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Republican tax plans don't add up
Quote:Trump's plan would decrease federal revenue coming from the top 1 percent by $312 billion, and by $151 billion for the top 0.1 percent. Trump's plan is not as generous to the superrich as Cruz's, but overall it calls for the most massive tax cuts — with no offsetting spending reductions — of any of the Republican candidates. Cruz's plan would decrease federal revenue coming from the top 1 percent by $463 billion, and by $231 billion for the top 0.1 percent. That's part of a plan that is, in general, much more generous to the wealthy than any of the other candidates' plans, according to Vox's Dylan Matthews.
Here’s how much each presidential candidate would raise — or cut — taxes for the superrich - Vox

There are the two usual tricks around this:
  1. Make huge cuts in public spending, but these can't be stated in advance as the numbers are so big they necessarily involve big cuts in programs like social security which are actually popular with Republican voters.
  2. Just like the proverbial economist on a desert island assumes a tin opener for those whashed ashore cans of tuna, republicans assume a big increase in growth from those tax cuts for the super-rich. 
Experience of the last three decades show that rather than increase economic growth, tax cuts for the super-rich are actually more likely to reduce growth:
  • Just as the tax increases under Clinton did not led to the predicted economic crisis (quite the opposite), the Bush tax cuts did nothing to spur growth.
  • The super-rich already benefited a huge increase in income and wealth distribution in their favor. For instance, CEO to worker pay went from 20 times to 300 times from the 1970s. Rather than increasing growth this is reducing it. As Hanauer put it, if I earn 1000 times as much as my employees, I don't spend 1000 times as much..
  • The mechanism through which this redistribution in favor of 'job creators' is supposed to work is they save more, which reduces interest rates, which leads to more investment. But interest rates are already at record low levels and companies have little reason to invest if the purchasing power of their customers doesn't increase. Rather than invest, they pay big dividends and buy back their own shares, 91% of the profits of S&P 500 companies were spent on dividends and buybacks..
Just to show how the Republicans indeed assume miracle effects of tax cuts for the rich, here is Paul Ryan in a recent interview:

Quote:HARWOOD: On taxes, when your predecessor as Ways and Means chair, Dave Camp, came out with a comprehensive tax reform a few years ago, he adopted as a principle that it was going to be distributionally neutral. It wasn't going to give an advantage to any group over the current system. Is that still a principle that you think is appropriate for the Republican tax agenda?

RYAN: So I do not like the idea of buying into these distributional tables. What you're talking about is what we call static distribution. It's a ridiculous notion. What it presumes is life in the economy is some fixed pie, and it's not going to change. And it's really up to government to redistribute the slices more equitably. That is not how the world works. That's now how life works. You can shrink or expand the economy, and what we want to maximize is economic growth and upward mobility so that everybody can get a bigger slice of the pie.
Another Dem like Obama? Our best days are behind us: Ryan

What actually is a ridiculous notion is that giving even more money to the top is going to make the economy grow faster while there is no evidence to support this, and as admin just argued, the reverse might actually be closer to the truth.

As you can gauge from the charts below, the top 1% has gained enormously both in income share and in wealth share from the early 1980s. What did that do to the economy? Uhh..

[Image: 10-26-15pov-f3.png?itok=fGviTaYx]

[Image: Wealth%20Distribution.jpg]
Quote:The tax-cut proposals from Republican presidential candidates Donald Trump and Ted Cruz, in conjunction with their calls for balancing the budget, would dictate low levels of government spending not seen since about 1950, as we explain in a new paper.  Programs that receive support across the political spectrum and are important to the well-being of most Americans would dramatically shrink or disappear altogether.

Even if policymakers didn’t achieve budget balance under their tax-cut plans but simply offset the costs of the plans themselves, the consequences to essential programs — and to low- and middle-income Americans — would be severe.  These conclusions emerge from an analysis of the Urban-Brookings Tax Policy Center’s (TPC) revenue estimates of the Trump and Cruz tax plans — which would reduce revenues by $9.5 trillion and $8.7 trillion over the next ten years, respectively, according to TPC — and CBPP estimates of what such revenue levels imply for government spending.

Measured as a percent of the economy (gross domestic product or GDP), revenues would fall to their lowest level since 1950 under the Trump tax cuts and to their third-lowest level since 1950 under the Cruz tax cuts.  Social Security spending was just 0.3 percent of GDP in 1950 and Medicare did not exist.  Social Security and Medicare spending now amounts to 8.1 percent of GDP and continues to rise, primarily due to the aging of the population.  The 1950 revenue base is inadequate for today’s needs (see chart).

Offsetting the cost of the Trump or Cruz tax cuts would require cuts in government programs that far exceed the painfully deep reductions in the budget plan the Republican majority on the House Budget Committee recently approved.  Offsetting the costs of the tax cuts and balancing the budget, as both candidates support doing, would require spending cuts about two and one-half times the size of the Budget Committee cuts.
Trump, Cruz Tax-Cut Plans Would Force Historically Dramatic Cuts | Center on Budget and Policy Priorities

And most of the benefits of these tax cuts go to..
Basically, it's a switch and bait. Rile against the budget deficit, the public debt, the rise in inequality (if that isn't still denied, as it has been for a long time), pose as the working and middle class champion and then implement huuuuuge tax cuts which overwhelmingly go to the rich, do little for the economy, crater public finances which necesitates either big spending cuts in programs for working and middle classes or a huge deficit..
Speaking about switch and bait, here is Krugman summing it up:

The Pathos of Republican Reformers
 MARCH 30, 2016 6:31 PM

March 30, 2016 6:31 pm

Ross Douthat has a wonderfully written, heartfelt takedown of the WSJ editorial page, which is — surprise! — dead set against any deviation from the tax-cuts-for-the-rich agenda. Definitely worth reading. But my question is, did Republican reformers like Douthat really think there was any chance that their ideas would achieve headway within the party? If so, they were remarkably naive.

After all, what is the modern GOP? A simple model that accounts for just about everything you see is that it’s an engine designed to harness white resentment on behalf of higher incomes for the donor class.

What we call the Republican establishment is really a network of organizations that represent donor interests because they’re supported by donor money. These organizations impose ideological purity with a combination of carrots and sticks: assured support for politicians and pundits who toe the line, sanctions against anyone who veers from orthodoxy — excommunication if you’re an independent thinking pundit, a primary challenge from the Club for Growth if you’re an imperfectly reliable politician.

To a very casual observer, it may look as if this movement infrastructure engages in actual policy analysis and discussion, but that’s only a show put on for the media. Can you even imagine being unsure how a Heritage Foundation study on any significant issue will come out? The truth is that the right’s policy ideas haven’t changed in decades. Paul Ryan’s innovative idea on Medicare — let’s replace it with vouchers! — is the same proposal Newt Gingrich offered in 1995.

So why are we seeing a crackup of this system now? It’s not because events have called the orthodoxy into question; that has never mattered in the past. On the contrary, failed predictions have never caused even the slightest change in claims: the same people who predicted that Bill Clinton’s 1993 tax hike would kill jobs and that Obamacare would be an economic disaster are making confident predictions about the salutary effects of tax cuts now.

The problem, instead, seems to be demography — an increasingly diverse population means that the party needs to go beyond white resentment, but the resentful whites are having none of it. Oh, and the base never cared about the ideology.

Just to be clear, Democrats aren’t angels. But the Democratic party is a very different kind of arrangement. It’s a coalition of interest groups. None of them are selfless, but the party does in fact try to serve the interests of these groups, more or less; it’s not the kind of immense exercise in bait-and-switch that the GOP has become. And it can respond to a changing country by changing itself, adapting to the shifting balance of power among its constituent groups.

Oh, and the very pluralism of the Democratic system, while it can make the party diffuse and ineffectual, means that there’s nothing like the right’s unchallengeable orthodoxy, which in turn means that sometimes analysis and evidence can matter.

But back to the Republicans: the reformist hope was, I guess, that the donor class itself would realize the need to soften the party’s ideology in the face of a changing society. But the right-wing rich are different from you and me: they can and do surround themselves with people telling them that if only they say the usual things louder — if only they run yet another ad accusing Donald Trump of not being a true conservative — they can reestablish the old order. Remember, it took five presidential defeats — 1932, 1936, 1940, 1944, and the shocker in 1948 — before the old GOP accepted the legitimacy of the New Deal. If that’s the standard, would-be Republican reformers might have to wait through two terms of Hillary and one of her successor before getting a hearing.

For now, at least, the reformers have no constituency.
Trillion Dollar Fraudsters

MARCH 20, 2015

Paul Krugman

By now it’s a Republican Party tradition: Every year the party produces a budget that allegedly slashes deficits, but which turns out to contain a trillion-dollar “magic asterisk” — a line that promises huge spending cuts and/or revenue increases, but without explaining where the money is supposed to come from.

But the just-released budgets from the House and Senate majorities break new ground. Each contains not one but two trillion-dollar magic asterisksone on spendingone on revenue. And that’s actually an understatement. If either budget were to become law, it would leave the federal government several trillion dollars deeper in debt than claimed, and that’s just in the first decade.

You might be tempted to shrug this off, since these budgets will not, in fact, become law. Or you might say that this is what all politicians do. But it isn’t. The modern G.O.P.’s raw fiscal dishonesty is something new in American politics. And that’s telling us something important about what has happened to half of our political spectrum.

So, about those budgets: both claim drastic reductions in federal spending. Some of those spending reductions are specified: There would be savage cuts in food stamps, similarly savage cuts in Medicaid over and above reversing the recent expansion, and an end to Obamacare’s health insurance subsidies. Rough estimates suggest that either plan would roughly double the number of Americans without health insurance. But both also claim more than a trillion dollars in further cuts to mandatory spending, which would almost surely have to come out of Medicare or Social Security. What form would these further cuts take? We get no hint.

Meanwhile, both budgets call for repeal of the Affordable Care Act, including the taxes that pay for the insurance subsidies. That’s $1 trillion of revenue. Yet both claim to have no effect on tax receipts; somehow, the federal government is supposed to make up for the lost Obamacare revenue. How, exactly? We are, again, given no hint.

And there’s more: The budgets also claim large reductions in spending on other programs. How would these be achieved? You know the answer.

It’s very important to realize that this isn’t normal political behavior. The George W. Bush administration was no slouch when it came to deceptive presentation of tax plans, but it was never this blatant. And the Obama administration has been remarkably scrupulous in its fiscal pronouncements.

O.K., I can already hear the snickering, but it’s the simple truth. Remember all the ridicule heaped on the spending projections in the Affordable Care Act? Actual spending is coming in well below expectations, and the Congressional Budget Office has marked its forecast for the next decade down by 20 percent. Remember the jeering when President Obama declared that he would cut the deficit in half by the end of his first term? Well, a sluggish economy delayed things, but only by a year. The deficit in calendar 2013 was less than half its 2009 level, and it has continued to fall.

So, no, outrageous fiscal mendacity is neither historically normal nor bipartisan. It’s a modern Republican thing. And the question we should ask is why.

One answer you sometimes hear is that what Republicans really believe is that tax cuts for the rich would generate a huge boom and a surge in revenue, but they’re afraid that the public won’t find such claims credible. So magic asterisks are really stand-ins for their belief in the magic of supply-side economics, a belief that remains intact even though proponents in that doctrine have been wrong about everything for decades.

But I’m partial to a more cynical explanation. Think about what these budgets would do if you ignore the mysterious trillions in unspecified spending cuts and revenue enhancementsWhat you’re left with is huge transfers of income from the poor and the working class, who would see severe benefit cuts, to the rich, who would see big tax cuts. And the simplest way to understand these budgets is surely to suppose that they are intended to do what they would, in fact, actually do: make the rich richer and ordinary families poorer.

But this is, of course, not a policy direction the public would support if it were clearly explained. So the budgets must be sold as courageous efforts to eliminate deficits and pay down debt — which means that they must include trillions in imaginary, unexplained savings.

Does this mean that all those politicians declaiming about the evils of budget deficits and their determination to end the scourge of debt were never sincere? Yes, it does.

Look, I know that it’s hard to keep up the outrage after so many years of fiscal fraudulence. But please try. We’re looking at an enormous, destructive con job, and you should be very, very angry.
GOP: We’ve been lying all along

Boehner's admission that we don't really have a debt crisis reveals his party's ulterior, program-cutting motives

I never thought I’d write these words, but here goes: Thank you, John Boehner. Thank you, Mr. Speaker, for finally admitting on national television that all the fiscal cliffs, sequestrations and budget battles you’ve created are, indeed, artificially fabricated by ideologues and self-interested politicians and not the result of some imminent crisis that’s out of our control.

America owes this debt of gratitude to Boehner after he finally came clean on yesterday’s edition of ABC’s “This Week” and admitted that “we do not have an immediate debt crisis.” (His admission was followed up by Budget Committee Chairman Paul Ryan, who quickly echoed much the same sentiment on CBS’ “Face the Nation”).

In offering up such a stunningly honest admission, the GOP leader has put himself on record as agreeing with President Obama, who has previously acknowledged that demonstrable reality. But the big news here isn’t just about the politics of a Republican House speaker tacitly admitting they agree with a Democratic president. It is also about a bigger admission revealing the fact that the GOP’s fiscal alarmism is not merely some natural reaction to reality, but a calculated means to other ideological ends.

Before considering those ends, first remember that Boehner (like Obama) is correct on the facts.

As Nobel-winning economist Paul Krugman has pointed out, “Even if we do run deficits, federal debt as a share of GDP will be substantially less than it was at the end of World War II” and “it will also be substantially less than, say, debt in several European countries in the mid- to late 1990s.” It is also lower than the 80 percent of GDP level that many economists say starts to put countries in a precarious position. Additionally, citing Congressional Budget Office data, the Center for American Progress notes that the long-term debt outlook is only dire because the projections simply assume without question that “future Congresses will enact huge new deficit-increasing tax cuts and spending hikes.”

“The debt outlook is bad (but) we’re not looking at something inconceivable, impossible to deal with,” writes Krugman. “We’re looking at debt levels that a number of advanced countries, the US included, have had in the past, and dealt with.”

So yes, we should start dealing with the long-term debt in a pragmatic and sober way, but we shouldn’t pretend it is some sort of imminent crisis worthy of draconian austerity measures.

If we could somehow do that, then there would be plenty of gradual steps that could be taken right now — steps that deal with the debt in measured ways that do the least harm to the overall economy. Those include starting to phase out the Bush tax cuts, which show no correlation with job growth and yet are the single largest driver of annual deficits; starting to reduce defense and war spending, which, job-creation-wise, is one of the least effective ways for the government to spend money; starting to move the United States toward the least costly, more efficient, and more effective single-payer healthcare system that most industrialized countries have, and that lowers overhead for employers; and starting to spend more money on social programs that fight economic inequality, with the understanding that driving down such inequality tends to boost macroeconomic growth and consequently boost public revenues (this is the Reagan-esque idea of growing one’s way out of debt).

But, of course, we aren’t having a sober and measured discussion about such pragmatic solutions. Instead, the national conversation about the budget is dominated by debt demagogues with ulterior motives. Taking a page out of the shock doctrine playbook that says every crisis is an opportunity, these alarmists have sought to create the perception of an immediate crisis in order to quickly manufacture opportunities to legislate their otherwise politically impossible agenda items.

In practice, that means Wall Streeters and conservative ideologues citing the supposedly imminent crisis to successfully nudge the political establishment to endorse cuts to Social Security, even though the program has almost nothing to do with the debt crisis. It also means a GOP budget that targets most of its cuts at the social programs that the poor and middle-class most rely on (this, at the same time most of these same alleged budget hawks supported an extension of most of the deficit-expanding Bush tax cuts; decry any cuts to the defense budget; and either outright oppose a single-payer system or support the Obama healthcare law that while certainly expanding coverage, nonetheless buttresses the private health insurance industry and, thus, arguably makes such a single-payer system more out of reach).

From Boehner to Ryan to the Bowles-Simpson tandem to an unending parade of television pundits, the last year has been marked by the most prominent political voices ignoring the more prudent way forward, and instead claiming that these shock doctrine prescriptions — i.e., Social Security/Medicare cuts, social program cuts, etc. — are all required. And not just required, but required immediately, because of the supposed urgency of the debt crisis.

Using that supposed urgency as a rationale to create fiscal cliffs, sequestration battles and debt ceiling crises, their talking points have lately assumed a similar tenor to that of the old Thatcherites’ “There Is No Alternative” mantra, the idea being that because the emergency is supposedly so imminent, there is simply no other way forward than the conservative neoliberal path of profligacy for the rich (tax cuts, continued corporate subsidies, etc.) and austerity for everyone else.

But suddenly, thanks to yesterday’s declarations by Boehner and Ryan, the charade’s most sacred lie has been exposed. In acknowledging that “we do not have an immediate debt crisis,” GOP leaders are admitting that there is, in fact, an alternative. They are also admitting that their longtime claims to the contrary were ends-justify-the-means tactics to manufacture an unnecessary panic — one that they hoped would scare America into abruptly accepting the kind of draconian policies polls show the public opposes.

Now that the truth is out, maybe a more reasoned debate can begin and more pragmatic policies can finally take center stage.
Ted Cruz’s Tax Plan For ‘Hard-Working Americans’ Is Really A Gift To The Wealthy

MAR 28, 2016 11:59 AM

In a new ad, Republican presidential candidate Sen. Ted Cruz (R-TX) promotes his tax plan, which he paints as a way to boost working-class Americans. Yet every analysis finds his proposals would give the rich the biggest benefits with little left over for everyone else.

“As Washington pads Wall Street’s pockets, hard-working Americans get left behind,” he says at the beginning of the ad. “My tax plan will change that.”

A voiceover claims that by abolishing the Internal Revenue Service and instituting a 10 percent flat tax on all income, “working families” will get “higher take-home pay.” The ad finishes with Cruz saying, “When the playing field is level, American workers win.”

Yet the details of Cruz’s plan would significantly skew the playing field in favor of the wealthy and corporate interests. Different analyses making different assumptions have found differing results, but they all paint the same picture: the wealthiest 1 percent would get the biggest benefits from his plan, with very little going toward everyone else. The conservative Tax Foundation found that about 30 percent of the benefits would flow to the 1 percent. The centrist Tax Policy Center found that half of all benefits would be captured by the 1 percent, and the richest fifth of the country would see more than 80 percent. That leaves the middle and lower classes with less than 7 percent of the benefit, with the poorest tenth actually experiencing a tax increase over a decade. The left-leaning Citizens for Tax Justice found that the 1 percent makes off with 65 percent of the tax cuts, with increases on the middle and lower class.

And far from cracking down on Wall Street, the plan offers some benefits for bankers. It would reduce the capital gains tax, paid on money made from investments rather than salaries, to the flat 10 percent rate, a drop for the already lower rate they pay. Large corporations would generally benefit from the 16 percent “Business Flat Tax,” much lower than the on-paper tax rate of 35 percent or the effective 19 percent rate many big companies pay.

Cruz’s plan also comes with a big price tag: the Tax Policy Center found it would cost the federal government $8.6 trillion over a decade. Assuming that tax cuts are paid for with a mix of half spending cuts and half tax increases, Citizens for Tax Justice found that his plan would cost nearly everyone in the country even more while padding the pockets of the richest. A person in the poorest fifth of the country would have about $6,000 less, while someone in the top 1 percent would have about $364,000 more.
Trump Either Doesn’t Understand His Own Tax Plan Or Is Egregiously Lying About It

 APR 4, 2016 8:00 AM

On Sunday night during a “town hall” broadcast on Fox News, Greta Van Sustren asked Donald Trump about his tax plan. Specifically, she asked him if everyone in the country would get a tax break, “even the very rich.” This is how Trump responded:

Quote:The very rich are going to be paying — well, first of all on the very rich, let me explain. We have things in the very rich that are so unfair to the general public, especially the hedge funds guys, like carried interest and different provisions, that are very complex that a lot of people wouldn’t understand. But I’m getting rid of carried interest and frankly the ones that I’m really concerned about — you know, I like the workers — I call them the workers of this country — the best. I don’t necessarily like the very rich, even though I’m one of the very rich. Butthe very rich are going to end up probably paying more but there’s an incentive for them to invest in the country and to create jobs.

Trump is either completely unfamiliar with his actual tax plan or is blatantly lying about it.

According to an analysis by the Tax Policy Center, the top 0.1 percent of taxpayers — a group that includes those with incomes over $3.7 million — would receive an average tax cut of $1.3 million under Trump’s plan. Those in the bottom 20 percent of income, meanwhile, would receive an average tax cut of $128. Overall, 35 percent of the benefits of Trump’s tax cuts go to the top 1 percent of earners.

[Image: taximpacts-e1459767331630.jpg]

Trump does get rid of the carried interest loophole, which provides tax advantages to hedge fund managers and others, but the impact of that change is swamped by massive cuts to the rates on income and capital gains.

This analysis shows that the idea the very wealthy will “probably pay more” under Trump’s tax plan is completely false. The very wealthy under Trump’s tax plan will pay much less.

Trump paid no price for his obvious falsehood on Fox News, however. Van Sustren simply moved on to the next question.
New Heights of Preposterousness

60% of Ted Cruz‘s tax cut goes to the top 1%

I haven’t been commenting on Republican tax plans this season because, well, it takes a lot to impress me when it comes to absurd tax cut proposals. Ted Cruz has done it.

The major components of Cruz’s plan amount to this:
  • A flat 10% tax on individual income (labor and investments)—down from top rates today of 43.4% on labor and 23.8% on capital gains and dividends
  • No payroll taxes (15.3% for most people today), corporate income tax (average rate about 13% today), or estate tax
  • A 19% value-added tax (16% of gross business receipts, including the tax)
There are two big things that are crazy about this plan.

The first is that it eliminates an enormous amount of tax revenue: $3.6 trillion over ten years, according to the right-wing Tax Foundation’s “static” analysis—that is, before the growth fairy waves her magic wand. To put that in context, that’s more than we plan to spend on the military over the next ten years.

The second is the astonishingly naked handout to the very rich:

60% of the tax cut goes to the top 1%.

That leaves only 40% for everyone else.

This number is so embarrassing that you won’t find it in the Tax Foundation’s analysis. Unlike the Tax Policy Center, which typically shows how the dollar impact of a tax proposal is distributed across the population, the Tax Foundation only provided the percentage impact of Cruz’s plan on the after-tax income of each income group. What they tell us is that the tax cut will increase after-tax income by 1.2% to 1.5% for households between the 40th and 60th percentiles; by 29.6% for households above the 99th percentile; and by 9.2% for all households on average. But with a little arithmetic we can figure out the missing number.

Thanks to the World Top Incomes Database, we know that the top 1% receive about 21% of all income, including capital gains. The average total federal tax rate today is 19.8%; the average rate for the top 1% is about 30%, and the average rate for everyone else is about 17%. So for every $100 of pre-tax income, the 1% get $21 and the 99% get $79; after taxes, the 1% get $15 and the 99% get $65, for a total of $80. Since after-tax income goes up by 9.2% on average, total after-tax income goes up by about $7.40 in Ted Cruz’s world. But for the 1%, after-tax income goes up by about $4.40—just under 60% of the total.

Why this is should be obvious. A value-added tax is a tax on consumption. So if you’re in the middle class and need all your income for living expenses, you pay a 10% tax rate on money as you earn it (after the standard deduction and personal exemptions) and another 16% on money as you spend it.

The claim that a family of four pays no tax on its first $36,000 of income is basically a lie, since they will pay 16% when they spend the money.

If you’re a gazillionaire and can’t possibly spend all your money (real estate counts as investment, not consumption), you only pay 10% once—and you can defer most of your income by not taking capital gains. This makes Cruz’s tax system “flat” in name only; it’s actually highly regressive. This is also why any serious advocate of a value-added tax, and there are many, favors some provision for restoring progressivity.

What about the loophole fairy? Cruz, like most tax reformers, claims that he will eliminate those loopholes that big corporations and rich people benefit from. The problem is that he keeps all the big, distortion-creating loopholes: the deduction for charitable donations, the mortgage interest deduction, the exclusion for pension contributions, and the exclusion for employer-provided health care. Everything else is small potatoes.

Finally, what about that growth fairy? According to Cruz, lower tax rates will spur economic growth because of stronger incentives to work and save. It’s Economics 101, after all. But first, there’s less here than meets the eye, even on paper. The true marginal tax rate for most people will be 26%, not 10%; if you don’t save, and most people don’t, a consumption tax is virtually identical to a tax on labor income. Second, the growth fairy just doesn’t exist. Most empirical studies find very small or nonexistent effects of tax rates on labor force participation or on the propensity to save. Third, the Tax Foundation’s rosy economic projections assume that the tax cuts will be “appropriately financed”—which can only mean that government spending will be reduced to completely offset the losses of tax revenues. Yet at the same time, Cruz proposes to guarantee funding for Social Security and Medicare.

This is taking puppies and rainbows to 11.

Of course, none of this should be any surprise. Republican tax proposals became completely divorced from reality long ago. More importantly, the Republican nomination lies in the hands of a handful of donors who are in the 0.001%, so the rational thing for any candidate to do is pander to them as enthusiastically as possible.

The only policies we have that limit the transmission of wealth from generation to generation are the estate tax and taxes on investment income. Eliminating one and slashing the other, as Ted Cruz proposes, is the single biggest step we can take toward becoming an aristocracy of inherited wealth. As a member of the 1%, that would be good for my grandchildren—but it would be bad for the country.

James Kwak is an associate professor at the University of Connecticut School of Law, a co-author of 13 Bankers and White House Burning, and a co-founder of Guidewire Software. Find more at TwitterMediumThe Baseline ScenarioThe Atlantic, or

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