From Our Future
Republican Senator Charles Grassley tells the Des Moines Register his party's plan for deep tax cuts to the rich "recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it's on booze or women or movies."
Perhaps Sen. Grassley is replaying an old record from his youth. "Cigarettes, whiskey, and wild wild women," sang the Sons of the Pioneers in 1947. "They'll drive you crazy, they'll drive you insane."
So much for that newfound Republican populism we've been hearing so much about. So why, Senator Grassley, can't we all just be rich, like you?
Every Darn PennyWorking people don't have much to spend on entertainment nowadays, because it takes "every darn penny they have" just to survive. A recent survey found that 78 percent of Americans say they're living from paycheck to paycheck.
More than one-third said they "sometimes" lived paycheck to paycheck, 17 percent said that "usually" did, and 23 percent -- one in four -- said they "always" struggled to make it from one payday to the next.
The CareerBuilder survey also found that "a quarter of workers (25 percent) have not been able to make ends meet every month in the last year, and 20 percent have missed payment on some smaller bills."
In a related finding, a Federal Reserve survey from 2015 found that nearly half of all Americans said they would be unable to come up with $400 in cash to cover an emergency expense. As NBC News reports, these levels of financial insecurity can be harmful to a person's health.
Making Inequality WorseIt's not likely to get better any time soon. As the Pew Research Center found last year, the middle class is steadily disappearing all across the United States. And inequality will get worse under the tax plan Grassley promotes (1).
Economist Lilly Batchelder summarized that plan's impact succinctly in a recent interview with Dylan Scott and Alvin Chang:
The bill is investing heavily in the wealthy and their children -- by boosting the value of their stock portfolios, creating new loopholes for them to avoid tax on their labor income, and cutting taxes on massive inheritances. At the same time, it leaves low- and middle-income workers with even fewer resources to invest in their children, and increases the number of Americans without health insurance.
As Scott and Chang note, this bill "would make America's income inequality worse. Maybe a lot worse ..."
Frugality, Savings, and InvestmentGrassley's tin-eared comments sparked widespread outrage, and his attempts to contain the blowback didn't improve matters. He said his remark had been "taken out of context," adding that he was seeking "a tax code that doesn't penalize frugality, saving and investment."
But the estate tax only applies to assets greater than $5.5 million for individuals and $11 million for married couples. Even Grassley, a multi-millionaire who has held public office since 1959 yet likes to call himself a farmer, would dodge the tax. The only way it might imaginably affect his heirs, he told NPR, is if he and his wife were to die on the same day.
Estates of the size amassed by the Grassleys are rarely the result of "frugality, saving and investment." Increasingly they're likely to be the result of inherited wealth that's been passed through multiple generations.
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