The Bottom Up and the Middle Out – Bidenomics Is Great for the Economy! Part 1

It is so critical to the health of the economy that our nation’s tax and economic policies are structured with the “bottom-up and middle-out” as its focus.

by Sheryll Bonilla, Esq.

Conchita Watanabe of Dole Intermediate School (before becoming Dole Middle) was a marvelously practical social studies teacher.

She taught us civics, so we understood how government worked and affected us in real-life ways. She taught us about the Constitution, so we knew about the fundamental law that framed our nation and kept us together.

She assigned us to learn the names of the current justices of the U.S. Supreme Court.

Pointing to Kelvin to answer first, he didn’t know any and blurted out “Oliver Wendell Holmes.”  Stifling a laugh she said, “He’s been DEAD!” At least he got the right court.

Mrs. Watanabe taught us about economics including how to prepare our tax returns, which I then did for my parents for many years after, even though I was only in the eighth grade when I learned how.

She taught us that we buy homes with mortgages, what’s involved in applying, and how they work. She taught us to budget and about bank accounts and credit cards.

In her economics lessons, she taught us about the stream of commerce.

What keeps an economy healthy is people saving and people spending. Our paychecks pay for the things we need and want. With more disposable income, we can spend it on groceries, necessities, and fun stuff.

Those dollars flow to the companies providing the goods and services, and our dollars spent at those companies, in turn, pay with the “bottom up and m those workers’ paychecks.

The more disposable income everyone has, the more we can spend, thereby sending our dollars into the ocean of commerce that provides the money for paychecks for everyone else in the community.

That is why it is so critical to the health of the economy that our nation’s tax and economic policies are structured with the “bottom-up and middle-out” as its focus.

Republican presidents – Reagan, Bush, Bush, and Trump – all blew up the national debt, each leaving office with massive deficits because their tax policies gave huge cuts to the wealthiest 1-2% of Americans that were offset with tax hikes to everyone else.

Trump is a six-time bankrupt businessman who lost $916 million as reported for 19 years on his tax returns. His write-offs were so distinctive that the IRS noted he was the one American who lost the most money of any taxpayer – and yet the country put him in charge.

The disastrous result was the Trump administration alone contributed a whole ¼ – one-fourth! – of our nation’s debt, with tax and economic policies that favored the richest 1% of Americans.

If your parents still have their tax returns from the years before and after Reagan – look at Schedule A, Itemized Deductions.

Before Reagan, everyone got to deduct ALL their medical expenses, ALL their job expenses, and ALL their personal interest paid.

After Reagan gave the millionaires their hefty tax cuts (and only the wealthiest got tax cuts), he raised taxes for everyone else by eliminating middle-class deductions.  When deductions are eliminated, this increases the income used to calculate a person’s income tax (“taxable income”).

The fact is that Reagan raised taxes on everyone who wasn’t the top 1-2% wealthiest, by eliminating deductions thereby raising everyone’s taxable income.

Reagan changed the tax laws so ordinary folks could only deduct medical and job expenses that were over 2% of their income – which eliminated almost everyone’s ability to deduct those.

Reagan cut out interest deductions except for mortgage interest, which meant taxpayers could no longer deduct interest paid on car loans, credit cards, or personal loans.

Non-homeowners were left with no tax deductions for consumer interest, which they were able to deduct before Reagan.

To add insult to injury, he gave wealthy families a $1 million per grandchild tax-free pass-through, so that each grandchild could receive $1 million tax-free.

Non-millionaire families had to pay taxes on anything they inherited that was over $200,000. That’s a massive injustice. The richest families get to inherit millions tax-free, while ordinary people have to pay taxes for anything over $200,000.

Republicans who protest their children paying future deficits and protesting higher taxes can only look to their own elected officials for creating the situation.  Clinton turned the Reagan-Bush deficit back into a surplus.

Clinton raised the $200,000 estate tax floor to $1M so that the middle class could pass down their hard-earned assets to their children and grandchildren without being taxed on their inheritance.

The next Bush Administration cut Clinton’s $1 million estate tax safety zone down to $600,000 to pay for the war in Afghanistan War.

This meant that under Bush, ordinary people had to pay estate taxes on inheritances over $600,000.

Bush could have simply increased taxes on the wealthiest and left the $1M intact for ordinary folks, but he didn’t.  Bush left the nation with a massive deficit.

This is Part 1 of a two-part article. Part 2 to be published next issue, April 20, 2024.

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