America Was Great When Taxes Were High on Corporate Executives — What Happened? Part II

“Trump’s Big Ugly Law Steals from the Poor to Give to the Ultra-Rich.” -Democrat House Budget Committee, August 11, 2025

Tax cuts are a billionaire maker:

“Since the passage of the Trump Tax Scam in 2017, billionaire wealth has exploded from $2.9 trillion to $7.6 trillion — a 150% increase. Meanwhile, working families have struggled to keep up with rising costs”. (Deloitte Tax Notes, Sept. 17, 2025). [1]

Lower Tax on The Ultra-Rich Increases the US Debt

While making multi-millionaires into billionaires and billionaires into trillionaires, the federal debt is escalating into stratospheric levels. As of January 2025, the United States had an astonishing $36 trillion in federal debt. The debt to GDP ratio was 124%. The debt is growing faster than the economy itself. The ratio was a low 31% in 1974 (CEIC, 2025). As of today, if the entire value of the GDP in a year was applied to the national debt, it would not be sufficient to pay it off.

Tax cuts on the high-end earners also accounts for the out-of-control US debt as shown in the graph below by Tufts University. The debt was also this high during World War II and it was paid down and prosperity was more evenly shared while doing so. (Tufts, June 26, 2023).

• The debt incurred for World War II was at the present level of 120 times GDP and was paid down through high taxes until the 1981 Reagan tax cuts to individuals began[1].

• As the debt was paid down through high taxes on the rich, economic equality increased but then after 1981, inequality began to increase.

• In the year 1997, the dip in the debt was due to Clinton raising taxes on the rich and having a surplus budget[2]. That ended with the election of G.W. Bush in 2007.

Clinton raised the upper tax rate to 39.6% producing a surplus supporting the claim of a relationship between higher taxing of the rich and the US federal debt.

The debt is now at 119.4% of GDP, meaning that if the value of the entire national wealth produced in a year was paid towards the debt, it would not be sufficient to pay it off.

[2] In fiscal 2024, the government paid $879.9 billion in interest. It was more than it spent on Medicare — $874.1 billion or on national defense — $873.5 billion (Pew Research, Aug 12, 2025).

Where Does the Tax Cut Money Go?

While Trump repeated Regan’s claim that corporate tax cuts would create jobs and promoted the Tax Cuts and Jobs Act of 2017, the corporate tax cuts did not create jobs, the savings went to buybacks.

• In the first three quarters of 2018, buyback increased 52% ($583.4 billion). In contrast, capital investment that would have increased jobs increased only 8% (Forbes, Feb 21, 2019).

A look at R&D investment helps to explain why the money went into buybacks. R&D lays the groundwork for expansion. According to Forbes, corporations had already over-expand on R&D and didn’t need the tax cuts (Forbes, Feb 21, 2019). [3] According to the Congressional Budget Office, the 2017 tax cuts will add an estimated $1.9 trillion to the nation’s debt, while billionaire wealth nearly doubled — up $2.9 trillion , (Americans for Tax Fairness, Ap 8, 2024). As explained in the section Indefensible Tax Breaks for the Rich,much of that nearly $3 trillion in wealth gain– the main form of income for the ultra-wealthy– may never be taxed

Trump admitted that the tax cuts did not create jobs but went to buybacks:

“I never liked stock buybacks from their standpoint. When we did a big tax cut, and when they took the money and did buybacks, that’s not building a hangar, that’s not buying aircraft, that is not doing the kind of things that I want them to do.” (Reuters, Mar 20, 2020).

Support for raising taxes is high. In a 2025 survey, more than six-in-ten US adults (63%) say tax rates on large businesses and corporations should be raised (Pew Research, Mar. 19, 2015) NTD in some chapters US has no periods. In this chapter US has periods. Consistency is needed. — Too many kinks — Very choppy

In spite of the experience of his 2017 tax cuts and public opinion favoring raising taxes on the rich, Trump pushed for and got a continuation of this unnecessary individual and corporate tax cut in his 2025 ‘Big Beautiful Bill’. Therefore under Trump’s “Big Beautiful Bill”. Billionaires will continue to increase and multiply whittling down the middle class.

What Can Be Done

• Distinguish between tax cuts for individuals and tax cuts for businesses. Cuts for individuals cannot be justified as creating jobs.
• Increase the income tax on individuals. These are the corporate executives and managers of hedge funds.
• Make it known that tax cuts for businesses have not created jobs but gone into buybacks that inflate already outsized executive pay and larger dividends that benefit only the upper 10%.

[1] 1981, the highest rate of 70% reduced to 50%; 1986, 50% reduced to 28%. Forbes, Tax Notes, Sep 03, 2013.

[2] However, Clinton also lowered the capital gains rate which reduces tax revenue over the long run.

Acknowledgement: Money image: Photo by Pixabay: https://www.pexels.com/photo/grey-metal-case-of-hundred-dollar-bills-164652/