by Kayla Jimenez
Whenever I hear the term “Trickle-down economics,” I’m uncomfortably reminded of times when poor decision making has led me to trying to pee outside somewhere (and failing miserably.) Nonetheless, Trickle-down is the choice word(s) that refers to the economic theory that by increasing benefits for the wealthy, including corporate and business tax cuts, these benefits will ~trickle~ down to everyone else. Rooted in the assumption that the wealthy (business owners, investors, Fortune 500 CEOs) are the predominant source of change and economic growth, this theory suggests that when taxes are cut for this group of individuals and businesses, the resulting monetary savings will be reinvested in the economy to expand and drive business growth.
There are many haters and naysayers regarding Trickle-down economics and its “unfair” targeted tax cuts. *whiney voice* “OMG corporations are, like, evil, greedy, manipulative, and only interested in taking all of our money! Why should they get tax cuts??!!! They should pay more taxes so we can all go to college for free and have free abortions!” Trump could care less about these illogical sentiments and has pushed his tax-cut agenda since day one. I’m more of a supply-side economics kinda gal, I like ALL tax cuts, not just Trickle-down economics vibey tax cuts. But, at this rate, if there’s any sort of tax cut, in any shape or form, I’m here for it. Trump has continually suggested major corporate tax cuts. Finally, in December, Trump signed legislation that lowered the corporate tax rate from thirty five percent to twenty one percent beginning January first of this year. Let’s leave high corporate tax rates in 2017!
What happened following the introduction of this lowered tax rate? Did the country combust? Did corporations decide to take all their newfound profits and offshore them? Buy more private jets or whatever it is people want to assume the repurposed funds will be used for? NO! HA! Take that h8rs. Instead, over one hundred U.S. corporations announced extensive plans to invest the tax savings in their businesses, employees, company infrastructure, and the United States. Walmart, ironically the largest private employer in the U.S. while simultaneously having a bad rep of poor employee treatment and low wages, said starting wages for U.S. store workers will be raised from $9 an hour to $11 an hour, and certain employees will be offered bonuses of up to $1,000. It gets even better: Walmart also plans to grant “10 weeks maternity leave and six weeks paid parental leave to full-time hourly associates, including leave for parents who adopt… Walmart will also contribute $5,000 to the cost of adoption,” according to CBS. Wow! Amazing! Starbucks developed a $250 million wages-and-benefits package thanks to the tax cuts; this package includes wage increases, improved health-care benefits, and more employee stock grants.
These two examples in particular are my favorite because the same people who are anti-corporate tax cuts are also always demanding that the federal government needs to provide us with healthcare and enforce more intense policies for paid family and maternity leave. Well guess what: when the government steps out of the picture, in this case by reducing the tax rate, all of our wishes come true! Walmart is improving its family leave options, even assisting parents who are adopting (progressive af!), Starbucks is expanding its healthcare benefits… it’s truly a beautiful thing. We do not need the government to pass sweeping regulations in order for women and men, moms and dads, to have more options for family leave; we do not need a $15 federal minimum wage; we do not need the government to expand Obamacare and provide coverage for all citizens. All we need is for the government to allow people and corporations to exercise the freedoms they deserve, and the market will take care of the rest!
Though the tax cuts are a primary reason for these announcements and changes, they are not the sole reason. With unemployment rates historically low, the job market is increasingly competitive (on the hiring side, not the searching side). Businesses have to provide more and more to make their job offerings more attractive and incentivize applicants to choose their company over competitors. None of this is bad; this is good for workers, and happy workers make for happy and successful businesses. The general state of the current labor market is an underlying driver for these changes, but the tax cuts were the real catalyst; the icing on the cake, if you will.
The one valid argument against Trickle-down economics emphasizes the concern that reduced revenue from tax cuts may have an impact on the United States’ ability to fund federal programs and manage the national debt. In regards to the federal programs, good! A reduction in federal spending is always ideal. As for the national debt… we’re probably screwed anyways.
Though it seems as though the government’s actions are responsible for this change, American businesses are at the heart of it. They could have said nothing and plotted to improve their bottom lines with lower taxes and higher revenue retention, but instead, they chose to invest in hard working Americans. Most corporations aren’t the heartless, money-crazy entities they are wrongly thought to be: they are run by living, breathing people, they are drivers of change, they put smiles on our faces and money in our pockets, and they keep the world turning.