Clinton, Trump and the Redistribution of Wealth
Yet there's little question about what direction Clinton has in mind for her overall tax policy. After describing her idea to make college more affordable, for instance, she adds the following: "This plan will cost around $350 billion over 10 years -- and will be fully paid for by limiting certain tax expenditures for high-income taxpayers."
The American economy of the past four decades has been sufficiently varied to merit multiple, conflicting descriptions, from "hollowed out" to "innovative." But the general direction in which economic gains have flowed over that period is indisputable: upward.
Nor is there any doubt that, ever since the Ronald Reagan administration, tax rates on the wealthy have been low by historical standards. The top marginal income tax rate when Reagan took office was 70 percent. Today, after a high-end increase supported by Democrats and opposed by Republicans took effect in 2013, the top rate is 39.6 percent.
Donald Trump's pronouncements on taxes, as on so many other matters, are wholly unreliable. His campaign's tax plan, which lavishes gains on the wealthiest, is a ridiculous proposal, producing something on the order of $10 trillion in debt over a decade. It's difficult to tell how much Trump cares about the plan, or whether he even has bothered to read it. (It also seems to be evolving.) It's certainly not a central element of his pitch to supporters.
However, if Clinton is promising explicitly to reapportion the economic pie, using tax policy and public spending to distribute gains from the top to the bottom, Trump is making a similar vow, albeit less explicitly and using different means.
He has promised to prevent multinational corporations such as Ford Motor Company from moving blue-collar jobs out of the country, and he has promised to impose tariffs on their foreign-produced goods if they do. China, similarly, would be slapped with tariffs.
The Trump-and-tariff-fueled renaissance in American manufacturing would be so expansive that Trump has vowed that steel production -- once at the top of the blue-collar pay scale in the U.S. -- would return to Pittsburgh, while the coal industry would, Lazarus-like, be revived "100 percent." With so many high-wage blue-collar jobs returning to American shores, the redistribution effect on the working class would be potent.
Right now, highly educated, high-skills Americans have their global cake and eat it. The value of their skills has increased in a globalized marketplace while their purchasing power has benefited from cheap goods manufactured in China and other low-wage countries. (According to one study, between 1990 and 2007, the U.S. lost about 1.5 million manufacturing jobs to China alone.) In Trump's blue-collar Nirvana, the wealthy would presumably maintain the wage premium on their skills. But the price they pay for manufactured goods would rise as American corporations returned to the U.S., where they would be forced to pay higher wages to their workers and reap lower returns for their shareholders. (Of course, blue-collar workers would pay more for goods as well.)
At the same time, Trump's wall would restrict low-wage immigrant labor from entering the U.S., presumably driving up wages, slightly at least, at the very bottom.
When Trump said, “I love the poorly educated," he probably meant that he loves their votes. But his policies, however fantastical, are intended to benefit low-skills workers with limited educations. While the Paul Ryan wing of the Republican Party has been working to concentrate even more wealth at the top, Trump proposes moving in two directions at once, cutting taxes at the top while bolstering wages and employment at the bottom.
A Pew survey in February found that Americans overwhelmingly believe the economic system unfairly favors powerful interests. Clinton and Trump, in their different ways, are promising to restore some balance to a polarized system of wages, and a dramatically lopsided distribution of wealth.
Paul Ryan's GOP has yet to reckon with Trump's victory. But the days of Mitt Romney trashing the "47 percent" of low-wage American workers appear numbered. In 2016, a working-class hero is something to be.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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