader Nancy Pelosi, “the worst bill in the history of the United States Congress.”
According to historian Nancy Koehn, the latest GOP bill is a monumental step backwards: reminiscent of a few other pieces of legislation throughout the history of American taxes that did not end well.
“We’re talking a big, exclamation-point piece of legislation in the sweep of American tax history,” Koehn told Boston Public Radio Tuesday.
“There has been, at various moments in American history, the idea that the graduated income tax should be a very important leveler of incomes,” Koehn said. “What we’ve seen in the last 25-30 years is this massive increase in income and wealth inequality, and now we have the passage of this tax act, which will exacerbate that significantly, in terms of where the benefits flow.”
Koehn compared the new tax code, which would enact $1.5 trillion in tax cuts, largely favoring wealthy Americans and corporations, to Economic Recovery Tax Act (ERTA) of 1981 — the foundation of supply-side economics, or “trickle-down” economics.
“Give a lot of money to the wealthy, give a lot of money to businesses, and that extra money will trickle down in the form of jobs and higher incomes for folks less fortunate and less wealthy than large corporations and the wealthiest 1 percent,” Koehn explained. “That economic logic has been empirically and theoretically decimated over the last 30 years.”
“This is a pretty momentous piece of fiscal legislation that has much broader effects than just the country’s finances,” Koehn continued. “It’s hard to see this as an economically beneficial piece of legislation.”
So why are we implementing it again?
“I think there’s an interesting question about why, as a people, we are accepting something that most people don’t benefit from and that we know will create more income inequality, not to mention a deficit that’s over $1 trillion,” Koehn said. “This is like selling our kid’s future off so that a few people in today’s society get an immediate benefit.”
Harvard historian Nancy Koehn holds the James E. Robison Chair of Business Administration at Harvard Business School. To hear her full interview with Boston Public Radio, click on the audio player above.