Trump’s tax bill betrays working class to help Republican donors

The Trump administration soared to power on the back of its policy of economic nationalism, appealing to blue-collar workers across the American industrial heartlands who had been left behind in the era of globalisation. Yet the new tax bill epitomises a fundamental realignment from these campaign promises; it is a tax cut for the wealthy and the corporations, leaving behind the millions of politically disillusioned American workers to whom Trump owes his election to the White House.

Until 2016, the US economy had been dominated by the neoliberal ideals of globalisation and free movement of capital, enabling corporate profits to skyrocket – alongside the neglection of the newly unemployed, whose jobs had been transferred to Southeast Asia where production costs were cheaper. This chorum of disenchanted workers were the losers from globalization. They remained overlooked by the Western political elite who favoured maximising economic growth, regardless of the individual costs. This fuelled economic nationalism across the Rust Belt who demanded prioritisation of the workers.

In the years since 2008, median real wages have risen by a grand total of 3.58%, in comparison to the explosion of corporate profits by 57.25% over the same period. The trend of stagnating working wages began under Reagan, and continued in the era of Neo-Liberalism. Rust Belt workers hoped Trump would reverse the trend.

And so, how does Trump help such disenchanted voters, reversing the political tide away from corporate appeasement? He reduces corporation tax from 35% to 21%. Those very workers who were seduced into the ‘America First’ slogan, the backbone of Trump’s ride to the White House, appear to have been deserted in favour of the rich.

The change will reduce taxation of business owners by an average of three times as much as those whose primary source of income is wage labour – explaining the statistic that 75% of people believe this Tax Plan, disguised as a simplification of the tax code, is a tax cut for the wealthy only. Whilst some credit is given for remaining loyal to his voter base, as evident in the expansion of child credit to $2000 per child, this historic bill represents an appeasement of the GOP donors rather than Trump’s core supporters.

The workers left behind by globalization are in desperate need of government investment in infrastructure and education to help them adapt to the new economy – yet the estimated $1.7tn increase in the deficit as a result of the tax bill will restrict the administration’s ability to achieve this, and it seems like the administration has no great desire to invest in vital government services.

The potential for increasing dissent amongst Trump’s core supporters in the industrial wastelands, combined with his traditional opposition in the Democrat sphere, could force him away from politics of patronage in order to prevent the loss of control of both Houses of Congress in the upcoming elections. The Trump administration is treading a fine line; much like his globalist predecessors, a continual neglection of the the American manufacturing class could cause the downfall of Mr Trump’s control of Congress and his chances of re-election, leaving America even more economically divided than it was before.


Craig Stock

Second Year Economics Undergraduate at Warwick University.

Craig Stock has 21 posts and counting. See all posts by Craig Stock

This site uses Akismet to reduce spam. Learn how your comment data is processed.