Trump's Tax Cut for the Rich Cost $1.5 Trillion
by John Lawrence, August 17, 2018
Most of that money went to rich people. What if you turned it around and gave most of that money to the poor and middle class. With Republican tax cuts the logic is that since rich people pay proportionately more taxes than the poor, they should get proportionately a larger tax cut. That leaves the poorest of the poor, who pay no taxes, with no tax cut at all. But what if you took that trillion and a half dollars and used it for supplements instead of cuts? Then the poorest people would get the largest supplement and rich people, who don't need the money, would get the least. It would still cost the government $1.5 trillion, but the most needy would be helped the most and the least needy would be helped the least.
The New York Times reported:
Senate Republicans’ $1.5 trillion tax cut would not pay for itself, according to a report released on Thursday by the nonpartisan Joint Committee on Taxation. The report is a significant setback for Republicans, who have asserted that the tax cuts would grow the economy enough to cover the cost of the plan.
The report of the committee, Congress’s official tax scorekeeper, is the latest in a number of analyses that have found that the cuts could add a significant chunk to federal budget deficits, a move that would seem counter to years of Republican criticism of the deficits accumulated under the Obama administration.
In the Congressional Budget Office’s analysis of the Senate tax bill, the cuts would add $1.414 trillion to the deficit by 2027. That estimate does not include the amount that would be offset by the economic growth spurred by tax cuts.
This money going mainly to the rich does not take into account that most rich people park their money offshore in places like the Cayman Islands so that they pay no taxes at all. In fact rich corporations use loopholes and highly paid accountants to figure out how they get tax refunds from the government. Or they pay taxes in Europe where the tax rate is cheaper. They can book their profits anywhere so why not book them where they pay little or no taxes. That wouldn't be in the US.
The biggest taxpayer was the most profitable: Apple, which reserved $15.8 billion for income taxes on $59 billion in operating income. Apple reports its effective tax rate as 25.8%, which is quite a bit lower than the statutory 35% rate. The iPhone giant (like many tech companies with a lot of intellectual property) has become famous over the years for deploying legions of accountants to devise offshore tax avoidance mechanisms with names like “double Irish with a Dutch sandwich.” Why book profits in the U.S. if you don’t have to? Unfortunately for Apple, its pot of Irish gold appears to have evaporated. Last year the European Commission presented Apple with a $13 billion tax bill, payable to Dublin, on the grounds that Apple's tax structure had benefited from "state aid," a no-no. CEO Tim Cook has called it "total political crap."
These tax avoidance schemes serve to make the rich richer and to run up the national debt which is now over $20 trillion. Some day the chickens will come home to roost.