David Herman-Chavez

Emily Litle

ENG 121.002

1 December 2017

Blueprint for Disaster

Throughout Donald Trumps presidential campaign and current presidency he has

promised the American people that he will Make America Great Again. One way in which

Donald Trump has proposed to make this promise happen is through a controversial tax reform

that has caught the attention of the entire nation due to the effect it will have on the tax payers.

This new purposed tax reform will cut taxes to levels that have not been seen since Ronald

Regan during the 1980s. Regrettably Trumps imprudent tax reform will lead to an even worse

federal budget deficit. Jarred Bernstein an economic advisor says its cost of somewhere around

2 trillion over 10 years will thus be added to the debt. (Bernstein 1). It would create an even

bigger gap in the already disproportionate income inequality that has infected America. Making

it appear if Trump is successful in pushing through his new tax plan the rich will benefit and the

lower and middle classes will pay for it.

This economic theory is known as supply-side economics, but is referred to by a variety

of different titles such as Reaganomics, voodoo economics, trickle-down economics, and

classical economics. The theory behind supply-side economics is to lower marginal tax rates for

corporations, business owners, and the wealthy giving them incentives to augment investment

spending. Ultimately this increase in investment spending should lead to an increase in

production which would kick start economic growth giving everyone in America more jobs,

especially the middle class and poorer families. Supply-side economics emphasizes long run
economic growth and argues growth can be best achieved by maximizing the incentives

producers have to increase production. The problem with supply-side economics, as history has

shown us, is it does not work and only the wealthy benefit from it.

A perfect example of the devastation supply-side economic theory can wreak on an

economy can be seen with what happened to the Sunflower state of Kansas during Governor

Sam Brownbacks tenure also known as The Kansas Experiment. On May 22, 2012 Sam

Brownback signed the most radical version of supply-side economics any state has instituted

pronouncing that, Todays legislation will create tens of thousands of new jobs and help make

Kansas the best place in America to start and grow a small business(Miller 51). In order to

usher in this massive economic growth Brownback completely eliminated the Kansas top

income tax bracket, considerably slashed rates, and established an income tax exception for

limited liability companies. On the other hand, to demonstrate fiscal responsibility and prevent a

budget deficit that the tax cuts would create, his plan also eliminated a number of tax credits that

benefited the lower and middle classes.

Unfortunately for Kansas these promises fell unbelievably short and ravaged their

economy causing them to become one of the worst performing state economies in the nation.

Kansas yearly average of revenue, which was $6 billion, dropped $713 million during the 2013-

2014 fiscal year. Brownback was unable to stop the underperformances from bleeding the state

dry, leading him to deplete the states reserve funds to make up for the shortfall of income.

Eventually the state had to increase borrowing money to assuage the downfall and added $1.3

billion to the states debt in following years. Due to their disproportionate budget Standard &

Poor downgraded Kansas bond rating.

 With a huge decrease in the states revenue it soon became evident that the Kansas public

school system, which relies on more than half of the states general fund for education, would

suffer immensely. When adjusted for inflation the states school funding fell by 16.5 percent in

2013, forcing two school districts to end their school year earlier due to a lack of funding. All

while these tax cuts are putting more money into the hand of those who need it less. The most

astonishing example of the wealthy exploiting Brownbacks tax cuts is of Bill Self the basketball

coach of the University of Kansas. Self classified himself as an independent contractor and under

Kansass tax code was considered a limited liability company, allowing him to pay $0 state taxes

on a $2.75 million. Reclassifying his income allowed Self to circumvent taxation that would

have generated an average of $126,500 each year for programs like the Kansas school board that

is struggling to make ends meet. It becomes evident that a tax code designed to promote

production and boost the economy gets abuse through loop-holes like the ones used by Self, who

has no financial responsibility to invest the money he saved on the school basketball team.

Regrettably for America, Donald Trumps new purposed tax plan and promises of

economic growth mirrors those same promises and tax cut purposed by Kansass Governor Sam

Brownback five years ago. Yet instead of economics growth, there was huge setbacks to the

states budget that will take years to repair and only affecting the lower and middle classes.

Much like Bill Self, Donald Trump and other millionaires will benefit greatly from Trumps

specific removal of the alternative minimum tax A.M.T. which is designed to prevent tax

avoidance. Despite Trump vehemently denying receiving any benefit from his own tax cuts Lily

Batchelder a tax law professor at New York University and former majority chief tax counsel for

the Senate Finance Committee says, His proposal to repeal the A.M.T. would have slashed his

own tax burden by $31 million, and his income tax rate would be lower than the average rate
paid by families earning $75,000 to $100,000. (Backer 2) Since it appears that Trump is lying to

the public that he would receive any benefit from his own plan, it then becomes necessary to

evaluate what else Trump has promised with his tax cuts. Trump claims these tax cuts will

incentivize investors to reinvest more money in to job creating by producing. Yet William Gale,

co-director of the nonpartisan Tax Policy Center says, Its not lack of funds thats stopping

companies from investing, (Appelbaum 4) referring to the $1.84 trillion nonfinancial companies

are not investing despite the really low interest rates. In spite of what happened in Kansas, and

despite what expert say about Donald Trumps new tax reform, Republicans control the Senate,

the White house, and the House of Representatives and will see to it that this tax reform is

passed.
 Works Citied

Appelbaum, Binyamin. Trump tax plan Benefits Wealthy, Including Trump. The New York

Times, 27 September 2017, Https://www.nytimes.com/2017/09/27/us/politics/trump-tax-

plan-wealthy-middle-class-poor.html Accessed 29 November 2017

Baker, Peter. Trump wrote off $100 million in Losses in 2005, leaked forms show. The New

York Times, 14 March 2017, Https://nyti.ms/2nlqze2 Accessed 29 November 2017

Bernstein, Jared. The Top 10 reasons not to pass the Trump tax cut. CNBC, 9 October 2017,

Https://www.cnbc.com/2017/10/13/the-top-10-reasons-not-to-pass-the-trump-tax-cut-

commentary.html Accessed 29 November 2017

Miller, Justin. Kansas, Sam Brownback, and the Trickle-down Implosion. The American

Prospect, 28 June 2017. Http://prospect.org/article/kansas-sam-brownback-and-trickle-

down-implosion-0