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OPINION: What Would a Second Trump Term Mean for Our Taxes?

By Op-Ed

Originally published at The Keystone.

Donald Trump doesn’t like to talk much about the public policies he would propose if he becomes president again. To the despair of his own political advisors, he would rather make juvenile, personal attacks against Kamala Harris.

But maybe Trump knows what he is doing. For if you look at the policy proposals he and his closest advisors have actually supported, you’ll see that they would be disastrous for working people. That’s especially true when it comes to taxes.

Here’s what we can surmise from what he has said and done about his likely tax policies and how they would affect Pennsylvanians.

First, he would seek to reauthorize the 2017 Trump tax cut law, which expires in 2025. The tax cut was so tilted in favor of the wealthy, rather than workers, that it had the dubious distinction of being the only tax cut that was wildly unpopular since the invention of polling. It drastically cut corporate taxes and taxes on the wealthy, while offering working people only token reductions in taxes. And it never brought about the new investment Trump promised. Instead, corporations used their tax cut to buy back stock, helping their rich owners get richer while avoiding taxes on dividends.

Recent projections by the Institute on Tax and Economic Policy (ITEP) show that making the 2017 tax cuts permanent would again benefit the very wealthy a great deal but everyone else very little. The top 1% in Pennsylvania households, making $891,700 or more, would get a tax cut of $50,230 per year. Households in Pennsylvania in the middle 20%, with an average income of $74,450, would get a tax cut of only $990. And households in the bottom 20%, with incomes below $27,500, would get a tax cut of only $80.

That’s bad enough. But things could get even worse for working Pennsylvanians if Trump pursues the recommendations of Project 2025, which is organized and written by his biggest supporters. Under that plan, tax rates would be consolidated, raising them for low-income workers and lowering them for high-income ones while also eliminating all tax credits. Our estimate is that this plan would require a family of four at the state median income of $119,000 to pay an additional $7,167 MORE in taxes per year. A family of four with an income of $50,000 would pay $6,315 MORE in federal taxes per year. But a family of four that breaks into the top 1% of Pennsylvania families, with $891,700 in income, would pay $22,594 less in federal taxes.

And we are still not done. Either of those tax proposals, and others Trump has proposed, would drive up the federal deficit. But Trump says he will reduce the deficit by implementing a 60% tariff on Chinese imports and 10% on all other imports.

Trump claims that businesses in other countries pay tariffs. That’s simply not true. Businesses in the importing country pay tariffs and pass the cost on to US consumers. And if those businesses’ prices go up, their US competitors would also raise prices. The Peterson Institute, a right of center organization, calculates that the average US family would pay $1,700 more per year as a result of Trump’s tariffs.

And what’s worse, while tariffs might raise about $227 million per year in the first year, it’s probably still not enough to pay for his tax cuts for the wealthy. And as people shift from buying goods that are costly because of tariffs to goods that are less costly, the tax take will decline. So, deficits won’t come down due to the tariffs.

Nor will tariffs create jobs. Trump’s 2018 tariffs on steel did not do so. And in general, tariffs don’t because they reduce US exports and thus the jobs that produce them. First, tariffs tend to raise the value of the dollar, making our exports more expensive. And second, they lead to retaliatory tariffs by our trading partners, also reducing our sales.

Narrowly targeted tariffs to protect growing strategic industries like computer chips or solar panels make sense. But broad tariffs simply don’t make economic sense for anyone. Indeed, high tariffs like the ones Trump is proposing have a terrible record, including helping to bring about the Great Depression.

Trump may not want to talk about his plans for another term as president. But we need to do so because his plans would be disastrous for our economy and especially for working people. And while rich people benefit from his tax cuts, once Trump’s deficits and tariffs sink our economy, even they would regret supporting him for another term.

October 17, 2024

What Would an Equitable Voucher System Look Like?

By Blog Post, Op-Ed

Pennsylvania’s Republican legislators support a voucher program they say is meant to help a small number of students who attend schools they claim are failing. (They don’t mention that those schools are also severely underfunded.) However, these legislators and their supporters, including billionaires Betsy DeVos and Jeffrey Yass, have made no secret that their ultimate goal is to replace our public schools with a system of private schools financed by vouchers.

It is doubtful that such a plan could meet the requirements of the Pennsylvania Constitution. When the education clause was added to the Constitution of the Commonwealth of Pennsylvania in 1873, it specifically required funding of “public schools.” And, changing the words to “public education” in the constitutional revision of 1967 does not alter the import of the phrase.

Could a voucher plan be designed to meet the two goals for public education held by the framers of the Pennsylvania Constitution? The first was to provide an equal opportunity for all students to make the best use of their talents and abilities, not just to benefit themselves but to benefit our economy and democracy. The second was to ensure that every student is prepared to take part in our representative government, beginning with a firm understanding of our country’s ideals.

What would a voucher system crafted to attain these goals look like?

First, all private schools that accept vouchers would be required to teach the basics of American political institutions and ideals and our ideals of freedom and democracy for all.

Second, private schools would have to be prohibited from discriminating against students based on political ideology, income, race, ethnicity, religion, gender, sexual orientation, and disability status.

Third,  any voucher system would need to ensure that every child has an equal opportunity to get a comprehensive education, even though some families have a greater financial ability to pay tuition than others. We also know that children growing up in poverty, and those who are English-language learners, need more resources to get an equal education. This would require some combination of the following policies:

·           A sliding scale that provides a larger voucher for parents with lower incomes and English-language learners.

·           Given spending at the best public schools in the state exceeds $25,000 per student and tuition at the best private schools in the state often exceeds $40,000, voucher amounts would have to be substantially higher than found in any current legislation to make those schools broadly accessible.

·           A cap on private school tuition or a requirement that any private school that accepts vouchers take them as full payment for students who come from families below a certain income threshold.

Fourth, to ensure that schools meet these requirements—and to stop the graft, fraud, and waste that afflict voucher-funded private schools wherever the system has been implemented—private schools would be required to file extensive reports on their practices and the quality of the education they provide.

And, fifth, there would have to be guarantees that voucher levels and the funding for them would increase with inflation in education costs. Failing to do that would ensure that access to the best and most expensive schools in the Commonwealth would increasingly be limited to families with higher incomes.

None of these provisions are in the voucher proposals Republicans put forward this year. Their current plan gives a voucher of fixed amount to all students that is far below the cost of the best schools, and it only caps the income of the families eligible to receive vouchers at Governor Shapiro’s insistence.

It’s also clear that many of the elite and religious private schools would reject rules and regulations designed to create an equitable education system. Almost none are willing to open their doors to all. Few of them welcome disabled students. Many of them will not admit students who are pregnant, have had an abortion or have children.  And many insist on teaching ideas that conflict with well-established science, such as creationism, or that are inimical to the ideals of freedom and democracy.

While the Republicans’ current voucher plan is small, the experiences of other states such as Arizona, show us that once small voucher programs are instituted, state funding will increasingly be diverted to vouchers that help only a small number of kids while draining public schools of funding.

The Republicans’ failure to put forward a voucher plan with the features described above, along with their unwillingness to fund the current education system at higher levels, calls into question their commitment to meet the goals for public education set by our constitution: an adequate and equitable education for all.

Instead, we should assume that the real goals of Republican legislators and their billionaire supporters in Pennsylvania and elsewhere are shown not just in their manifestos but in the policies they support. Their aim appears to be to destroy our public schools, reduce taxes on the rich, and give those with high incomes vouchers to send their kids to high-quality private schools while everyone else’s children get a second-rate education. That is a path to a permanent economic and political elite—not the political and economic democracy sought by the framers of our state’s constitution.

September 18, 2023

Saving Public Education in Pennsylvania, Where It Began

By Blog Post, Op-Ed

Originally published on PennCapital-Star.com

The budget stalemate in Harrisburg hasn’t been primarily about whether some budget line items go up or down by a few hundred million dollars. Those kinds of disputes are easy to resolve. Rather, it’s been about whether Pennsylvania will start down a radical, extremist path that leads to the destruction of public education in our state.

As we celebrate the birth of our country, we should remember that public education is central to the ideals that led to, and grew out of, American independence. And we in Pennsylvania should resolve not to compromise those ideals as the state passes its budget this year.

The American Revolution was not just a political revolution against the King and Parliament. It was also a social revolution against the hierarchal society they represented, a society in which everyone knew and kept in their place. It was a revolution to give all white men, no matter whether they started out poor or rich, real freedom and an opportunity to better themselves—and, in doing so, contribute to the well-being of the whole country. Over the following 200-plus years, we have expanded their vision and still seek freedom and opportunity for all people, no matter what they look like, no matter their gender, and no matter who they love.

Creating opportunity for all does not just mean tearing down the barriers of aristocracy. Founders like Washington, Jefferson, Hamilton, and Adams realized that unless access to a good education was available to all, opportunity would be limited to only a few.

They also realized two other things. First, the future of the country required our citizens to have a civic education centered around American ideals. And second, the rapidly growing economy in the early 19th century needed workers who would only get the necessary education if it were publicly provided.

Cities, towns, and villages provided free public education as early as 1639. Many colonies and every new state after 1776 required local communities to create public schools.

As it became clear that the benefits of public education spread far beyond local communities, states began to support those schools. Under the leadership of Thaddeus Stevens, who was the great educator before he became the great liberator, Pennsylvania became the first state to do so in 1834.

Private schools have always existed alongside the public schools, and Pennsylvania today offers business tax credits that provide $350 million in support for private schools.

But Republican extremists from outside Pennsylvania, like billionaire Betsy Devos, Donald Trump’s Secretary of Education, have always wanted much more: a radical, voucher-based alternative to the public school system in every state. When Pennsylvania’s Commonwealth Court plainly said that our public schools are inadequately and inequitably funded, Republicans lied and said it called for more support for private schools.

And now the Senate Republicans are holding the state budget hostage for what looks like a small investment in vouchers. That Betsy Devos and other billionaire extremists embraced it, however, shows us that the ultimate goal of the program is the total replacement of public schools. States that have taken the first step in this direction, like Ohio and Arizona, have been traveling down that slippery slope ever since they first enacted a voucher program with declining funding for public schools.

What would be wrong with a privatized school system?

Most importantly, it would be an elitist system, in which wealthy parents would supplement state vouchers to attend schools that were far better funded than the schools the rest of our children could attend. The promise of America, to offer real freedom and equal education to all, would come to an end. England’s rigid class system, which our founders sought to displace, would be recreated here.

This elitism would not only block the way forward for working people, it would especially affect Black and brown people, who have far fewer resources to attend private schools but receive no more under the voucher plan proposed here and in other states. A privatized education system would be an inherently racist one.

Second, our children would no longer attend schools that teach American ideals. There are too many who attend schools that teach religious ideas that conflict with our ideals and that undermine respect for science and rational thought itself. And the private schools attended by the wealthy would, implicitly or explicitly, teach their students that they are members of the elite, who deserve to rule over the rest of us.

And third, economic growth, which grew because of our huge investment in public schools and the skills and talents of our people, would slow down as fewer people have access to an excellent K-12 education and the opportunities for further education and training it creates.

Like the British monarchs and aristocrats before them, the wealthy elitists who back vouchers think that America’s success depends on people like them having outsized political and economic power.

We need to remind them and their supporters, among whom are Republican legislators and Governor Shapiro, that the success—and the soul—of America depends on fairly and fully funded public schools that provide opportunity and freedom for all.

 

 

July 5, 2023

The Time Is Right for PA to Finally Raise its Minimum Wage | OPINION

By Blog Post, Op-Ed

Originally published in the Pennsylvania Capital-Star

By Marc Stier

House Bill 1500, co-sponsored by Democratic Reps. Jason Dawkins of Philadelphia and Patty Kim of Dauphin County, would increase the minimum wage to $15 per hour over three years and then create annual increases in the future based on the cost of living. While the bill, which is now before the House Appropriations Committee, is not perfect, it would provide enormous benefits to Pennsylvania workers and Pennsylvania’s economy.

The legislation has faced the usual arguments made against raising the minimum wage. But what the critics seem not to have noticed is that those arguments make little sense under current economic conditions, if they ever did.

Indeed, it’s hard not to conclude that this is the best possible time to raise the minimum wage for both workers and businesses.

Raising the minimum wage is almost certain to lead to the creation—not elimination—of jobs and a better environment for businesses.

Businesses all over the state are frustrated by their inability to hire enough workers in the post-pandemic economy. Many of them have already raised wages. Many more would do so if they didn’t fear it would put them at a competitive disadvantage. By creating a higher floor for wages, a higher minimum wage allows businesses to pay more without fear of losing business to their competitors. And higher wages bring more potential workers back into the job market.

Higher wages—and the new jobs created when more people enter the workforce—would also generate more consumption of goods, which would lead to more economic activity and even more new jobs. Using recent Keystone Research Center projections, I estimate that 1.3 million to 1.5 million workers—or as much as 25% of the state’s work force—would get a raise when the minimum wage reached $15 and that at least $5 billion to $6 billion in wages would be added to the state’s economy. And the KRC projection does not account for the multiplier effect of new job creation.

I’ve adapted KRC projections because they assume the minimum wage reaches $15 in January 2014, not 2016 as it is in HB 1500.

Having grown up in a small, family-owned business, I understand that small business owners worry about how to afford paying higher wages. But what my family discovered is paying higher wages brought us workers who were better motivated and less likely to quit, reducing the cost of finding and training employees. Higher wages for all brought us more customers, too. We couldn’t pay more if we were the only business doing so. But when our competitors also had to pay more, we all benefited.

Raising wages is especially important to protecting workers at a time of high, if recently declining, inflation. The workers who would see higher wages because of a higher minimum wage are not just those making below $15. As businesses adjust their wage scales to prevent employees from leaving, a higher minimum wage would boost wages for those making more than that new minimum wage. And, no, it wouldn’t lead to higher inflation because wages are not the sole, or in many cases, the main cost of doing business.

The claim that raising the minimum wage helps businesses and creates jobs may sound counter-intuitive to some who have studied abstract economic theory. But as contemporary research shows, abstract theory ignores an important contemporary reality—giant, wealthy corporations dominate our economic life. A large share of workers is employed by huge corporations. A large share of small businesses buys goods and services from those same corporations.

Lack of competition in most industries gives those corporations economic power. The wages huge corporations pay are below what they would be if they had real competition. And the goods and services they sell are priced higher than they would be in a truly competitive market.

A higher minimum wage—like the right to form unions, the social safety net, and a tax system that asks the rich to pay at a higher rate than the poor—are a necessary counter to the near-monopoly-level power of corporate giants. It doesn’t raise wages above what they would be in truly competitive market but ensures that they reach that level.

Higher wages shift income from the wealthy people, who own corporations and save much of what they earn, to working people who spend what they earn. That creates more economic activity and jobs. By protecting workers, a higher minimum wage ultimately helps small businesses, too.

Pro-business advocacy groups often fight the minimum wage in the name of small businesses. But the truth is that they are fighting for those who support them: large corporations, which have far too much power in our economic life, and through their campaign contributions, our political life as well.

There has never been a better time for Pennsylvania, and our country, to counter their power and work together to create a political economy that works for all of us.

 

June 23, 2023