Room for Debate: Connecticut College Republicans and Conservatives Club

Note from the Editors: It’s been approximately one year since the passing of the Republican-backed tax plan championed by Mitch McConnell and Donald Trump. As with most pieces of legislation– especially those that affect Americans financially– opinion is divided on whether the new tax plan helps or hurts families across the country. Seeking to foster more bi-partisan dialogue on campus, the Voice has partnered with Connecticut College Democrats (CCDems) and Connecticut College Republicans and Conservatives Club (CCRCC) to help educate readers on the stances held by both sides of the political spectrum. The pieces below reflect the unofficial positions of both clubs. Finn Boed ‘21 penned the response for CCDems. The CCRCC respondent has requested anonymity.

When the government taxes, it is taking money from individuals to spend on government programs that are not as efficient as the free market. Corporations are composed of individuals that have allowed for a large increase in the level of wealth, comfort, material goods, and necessities available to all Americans. Trump’s tax bill has reduced the tax corporations are required to give to the government. This decision was made in part because of the corporate tax rate abroad, relative to ours. Corporations have relocated headquarters or taken on debt to avoid paying high corporate taxes. When the rate is lowered, there is less of an incentive to undertake cost reduction measures. Fewer taxes levied on companies will allow them to undertake more capital expenditure. Furthermore, it is inefficient for companies to buyback stock when the stock is not cheap because they will be spending less on more efficient expenditures. This means their fundamentals will be weaker and lead to lower stock growth. CEOs do not benefit from a temporary, rapid increase in share price when they are still captaining the ship in a worse long-run position.

Larger executive salaries are often critiqued. In our current tax structure, the more one earns, the greater the percent of income one is taxed. This disproportionate taxation system benefits the poor. Trump has not undone our fundamental tax structure but has reduced the rate uniformly for all Americans. Therefore, it is an even percentage tax cut, not solely a tax break for the poor when their rate changes from 15 percent to 12 percent. It is also not solely a tax break for the rich when their rates change from 39.6 percent to 37 percent. To characterize this bill as a tax break for the rich is to misrepresent its complexities.

Additionally, those who are earning the top marginal rate are not static; they are dynamic. Evidence shows significant income mobility in the US – 73% of Americans were in the ‘top 20%’ for at least a year. Those who are earning the top marginal rate are not born into it. 54 percent of Americans will experience poverty or near poverty at least once between the ages of 25 and 60. Although 12 percent of the population will experience a year in which they find themselves in the top 1 percent of the income distribution, a mere 0.6 percent will do so in 10 consecutive years. We must provide an incentive to reward the highest skilled people who are providing products and services that lift the standard of living of all Americans.

Finally, as for “trickle down economics,” conservatives do not believe in giving a tax break solely to the top tier because “they spend it better.” When the wealthy or anyone ‘gets money back,’ that money will be spent or invested in the economy directly, leaving the rest to be saved in a bank that will loan it out to various income earners. It is fallacious to claim the wealthy spend approximately 30 percent on consumption of their income, and thus we should not consider investment and savings. In our finance system, savings and investment are beneficial. Ultimately, the tax cuts enable the free market to do the most good for the greatest number of people, rather than the less efficient alternative. •