Trickle Downers

The Prospect's ongoing exposé of the folly, dysfunctions, and sheer idiocy of feed-the-rich economic policies.

Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.

Trickle Downers

The Vapid Defense of Share Buybacks

AP Photo/Richard Drew, File
AP Photo/Richard Drew, File The logo for 3M appears on a screen above the trading floor of the New York Stock Exchange T his past Sunday , with the share buybacks of American corporations at an all-time high, The Washington Post business section ran a major piece documenting buybacks’ rise and giving the arguments for and against the practice. And the arguments for, I’m compelled to say, look mighty flimsy. Those arguments have never been more important, since the Republican tax cut supercharged the irresistible force (greed) that compels CEOs to authorize buybacks—as their pay is commonly linked to the share values that buybacks inflate. And “supercharged” may be understating it: “In February alone,” the Post reported, “U.S. corporations announced a record $150.7 billion in buybacks.” The problem with buybacks—the problem their defenders are obliged to address—is that they simply funnel corporate profits into shareholders' pockets rather than into investment. The defenders’ argument...

Audits Endanger Tax Credits for the Working Poor

When workers who claim the Earned Income Tax Credit are audited, they’re less likely to claim the credit, a powerful anti-poverty tool, in the following years.

(AP Photo/Brennan Linsley)
(AP Photo/Brennan Linsley) A professional tax preparer views a Form 1040. I n 2017, 27 million families received the Earned Income Tax Credit (EITC), a refundable tax credit available to people with low incomes who work. While the EITC has been described as a subsidy for low-wage employers, the credit still materially puts, on average, $2,445 in the pockets of low-income people. But a new paper from the National Bureau of Economic Research (NBER) finds that EITC claimants who are audited are less likely to claim the credit in the following years. This is particularly significant because House Republicans recently proposed expanding Internal Revenue Service review of EITC returns. The NBER researchers looked at the behavior of taxpayers who received the EITC—both those who were audited (through correspondence audit ) and those who weren’t. Their study found that, after receiving a correspondence audit, people who claimed the EITC in a particular year were 30 percent less likely to...

A Tough Week for the Social Safety Net

States from Tennessee to Wisconsin are mirroring the Trump administration’s enthusiasm for eviscerating anti-poverty programs.

(AP Photo/Scott Bauer)
(AP Photo/Scott Bauer) Wisconsin Governor Scott Walker describes his proposal to reduce food stamp benefits for parents who do not meet work requirements on January 23, 2017. T he past few days have been difficult, on both the state and federal level, for the country’s already frayed social safety net. Several states, taking their cues from the Trump administration, have restricted and made cuts to anti-poverty programs, and this week, too, the federal government has joined in the shredding of welfare assistance. The week began with the tiniest of hopes, as the Republican-dominated Tennessee State Legislature voted Monday to raise cash assistance levels for the first time in 22 years. But the abysmal increase brings total benefits for a family of three to just 16 percent of the poverty line, and that same state legislature is moving forward with Medicaid work requirements that could strip health care from thousands of adults with children. In Wisconsin on Tuesday, Republican Governor...

Waiting -- and Waiting-- For Corporate Tax Cuts to Deliver Those Wage Hikes

Though if you’re a CEO or shareholder, the new tax cuts are the gift that keeps on giving.

(Photo by Albin Lohr-Jones/Sipa USA via AP Images)
(Photo by Albin Lohr-Jones/Sipa USA via AP Images) A demonstrator holds a sign at a rally in opposition to the Republican tax bill held in New York City on December 2, 2017. trickle-downers.jpg W orking- and middle-class Americans standing by for those corporate-tax-cut-fueled wage increases to appear now understand how Vladimir and Estragon felt in Waiting for Godot . It’s been nearly four months since the Tax Cuts and Jobs Act became law, and the good times continue to roll for shareholders and company executives. Corporate profitability is well on its way to hitting decade-long highs, and CEO pay, coming off of a record year in 2017, will be the cause of much champagne-popping. But if the new tax bill, which showered corporate America with an estimated $68 billion in savings, has been a party for Wall Street, folks on Main Street—the supposed primary beneficiaries of the tax-cutting bonanza, as Republicans told it—have yet to receive their invitations. A new online database...

Striking a Match

The walkout wildfire is spreading from West Virginia to Kentucky to Oklahoma to Arizona, as teachers demand investment in education—not more tax breaks for the rich.

(Nate Billings/The Oklahoman via AP)
(Nate Billings/The Oklahoman via AP) Teachers and supporters of increased education funding pack the first and second floors of the state capitol during the second day of a walkout by Oklahoma teachers on April 3, 2018, in Oklahoma City. trickle-downers.jpg W hat started in West Virginia has spread . This week, partly inspired by the teacher walkouts across every county in West Virginia, teachers in both Kentucky and Oklahoma have left the classroom to protest (the issues vary state to state) low pay, abysmally low school funding, and inadequate benefits—but fundamentally, the attacks on public education. As was much the case in West Virginia, the blame for these states’ defunding of public services like education can be placed on a history of tax cuts for corporations and the wealthy. West Virginia saw a wave of tax cuts passed in 2006, which only grew over the next decade. Soon, the cuts were reducing West Virginia’s revenue each year by $425 million . Corey Robin, author of The...

Pages