Here are some simple truths about the pending GOP tax legislation. The 427 page document was produced at the last minute and passed in the dead of night with illegible handwritten changes in the margins. Also no proper hearings were conducted. It includes exceptions for artic drilling and who knows what else since no one had a chance to read it. It’s not tax reform. It’s not a tax cut for most Americans. It is simply a huge transfer of wealth from the lower and middle classes to corporations and the top 1% of wealthy Americans. It doesn’t close loopholes, it creates new ones.
If you make $100,000 or less a year, it is a tax increase. If you make less than 40,000 it is worse. If you make even less, it’s even worse. Just another effort to make the middle class and the poor pay for the lifestyle of the rich and famous.
One false promise is that this bill will simplify your taxes. If you file a short form, taxes are already simple. Is the work of filling out a couple of pages worth the price of losing deductions for local taxes, college debt, healthcare and the rest? For most of us, the price of exchanging the current paperwork for the supposed “post card” sized version will cost you thousands of dollars. That’s a pretty expensive “bargain” for so-called “simplification.”
Another false premise is that corporations actually pay the 35% nominal rate. With fleets of tax lawyers, they pay nothing near that. Remember, Mitt Romney paid only 15% and that was based on the existing 35% tax rate. So, lowering their rate to 20% means they pay even less, or more likely nothing at all. So who picks up the tab?
The simple truth is that this tax travesty has nothing to do with sound economics (let alone “middle class” tax cuts) and everything to do with enriching the already incredibly wealthy. It is all about getting a “win” for Trump and the GOP regardless of the consequences.
The small tax benefits for the lower and middle classes will be phased out after a few years (long enough to obscure the consequences till after the 2018 mid-term elections). Only corporate tax cuts will be permanent.
The argument that corporations will pass on their huge tax windfall to their workers is a hope and a prayer—there is no mechanism to force them to do that. They will buy back their own stock and/or pay it out in dividends. The premise that corporations don’t have money to invest is completely phony—corporations are flush with cash. Even in public meetings, CEO’s refused to commit to investing in new factories and American jobs if the deal goes through.
Trump boasts of the booming stock market, huge corporate profits and low unemployment as proof of his great leadership, while in the same breath claiming that he inherited an economic “disaster” from Obama. In fact, jobs, the stock market and employment have been rising in a fairly straight line since Obama took office and began undoing the catastrophic polices of George Bush. Trump has not passed any major legislation that accounts for current economic growth.
The clearest proof of the gimmickry in this GOP tax travesty are the numbers. Legislative rules require that to pass the Senate with only 51 votes, the resulting deficit would have to be under $1.5 trillion. That is a political, not an economic standard. To get there the GOP got rid of the healthcare mandate. 13 million people will lose health insurance, the rest of us will see our premiums increase again—more than cancelling out any other tax relief. But the $1.5 trillion number is imaginary in any case. Reputable non-partisan groups estimate the deficit may increase by as much as 2.2 trillion. So much for being tough on the national debt.
