Last week, the financial news service Bloomberg reported what everyone who has grimaced as bills pour through the mail slot like poison pen letters already knew: The much-hyped corporate tax cuts that President Donald Trump said would put an extra $4,000 per year in the pockets of the average family have done no such thing. Wages have instead fallen in the two quarters since the tax cut and are, when adjusted for inflation, 9.3 percent lower than they were in 2006.
Rather than raising wages, companies used their $1.5 trillion gift from Congress to buy back shares and raise dividends for stockholders. Most of that money went to people who already had plenty of money. Meanwhile, the nation’s deficit went up by more than $800 billion, according to the nonpartisan Congressional Budget Office. So much for fiscal responsibility.
A new Congress, one minus believers in trickle-down economics and hucksters who know it doesn’t work but support it anyway, will have to pursue tax reforms that reduce the vast income gap that separates Americans at the top from everyone else.
It’s too soon to say just how the Trump tax cut is affecting New Hampshire, which is a special case for reasons both good and bad. The state has the lowest unemployment rate in New England at 2.7 percent. It also has the highest household income in the land at $76,260. But New Hampshire has the third highest property tax rates, placing 49th out of 51, counting the District of Columbia. The tax bill on the median sale price home assessed at $239,700 was $5,241, more than double the national average. The cost of living, already high, is being exacerbated by a housing shortage that’s driven home prices and rents up far faster than people’s incomes.
Wages have risen a bit recently, but the year-to-year comparisons show a small overall loss rather than a gain, according to the state Department of Employment Security. Average weekly earnings of $891.11 in May 2017 fell $5 to $886.03 in May 2018.
Wages have also been dragged down by changes in New Hampshire’s employment mix. High-paying jobs in fields like manufacturing and durable goods lost during the recession were replaced by lower-wage jobs in health care, social services, food services and accommodations.
Employee health care costs in the form of higher deductibles and worker contribution levels have and are likely to continue to erase modest wage gains. Defined benefit pensions, outside the public sector, have all but disappeared. Workers who save for years that may not be all that golden have even less disposable income.
Despite a fundamentally sound and healthy economy, the financial picture for the great majority of workers appears rather bleak. It won’t change because money trickles down from beneficent corporations that share gains with workers rather than shareholders. It would improve by real tax reform and a system that makes health care truly affordable for all. Both could happen – if people want them to and vote.