Donald Trump campaigned as an insurgent outside of the political establishment who would restore the long-neglected working class. That was a lie. As president, he’s turned his back on working people, governing instead as a lackey for billionaires, CEOs, and corporations. Even during a public health and economic crisis, Trump has left working people in the dust.
Consider his signature tax law, sold as a benefit to working people. More than 60 percent of its benefits have gone to people in the top 20 percent of the income ladder. In 2018, for the first time in American history, billionaires paid a lower tax rate than the working class.
Trump said every worker would get a $4,000 raise, but nothing trickled down. Instead, corporations spent their tax savings buying back shares of their own stock, boosting executive bonuses and doing nothing for workers. To make matters worse, some of the richest corporations are paying nothing in federal income taxes, despite making billions in profits.
Meanwhile, Trump’s corporate lobbyists and industry shills have systematically dismantled worker protections – rolling back child labor protections, undoing worker safeguards from exposure to cancerous radiation, gutting measures that shield workers from wage theft, and eliminating overtime for 8 million workers.
Trump has even asked the Supreme Court to take away the health insurance of 23 million American workers by invalidating the Affordable Care Act – in the middle of a global health crisis, no less! If Trump gets his way, protections for people with pre-existing conditions will be eliminated.
Oh, and remember his promise to rein in drug prices so working people can afford the meds they need? Well, forget it. Remdesivir, a drug to reduce the severity of COVID-19, from pharma giant Gilead, was developed with $70 million of taxpayer funding, yet Trump is letting the company charge $3,000 per treatment. And he is omitting pricing protections from federal contracts to develop drugs for Covid-19 – making it likely that life-saving treatments and vaccines will be out of reach for people in need.
Donald Trump doesn’t give a fig for working-class Americans. He even wants to end the extra unemployment benefits that countless Americans are depending on to get through this crisis.
So whose side is Trump really on?
Well, here’s a clue: Tucked away on page 203 of the COVID stimulus package backed by Trump, is an obscure provision that delivers a whopping $135 billion in tax breaks to millionaire real estate developers and hedge fund managers. One real estate tycoon who stands to profit handsomely from the provision is none other than the president’s son-in-law and senior adviser, Jared Kushner. In total, the cash secretly spent on tax cuts for millionaires in the COVID-19 package is more than three times as much money as was included for emergency housing and food relief.
Kushner isn’t the only Trump insider getting paid off during the pandemic. Forty lobbyists with ties to Donald Trump have helped clients secure more than $10 billion in federal COVID aid. And if Trump succeeds in getting the Supreme Court to repeal the Affordable Care Act, the richest 0.1 percent of Americans will get an average additional tax cut of $198,000 each per year.
Donald Trump is no working-class champion. He’s a corporate con man – the culmination of a rigged-for-the-rich system that’s shafting working Americans at every turn.
Let's say a Wall Street bank has a mortgage that's been defaulted on. That qualifies as a "toxic asset" meaning the guy isn't paying his mortgage. The bank then pleads with the Federal Reserve to take it off its hands because the bank is running low on money that it thought would be coming in if the guy had made his monthly payments. So the Fed adds "liquidity" by saying to the bank, "Give me that mortgage. I will take it off your hands and pay you the full value of the amount borrowed, and then I will be the mortgage holder for the "toxic asset." So the bank is made whole, and the Fed is now the holder of the toxic mortgage. The Fed has "taken it on its balance sheet" and taken it off the balance sheet of the Wall Street bank. This is what happened during the Great Recession of 2008. It's what Quantitative Easing is all about. Theoretically, some day the Fed will sell this mortgage in the marketplace, but who wants to buy a mortgage that no one is paying either interest or principal on especially if the mortgagee is long gone. Instead the toxic asset disappears in what amounts to the Fed's black hole.
Although the Fed will do this for a bank especially for those banks that are too big too fail, they will not do this for Joe Blow. Joe blow, for instance, may have a toxic asset of $30,000 in credit card debt or $100,000 in student loan debt. Why couldn't Joe Blow approach the Federal Reserve and say please will you take this toxic asset off my hands? That would mean adding "liquidity" to Joe Blow's bank account by taking the credit card debt or student loan debt onto the Fed's balance sheet and paying off Joe's creditors. This would make the Fed Joe's creditor. Perhaps some day, when Joe is better off, the Fed might be able to move Joe's debt off its balance sheet and put it back on Joe's account. At least theoretically that could happen.
What is happening today with the coronavirus relief package and the stimulus checks is a variation on QE which amounts to QE for the people. Where is all the money coming from you say? Will it just be added to the deficit and the national debt, God forbid? Right now interest on the national debt is $479 billion. The more money the nation borrows, the more interest on the debt crowds out other items in the Federal budget like social security, Medicare and the military. But there is a neat little trick that is played between the Treasury department which issues the bonds that comprise national debt and the Federal reserve which has the aforementioned capacity to make debts disappear down a black hole.
Those toxic assets that the Fed took off of banks' balance sheets? Some of them were Treasury bonds. Now more than ever the Fed will be taking Treasury bonds off the big banks balance sheet for two reasons: 1) they can't be all sold in the open market because there are no buyers and 2) the US taxpayers will not have to pay interest on these bonds because although the government pays interest to the Fed on these bonds all profits the Fed makes are returned to the Treasury after deducting minimal expenses at the end of the year. So one hand really does wash the other or, if you prefer, the Federal government is playing a shill game with the Federal Reserve. The Federal Reserve monetizes the debt which is the same as saying that it disappears down a black hole on the Fed's balance sheet. The middleman in this whole operation is Wall Street since the Fed by law cannot buy Treasury bonds directly from the Treasury Department. So by monetizing the debt, the Fed is doing two things: 1) it is taking the pressure off of interest paid in the Federal budget and 2) it is guaranteeing that the Federal government will have whatever amount of money it needs to pay its bills without having to increase taxes.
Now this is good news for pandemic relief. Deficit hawks are muted because they know how this shill game is played, and it's no skin off their backs. The Fed essentially prints money (although it's doe with a couple of keystrokes on a computer) and bails out the whole economy. There is no inflation since unions which drove up the price of labor were essentially muted during the Reagan administration which saw most manufacturing jobs transferred to China. So then Fed can print away giving everyone a taste of a Universal Basic Income (UBI). (See Ellen Brown's accompanying article.) Since the cat is out of the bag there is no reason why this same game couldn't be played to relieve American consumers of student loan debt and credit card debt although you can get rid of credit card debt in bankruptcy. Not so for student loan debt.
Also money for infrastructure could be obtained this same way by having the Fed monetize the debt. This would create good union jobs according to Bernie Sanders. But this is exactly what the bond market and the Fed doesn't want - good union jobs - because that would create wage inflation. When wages go up prices go up, and the bond market would not be pleased because inflation eats up the yields on their bonds. What the Fed and the monied interest want is an economy in which workers are deeply indebted because that means a ton of interest going to the banks which are totally in cahoots with the privately owned Fed. If your a worker, the Fed is not really your friend. They are the banker's friend. The Fed was set up in the first place to bail out banks not American consumers. Now it is giving American consumers a taste of a bail out because the coronavirus presents a unique situation with everybody being out of work. When things get back to normal, the Fed will go back to just bailing out banks, and relieving pressure on the national debt.
Progressive Taxation and Remuneration: A Progressive Universal Basic Income
by John Lawrence, April 2, 2020
It's obvious that the Federal government has the power to get $1200 or any amount to every citizen. It's actually doing that as a result of COVD-19. So it could provide a Universal Basic Income if it wanted to. It also has the power to tax the rich and untax the poor. The idea is to progressively tax the rich and progressively remunerate the poor. If progressives controlled the Federal government, this is what would happen. Right now conservative Republicans control the Federal government so the opposite happens: money is transferred from poor to rich. The only reason the Federal government is providing everyone with $1200. is that they don't want the 70% consumer economy to totally collapse. Progressive taxation and progressive remuneration are possible. In fact they could balance each other out. As incomes and/or wealth increased, taxes would increase; as incomes and/or wealth decreased, remuneration would increase. This would not totally equalize incomes; it would just bring poor people up above the poverty line to a point at which each family had an income which would adequately provide the basic necessities of life. People would still have an incentive to do better.
It's well known that the Federal Reserve is willing to provide unlimited amounts of free money to the banking system and hedge funds. It provided trillions in the form of Quantitative Easing (QE) during the Great Recession of 2008. Even though this was supposed to be a one time shot in the arm, it didn't turn out tom be that. Even today the Fed is doing QE. It is still providing trillions to the banking system free of charge. It could also be doing that for the average person - QE for the people. This is effectively what the Federal government is doing now during the COVID-19 pandemic. The only difference is that the government is doing it from the "fiscal side," which means it comes out of the budget and is added to the deficit. Which means that the taxpayers are ultimately responsible. The national deficit was about one trillion dollars before the pandemic. The bill Congress passed that gave $1200 to every US citizen was a two trillion dollar bill. This bill alone added two trillion dollars to the deficit for a total of $3 trillion for fiscal year 2020. This means that the national debt will increase by at least 3 trillion in FY 2020 from 23 to 26 trillion dollars, and that's if there's not another phase to the bailout.
But why worry about the national debt? The government issues Treasury bills, and Wall Street buys them if there are no other buyers. Then the Fed bails out Wall Street by taking them onto its balance sheet in return for cash. Problem solved. The Fed just deep sixes the debt in a black hole never to be seen again. Meanwhile the consumer economy just keeps humming along. This is the lesson learned from the Great Recession. The Fed can just print money although most of the money printed in 2008 went to rich people and a lot of middle class people lost their homes. Since the Fed has the capacity to print money, the US will never run out of money. Now they are printing money and distributing it to average people, and this will keep the economy running indefinitely, albeit at a lower level, even during the coronavirus pandemic.
The Fed announced recently that it would cut interest rates to zero. It has also promised to insert $1.5 trillion of "liquidity" into the markets. It's clear that the US is a society that runs on debt, and the biggest non profit producing industry that has gorged itself on humungus amounts of debt is fracking. But investors are getting weary. S&P Global Ratings this month cut credit ratings of six shale gas producers citing the outlook for natural gas prices. "We are particularly concerned about some of the issuers' ability to access the capital markets given investor aversion to the space," S&P said. But no worries. A Fed bailout is on the way. Zero percent interest. Free money. Whoopee. Frack away.
Just a few days ago, CNBC host Jim Cramer exclaimed, "I'm done with fossil fuel," after disappointing earnings reports from Dow Jones energy giants Chevron and Exxon Mobil. "We're in the death knell phase," he warned. The fracking industry is deathly afraid that, if Bernie Sanders is elected, the gravy train will be over. Fracking has provided a lot of jobs for a lot of people, but it is not profitable if the world oil price is less than $40 a barrel. Right now, thanks to Russia and Saudi Arabia, the price of oil is $30 a barrel. A Green New Deal would have to provide jobs for all those workers in the fracking industry who have been making pretty good money even though the industry as a whole is unprofitable.
The Fed is doing its job to create another tower of debt in the US. Alexandria Ocasio-Cortez has pointed out that the $1.5 trillion the Fed has injected into the system for "liquidity" could wipe out all the student loan debt in the US which now stands at $1.5 trillion. But the Fed insists that any stimulus to the economy which would actually help working people as opposed to investors has to come from the fiscal side meaning that Congress would have to appropriate the money. The Fed's job is to make sure that no major business player in the US economy goes bankrupt including the US government itself which is wallowing in debt to the tune of $1 trillion a year thanks to Trump's tax cuts for the rich similar to Ronald Reagan's tax cuts for the rich which quintupled the national debt. It took a Democrat, poor old Clinton, to reduce the deficit to zero.
The question naturally arises of why can't the Fed bail out American workers to the tune of $1000 a month as Andrew Yang has suggested especially now that the coronavirus has put a huge damper on consumption which is 70% of the economy. The Fed says, "Not my job. That's Congress' job." The Fed as it turns out is a wholly owned subsidiary of Wall Street. It is not a publicly owned entity. Congress will do nothing to bail out the American people because of the Republican controlled Senate led by Mitch McConnell. Even if Democrats were to attain a majority in the Senate, the filibuster would prevent them from doing anything. So Joe Biden, even if elected, will get nothing substantial done including building on Obamacare. The only reason Obamacare was even passed in the first place was that Democrats had a majority in both Houses and a filibusterproof majority in the Senate (60 votes) for a very short period of time (4 months) during which Obamacare was passed. Good luck Joe.
If the Fed, instead of being privately controlled by Wall Street, were to become a truly public institution controlled by Congress, then maybe it could bail out the general American public instead of failing businesses. According to the rules of capitalism, failing businesses at some point should go bankrupt. The Fed is essentially preventing that from happening thus fueling the stock market. However, the stock market senses that at this point the Fed has used up all its tools and can do nothing further. There is probably too much liquidity in the markets already. Providing more wouldn't do any good. Interest rates are already at zero. The Fed could go to negative interest rates, but that would screw the economy up even more. Perhaps we'll all have to settle for a good old recession after all. But one thing is for certain. About six months from now, Trump will pull out all the stops to get the economy moving again just before the election since he is basing his reelection on a robust economy. However, it all depends on whether or not the coronavirus is under control at that point. If it is, Trump will take credit.
I wasn’t going to comment on Trump’s lie-filled State of the Union message but the whoppers were so big – especially on the economy – that I feel compelled. Here, for the record, is the real state of the union:
1. JOBS: Average monthly job creation dropped from 223,000 in 2018 to 176,000 in 2019. The employment rate for working-age adults has increased less than during the Obama recovery, and is still significantly below that of other developed countries. The pace of job creation is also markedly slower than it was under Obama.
2. WAGES: Wage growth has slowed, except in states with minimum-wage increases. The typical American household remains poorer today than it was before the financial crisis began in 2007. The median wage of a full-time male worker (and those with full-time jobs are the lucky ones) is still more than 3% below what it was 40 years ago.
3. TAXES: The Trump-Republican tax cut has been a huge failure. We were promised an increase in business investment, but business investment has contracted for the third straight quarter—the first time this has happened since the Great Recession in 2009. Instead, the tax cut triggered an all-time record binge of share buybacks – some $800 billion in 2018.
If fully implemented, the 2017 tax cut will result in tax increases for most households in the bottom 80 percent.
And it has resulted in record peacetime deficits (almost $1 trillion in fiscal 2019) in a country supposedly near full employment. Even with weak investment, the US had to borrow massively abroad: the most recent data show foreign borrowing at nearly $500 billion a year, with an increase of more than 10% in America’s net indebtedness position in one year alone.
Nothing has trickled down to average workers. To the contrary, If fully implemented the 2017 tax cut will result in tax increases for most households in the bottom 80 percent.
4. TRADE: The 2018 goods deficit was the largest on record. Even the deficit in trade with China was up almost a quarter from 2016.
5 GROWTH: Last quarter’s growth was just 2.1%, far less than the 4%, 5%, or even 6% Trump promised to deliver, and even less than the 2.4% average of Obama’s second term. That is a remarkably poor performance considering the stimulus provided by the $1 trillion deficit and ultra-low interest rates.
6. WORKERS’ RIGHTS: Trump administration has systematically weakened workers’ rights. More than eight million workers will be left behind by the Trump overtime rule. Workers would receive $1.4 billion less than under the 2016 rule. New Trump administration joint-employer rule has $1 billion price tag for workers.
7. HEALTH: Millions of Americans have lost their health coverage, and the uninsured rate has risen, in just two years, from 10.9% to 13.7%. US life expectancy, already relatively low, fell in each of the first two years of Trump’s presidency, and in 2017, midlife mortality reached its highest rate since World War II.
8. CLIMATE: losses related to climate change have already reached new highs in the US, which has suffered more property damage than any other country – reaching some 1.5% of GDP in 2017.
Trump's Tax Cuts Forcing the Fed to Buy Up US Treasurys
by John Lawrence, November18, 2019
Republicans used to stand for fiscal conservatism. But they're only fiscally conservative when Democrats are in power. When they control the purse strings, they spend like drunken sailors with the result that the national debt is now $23 trillion. During FY2019, the federal government spent $4.45 trillion and collected approximately $3.46 trillion in tax revenue. A little simple arithmetic shows that the US Federal government has to borrow almost a trillion dollars a year in order to make ends meet or 82.5 billion dollars a month. And this will go on and only likely increase ad infinitum.
"The belief in Washington and on Wall Street has long been that the U.S. government could just keep issuing debt because people around the world are eager to buy up this safe-haven asset. But there may be a limit to how much the market wants, especially if inflation starts rising and investors prefer to ditch bonds for higher-returning stocks."
However, there is another scenario. The Federal Reserve could just keep eating the debt much as it did during the various stages of quantitative easing (QE). The Fed paid the Wall Street banks in cash for the Treasury bonds it took on its balance sheet. This cash provided the liquidity which allowed the banks to keep functioning after the Great Recession of 2008. However, the Fed promised to start selling those Treasury bonds back into the market thus unwinding its balance sheet, what you might call a quantitative tightening. But the Fed didn't get very far with that until the liquidity of the big banks started to be a problem again. So the Fed is back to QE again although now it's not calling it that. However, it is infusing $60 billion a month into the repo market, and taking that much in Treasury bonds off the Wall Street banks' books.
Wall Street banks are required to buy US Treasury bonds thus soaking up US government debt, that is if no other country or individual or other entity wants to buy it. Increasingly, it's getting difficult for the Treasury to sell its debt as other countries like China, which holds the largest amount of US debt, are cutting back on their purchases especially in light of Trump's use of the US dollar in trade wars and sanctions. US debt is not seen as the gold standard that it used to be. Therefore, the debt piles up on the balance sheets of Wall Street banks, and there is the threat of another liquidity crisis as there was in 2008. That's why the Fed is stepping in to buy up US Treasury debt and disappear it on its balance sheet thus providing liquidity to the Big Banks.
Primary dealers are banks and other financial institutions approved to trade with the Federal Reserve. In return for that privilege, they are obligated to place bids at the U.S. Treasury Department’s debt auctions.
With the federal fiscal deficit widening, dealers have bought up an increasing amount of government debt, constraining their ability to provide liquidity to funding markets when needed, but only a small proportion of those holdings are in shorter-term Treasury bills.
U.S. Treasurys held by primary dealers stood at $206 billion in the week ending Sept. 25. This compared with their holdings of Treasury bills which averaged $22.9 billion over the last six months, according to Fed data.
So US Treasurys, largely as the result of Trump's tax cuts for the wealthy, are clogging up the system, and the Fed must step in again after it had promised to unwind its balance sheet comprising trillions of US government debt when economic times returned to normal. But what is normal these days? A lot of pundits think there will be QE, like strawberry fields, forever. That would be the new normal. But wait until there's a Democratic President, and Republicans will start screaming bloody murder again about the national debt.
President Trump himself set up this false dichotomy by saying right off the bat, "There was no quid pro quo." Trump successfully got everyone arguing over whether or not there was one.The point is whether or not there was a quid pro quo is irrelevant. What he did by extorting Zelensky was a "high crime and misdemeanor." If it wasn't, what the heck is? The Constitution doesn't define in detail what high crimes and misdemeanors actually are. Therefore, it's left up to the Congress. But what Trump did looks like a duck, swims like a duck, and quacks like a duck. Therefore, it's a duck.Trump's strategy from the very beginning was to act like nothing of significance happened. He took pains not to look like he was hiding anything. He took pains to sound like it was just another day in the office. Ho. Hum.
However, the evidence is mounting. The real nitty gritty is Trump's tax returns which he has been fighting in court to prevent the release of. When these come to light, this will be the coup de grace on Trump's Presidency. The arcane legal arguments are almost too difficult to follow for the average layperson. Here are the key points thanks to CNBC:
1) A federal judge in Washington, D.C., on Monday [November 11] dismissed President Donald Trump’s legal effort to bar a House committee from using a New York state law to obtain his state tax returns.
2) The ruling by Judge Carl Nichols does not mean that Trump’s state tax returns will be released to the House Ways and Means Committee anytime soon. The committee has not tried to use the new law to get his state returns.
3) The committee sued the U.S. Treasury Department and the IRS in early July to obtain Trump’s federal income tax returns.
The question might be asked why the House committee has not used the New York state law to get Trump's returns which mirror his Federal returns. Can't they walk and chew gum at the same time? There are always a myriad legal workarounds and by passes and subterfuges that can be used by skillful lawyers to keep this game or any legal game going as long as possible. The longer it goes on, the more money lawyers make. "A federal judge in Washington, D.C., on Monday dismissed President Donald Trump’s lawsuit seeking to bar a House committee from using a New York state law to obtain his state tax returns, suggesting the president’s legal action belonged in another courthouse." There you go. If you can't win in one courthouse, there's always another courthouse you can try. Just try the wrong courthouse first. This eats up the clock. There are other avenues, other approaches when that one fails. Just because one judge threw out Trump's lawsuit, doesn't mean anything. The judge as much as said, "Go try your luck elsewhere." Nothing is ever definitive; nothing is ever final. There's always another way to deal with the problem as long as you keep on paying the lawyers.
As it turns out, neither of three House committees has invoked the New York State law to get Trump's tax returns. What were they waiting for? "[Judge] Nichols’ ruling in Trump’s own suit had failed to establish that a judge in Washington federal court had jurisdiction over a challenge to New York’s law, known as the TRUST Act." So what did the Judge's ruling establish? Not a heck of a lot to be sure. Who can challenge New York's law? Nobody knows. This is just all too convoluted to understand for the average layperson. It is a labyrinth of lawyerly mumbo jumbo and a mire of obfuscation There are just too many courts at too many levels so that no court knows what the other court is doing or is capable of doing or has the jurisdiction to do.
"Nichols’ ruling said that Trump did not establish a conspiracy between the Ways and Means Committee and New York officials, which could have established that a Washington court had jurisdiction over the suit." Why should the House Ways and Means Committee have to conspire with New York officials to get Trump's state tax returns in the first place, but if it did, that would mean a Washington court had jurisdiction over the suit? Well since they didn't conspire, that should mean that a New York court has jurisdiction over the suit, but a New York court just said that it didn't have jurisdiction over the suit. What is this a freakin' merry-g-round? Around and around we go, and where we stop, nobody knows. The ball is in your court; no, the ball is in your court. Let's toss the ball around some more.
It only makes sense that Congress should be able to get ahold of the President's tax returns since every President prior to Trump has voluntarily released them. Where is a whistleblower when we need one? Couldn't someone just leak Trump's tax returns? Now Judge Nichols is suggesting that Trump could refile his suit alleging said conspiracy since his lawyers failed to mention said conspiracy in the original suit. Judge Nichols, you are just wasting we taxpayers' time. Either Trump should be compelled to cough up his tax returns or the IRS or the state of New York should just be compelled to hand them over without Trump even having to be involved. After all both New York State and the IRS have the tax returns in their possession. But the judges and lawyers just want this game to continue going round and round in court. After all they make more money that way.
President Donald Trump speaks before signing an executive order for sanctions on Iran's supreme leader in the Oval Office of the White House on June 24, 2019 as US Treasury Secretary Steven Mnuchin looks on. (Photo: Mandel Ngan/AFP/Getty Images)
After exploding the federal budget deficit with over a trillion dollars in tax cuts for the rich and massive corporations, President Donald Trump is reportedly considering using his possible second term in the White House to slash Medicare and Social Security—the final part of a two-step plan progressives have been warning about since before the GOP tax bill passed Congress in 2017.
"The Trump/GOP tax cuts for the wealthy will add over $1.5 trillion in debt. Now we know how they'll pay for those tax cuts, by cutting Social Security and Medicare." —National Committee to Preserve Social Security and Medicare
The New York Timesreported this week that, with the budget deficit set to surpass $1 trillion in 2020 thanks in large part to Trump's tax cuts and trade war, Republicans and right-wing groups are pressuring the president to take a sledgehammer to Social Security and Medicare, widely popular programs Trump vowed not to touch during his 2016 campaign.
Sen. John Barrasso (R-Wyo.) told the Times that his party has discussed cutting Medicare and Social Security with Trump and said the president has expressed openness to the idea.
"We've brought it up with President Trump, who has talked about it being a second-term project," said Barrasso.
Senator John Thune (R-S.D.), the number two Republican in the Senate, echoed Barrasso, saying it is "going to take presidential leadership to [cut Social Security and Medicare], and it's going to take courage by the Congress to make some hard votes. We can't keep kicking the can down the road."
"The Trump/GOP tax cuts for the wealthy will add over $1.5 trillion in debt," said the National Committee to Preserve Social Security and Medicare. "Now we know how they'll pay for those tax cuts, by cutting Social Security and Medicare."
According to the Washington Post, Trump has already "instructed aides to prepare for sweeping budget cuts if he wins a second term in the White House."
"Trump's advisers say he will be better positioned to crack down on spending and shrink or eliminate certain agencies after next year, particularly if Republicans regain control of the House of Representatives," the Post reported last month.
The president, despite his campaign promises, has included major cuts to Social Security and Medicare in his budget proposals—while predictably demanding massive increases in Pentagon spending.
In his budget blueprint for fiscal year 2020, as Common Dreamsreported, Trump called for $845 billion in cuts to Medicare and $25 billion in cuts to Social Security.
Sen. Bernie Sanders (I-Vt.), a 2020 Democratic presidential candidate, tweeted Thursday his belief that Trump will not have a chance to carry out his "second-term project."
"Mr. Trump, you are not going to have a second term," said Sanders.
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Donald Trump and Republicans in Congress claim that America spends too much on things like food stamps, welfare, and foreign aid.
But let’s look at how the government actually spends your federal tax dollars each year. We’re going to look at what’s known as the “discretionary budget,” which has to be reappropriated by Congress each year.
Start with foreign aid, the conservatives’ favorite boogeyman. It’s $29 billion a year. That may sound like a lot but it’s only 2 percent of all discretionary spending. Add all spending on international affairs, it’s 4 percent.
What about science and technology, including NASA, the National Science Foundation, and research in clean energy, which conservatives love to hate?Just 3 percent.
The environment and natural resources – money for clean air, safe drinking water and protecting public lands? Another 3 percent.
Roads, bridges, highways, airports, all transportation funding: Another 3 percent.
You may be thinking, but what about Social Security, Medicare, Medicaid, and the Affordable Care Act?
By law, these programs are mandatory spending, which don’t require Congress to approve funding every year. Americans have paid into Social Security and Medicare over their entire working lives.
Yet they’re still vulnerable. In fact, if Trump and Republicans in Congress aren’t going to cut discretionary spending – especially on the military – the only places they can look to make way for more tax cuts for the wealthy and corporations are Social Security, Medicare, and Medicaid.
That’s been their goal all along.
Know where the money is really going. And know what they have in mind.
Why Can't the 90% Vote to Raise Taxes on the 10% and Lower Taxes on Themselves?
by John Lawrence, June 25, 2019
The Repubs are Johnny One Notes when it comes to elections. "We will lower your taxes." Of course they lower taxes on the rich (the 10%) much more than they lower them on the 90%. People always fall for this. They always say "The Democrats will raise your taxes." Well now, Bernie and others are saying "We'll raise taxes on the rich, but not on the 90%." That's good because in this country the majority rules, and the 90% can outvote the 10% at least in Presidential and Congressional elections. The Dems, however, should go further. They should say, "Not only will we raise taxes on the rich, we'll lower them on everybody else." That would go over great if the general public could appreciate that much nuance.
Trump's tax cuts blew a whole in the national budget and raised the Federal debt to $22 trillion. Now over a trillion dollars a year just goes to paying interest on the debt. The debt can never be paid off. The American people are being sold a bill of goods and will wind up being perpetual debtors not only nationally but individually. That's just where the power elite wants them. Debtors are more easily controlled than those who have some agency. The only agency the American people have is the fact that majority rules, and they can vote the powerful out of office and vote in people like Bernie Sanders and Elizabeth Warren who stand on the side of the middle class.
Ellen Brown in her latest book, "Banking on the People: Democratizing Money in the Digital Age," has shown the way to a debt free America with low taxes. She has been telling us for years that the Federal government need not borrow money and then pay interest on it. It has the power to generate money and then distribute it into society. The American Congress is given the right in the Constitution to coin money, but it has delegated that right to privately owned banks. Then the Treasury issues bonds which are bought by private investors who expect to be paid interest on those bonds. The big Wall Street banks take a cut on every bond sold.
Recently the Federal Reserve bank has gotten into the act with Quantitative Easing (QE). It buys the bonds from the Wall Street banks and by law returns the interest to the Treasury. These bonds need never be paid off. Net result: the American Treasury gets free money. But instead of this shell game the American government could issue its money directly, and spend it into American society on infrastructure development and in many other ways. This is exactly what other societies, who have control over their own money supply, have done. This is how China manages to spend money on its Belt and Road initiative building infrastructure all over the world without going into debt. Meanwhile the US goes further and further into debt, and in the final analysis it's all because it has delegated the creation of money to privately owned banks including the Federal Reserve.
But there is a better way according to Ms. Brown. Congress could create its own money and spend it directly instead of borrowing it and paying interest on it. This is how Lincoln built the transcontinental railroad and won the Civil War. He issued greenbacks which were money created instead of borrowed by the Federal government. This is how Franklin Roosevelt did it with the Reconstruction Finance Corporation during the Great Depression. The whole thing here is that Congress on behalf of the American people could create its own money tax free and use it any way it pleases like the Green New Deal, for example. It could be used to cancel student loan debt as Bernie wants to do.
These are radical ideas to be sure, but in the age of global warming and the neo-feudalization of the American people, radical ideas are called for. Our Grandkids will thank us for not letting planet earth go up in smoke. Presently, the whole American midsection is being flooded out because it drains most of the water from the ever increasing torrential downfalls. It is in the process of becoming just one big flood plain. Let's get radical to save planet Earth. The first step is to let the American Congress, not privately owned banks, create the money supply and use it to build infrastructure for which there is never enough money under the present system.
Some politicians are calling for higher taxes on the rich. Naturally, these proposals have unleashed a torrent of opposition – mostly from…the rich. Here are the 12 biggest myths they’re propounding:
Myth 1: A top marginal tax rate applies to all of a rich person’s total income or wealth.
Myth 8: The estate tax is a death tax that hits millions of Americans.
Baloney. The current estate tax, which only applies to assets in excess of 11 million dollars, or 22 million dollars for couples, affects fewer than 2,000 families.
Myth 9: If taxes are raised on the wealthy, they’ll find ways to evade them. So very little money is going to be raised.
Myth 10: The only reason to raise taxes on the wealthy is to collect revenue.
No. Although these proposals would generate lots of revenue – and help us reduce the national debt while investing in schools, roads, and all the things we need – another major purpose is to reduce inequality, and thereby safeguard democracy against oligarchy.
Myth 11: It’s unfair to raise taxes on the wealthy.
Hogwash. It’s their country, too. They couldn’t maintain their fortunes without what America provides – national defense, police, laws, courts, political stability, and the Constitution. They couldn’t have got where they are without other things America provides – education, infrastructure, and a nation that respects private property. And to argue it’s “their money” also ignores a lot of other ways America has bestowed advantages on the rich – everything from bailing out Wall Street bankers when they get into trouble, to subsidizing the research of Big Pharma.
So the next time you hear one of these myths, know the truth.
Why They'll Never Discuss the Military-Industrial Complex on Meet the Press
by John Lawrence, February 22, 2019
Because Boeing is one of their sponsors, that's why. It's not that the news is "fake news". It's that most of it is irrelevant news. The news is show biz. Mostly the news concerning Trump is his latest preposterous tweet. Or the news is about the latest mass killing. He wasn't supposed to have a gun because he was a felon, and the authorities ordered him to turn it in but he didn't. So? They didn't go after him? Of course that detail is not covered. Considered to be less than newsworthy. Not sensational enough. Or it's about some ridiculous antics of some celebrity like Jussie Smollett, a black guy who hires two other black guys to beat him up and call him a nigger. Why is this even news? So what? Who cares?
So why aren't we discussing the role of the US in the world? Why aren't we discussing the fact that American weaponry and support is helping Saudi Arabia commit genocide in Yemen? Why aren't we discussing how Trump's vaunted tax cuts have increased the taxes of a lot of people? In states like California and New York (Democratic states by the way) property taxes are extremely high because property values are extremely high. So capping the amount of the deduction for state and local taxes actually increased the tax bills of a lot of people not all of whom were Democrats as Trump had hoped.
In California, for example, there were some reliable Republican strongholds like Orange County. The New York Times reported:
House Republicans suffered heavy Election Day losses in districts where large concentrations of taxpayers claim a popular tax break — the state and local tax deduction — which the law capped at $10,000 per household. The new limit resulted in an effective tax increase for high-earning residents of high-tax states who claim more than $10,000 per year in SALT.
Democrats swept four Republican-held districts in Orange County, Calif., where at least 40 percent of taxpayers claim the SALT tax break, defeating a pair of Republican incumbents and winning seats vacated by Representatives Ed Royce and Darrell Issa. Those districts include longtime Republican strongholds, like Newport Beach, and rank among the country’s largest users of the state and local tax break.
Can you say BACKFIRED! The Trump tax cut increased the tax bill for a lot of relatively wealthy Republican property owners while giving huge tax breaks to the super wealthy. It was supposed to lead to productive investment which would lead to more hiring and more jobs. Instead it led to stock buy backs by large corporations and higher CEO salaries. Can you say BACKFIRED? The Democrats want to restore the full deductions for state and local taxes, God bless 'em. Maybe that's why Orange County switched from Red to Blue. Forbes reported: "Even Fox News, in an August 2018 poll, found Obamacare to be more popular than the tax cuts." Ha. Ha. on Trump. The only result of his tax cuts was to sink the US into $1.5 trillion more debt and to create more Democratic districts.
Published on Tuesday, January 15, 2019 by Common Dreams
"I don't think it's surprising," said the New York congresswoman. "What we see, overall, is that the vast majority of Americans know that income inequality is one of the biggest issues of our time."
Alexandria Ocasio-Cortez talks with a voter at the conclusion of a town hall event, September 19, 2018 in The Bronx borough of New York City. (Photo: Drew Angerer/Getty Images)
Rep. Alexandria Ocasio-Cortez (D-N.Y.) sparked a flood of hysterical and error-filled responses from the right when she suggested in a recent "60 Minutes" interview that America's top marginal tax rate should be hiked to 70 percent to help pay for bold progressive programs, but a survey published on Tuesday found that the majority of Americans are on the freshman congresswoman's side.
"This is a policy that is already popular and it's time that we embrace working Americans and it's time that the Democratic Party fights in a full-throated manner for the working class in the United States." —Rep. Alexandria Ocasio-Cortez
Conducted by The Hill in partnership with the market research firm HarrisX, the poll found that 59 percent of the U.S. public supports raising the marginal tax rate on the richest Americans to 70 percent. The poll also found a "surprising amount of support" for the proposal among Republicans, with 45 percent backing the idea along with 71 percent of Democrats.
"Oh? What's that? The majority of Americans respect when you break down reasonable policy proposals that are designed to combat runaway income inequality and help fund priorities they value most?" Ocasio-Cortez wrote on Twitter in response to the new survey. "We can win public sentiment, stand our ground, and not be scared by GOP [mis]information."
"I don't think it's surprising," Ocasio-Cortez said of the poll results in an interview with The Hill. "What we see, overall, is that the vast majority of Americans know that income inequality is one of the biggest issues of our time."
"This is a policy that is already popular and it's time that we embrace working Americans and it's time that the Democratic Party fights in a full-throated manner for the working class in the United States and to not support a marginal tax rate is to really just allow runaway wealth and inequality to persist," she added.
As economists and historians hastened to point out after Ocasio-Cortez first floated the idea of raising the top marginal tax rate on the ultra-wealthy to 70 percent, similar and even higher rates were the norm for much of the 20th century.
After Anderson Cooper called Ocasio-Cortez's 70 percent top marginal tax rate suggestion and other bold progressive proposals a "radical agenda" during the "60 Minutes" interview, the New York congresswoman responded, "If that's what radical means, call me a radical."
According to an analysis by the Washington Post's Jeff Stein, the revenue raised over a decade from a 70 percent top marginal tax rate on those earning $10 million or more could fund almost all of Sen. Bernie Sanders' (I-Vt.) tuition-free public college plan, forgive over half of the student debt in the U.S., or nearly fund a $1 trillion infrastructure plan.
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The biggest untold story about how we pay for government involves a big switcheroo by America’s wealthy.
Decades ago, wealthy Americans financed the federal government mainly by paying taxes. Their tax rate was far higher than what it is today.
Now, wealthy Americans finance the federal government mainly by lending it money, and collecting interest payments on those loans, profiting when the rest of us pay them back.
Follow the money: As the debt continues to grow, interest payments are becoming huge. Taxpayers could soon be paying more in interest on the federal debt than we spend on the military or on Medicaid.
Interest on the debt is expected to hit $390 billion next year, nearly 50 percent more than in 2017, according to the Congressional Budget Office.
Who’s receiving these interest payments? Mostly Americans, not foreigners. And most of these Americans are wealthy investors who park their savings in treasury bonds held by mutual funds, hedge funds, pension funds, banks, insurance companies, personal trusts, and estates.
The richest 1 percent of Americans now owns 40 percent of the nation’s wealth, which is more wealth than the bottom 90 percent put together.
Which means a big chunk of the growing interest payments American taxpayers make on the federal debt is going to… rich Americans.
Now, keep following the money. One of the biggest reasons the federal debt has exploded is that tax cuts, starting with the Bush administration in 2001 and extending through Trump’s 2017 tax cut, have reduced government revenues by over $5 trillion.
The Trump-Republican tax cut will cause the debt to explode even further. Trump’s own Office of Management and Budget predicts an added $100 billion a year in deficits over the next decade, adding up to $1 trillion of additional debt.
Keep following the money: Most of the benefits from those tax cuts are going to the wealthy. 65 percent have gone to the richest fifth of Americans, 22 percent to the top 1 percent.
So you see the big switcheroo? The rich used to pay higher taxes to the government. Now, the government pays the rich interest on a swelling debt, caused largely by lower taxes on the rich. Which means a growing portion of everyone else’s taxes are now paying the rich interest on those loans, instead of paying for government services everyone needs.
That’s wrong. America’s wealthy have never been wealthier. They should pay their fair share of taxes. The big switcheroo should be reversed.
“I am a Tariff Man,” Trump tweeted last week. “When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so…. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.”
I’m sorry, Mr President, but you got this wrong. Tariffs are paid by American consumers. About half the $200bn worth of goods you’ve already put tariffs on come almost exclusively from China, which means American consumers are taking a hit this holiday season.
These tariffs function exactly like taxes. By imposing them, you have in effect raised taxes on most Americans. You have made Americans poorer.
Worse yet, they’re regressive. The middle class and poor pay a larger percentage of their incomes on these tariffs than do the rich.
I needn’t remind you that your Tax Cuts and Jobs Act, passed last year, slashed taxes on big corporations and the rich by about $150 billion annually. You claimed it would cause companies to invest more in America and thereby create more American jobs. They didn’t. (See General Motors.)
They spent most of their tax savings buying back their own shares of stock. This gave the stock market a steroidal boost. Not surprisingly, the boost was temporary. Last week the stock market erased all its gains for 2018, and worse may be in store. The whole American economy is slowing.
Your tariffs could put us into a recession. The world’s other big economies are slowing, too. In 1930, congressmen Smoot and Hawley championed isolationist tariffs that President Herbert Hoover signed into law. They deepened the Great Depression.
Your economic advisers are trying to put the best possible face on all this, arguing that your tariffs are designed to improve your bargaining leverage with China.
The middle class and poor pay a larger percentage of their incomes on these tariffs than do the rich
But your recent US-China trade deal is already unraveling. More accurately, the deal never happened. Your claims about Beijing agreeing to buy more US agriculture and natural gas weren’t backed up by your own administration or the Chinese government. Sort of like your “great” deal with Kim Jung-un.
Some of your advisers say your real aim isn’t about trade at all. It’s to get China to stop stealing American technology. This presumably was the reason behind last week’s arrest of the chief financial officer of Chinese tech giant Huawei Technology. (Hint: That arrest won’t make it any easier to reach an agreement with China.)
I’m not sure why you’re so interested in helping American corporations protect their technology, anyway. That technology doesn’t belong to the United States. It belongs to those corporations and their shareholders. They develop and share it all over the world.
Most of these corporations have been willing to share their technology with China in joint ventures with Chinese companies, because that’s the price of entering the lucrative Chinese market. They still come away making lots of money.
Of course, they could make even more if the Chinese didn’t take the technology. So maybe, as with the tax cut, you just want to make big corporations richer.
But let me give you the benefit of the doubt. I’m going to assume your real concern is America’s national security, and that this whole “tariff man” blunderbuss is designed to prevent China from racing ahead of us in technologies that are critical to national defense.
John Bolton, your national security adviser, has said the real issue is “a question of power”, and the theft of intellectual property has “a major impact on China’s economic capacity and therefore on its military capacity”. Bolton advises you, right?
But if this is your real motive – and, quite frankly, I can’t come up with another reasonable one – might I suggest a better way to protect national security?
You have the authority to stop foreign corporations from buying any American corporation whose technology is critical to national security. So why not prohibit American corporations that possess such critical technology from sharing it with China, even if that’s the price of gaining access to China’s lucrative market?
Bar them from entering into joint ventures with Chinese corporations, prevent them from teaming up with Chinese state-owned companies, and demand that they guard their technology, under penalty of law.
Sure, these America corporations would have to sacrifice some profits, but so what? Your job isn’t to make them more profitable. It’s to protect the United States. And isn’t this a better way to protect American security than to impose a hugely regressive tax on average Americans and risk a global recession?
With 2017’s tax overhaul permanently reducing the federal corporate income tax rate from 35 percent to 21 percent, the personal-finance website WalletHub today released its latest Corporate Tax Rate Report.
The report provides an in-depth analysis of the 2017 federal, state and international tax rates paid by the S&P 100 companies, the largest and most established businesses in the U.S.
Companies Paying the Highest Taxes (Overall Tax Rate)
Companies Paying the Lowest Taxes (Overall Tax Rate)
1
American International Group Inc. (513.4%)
1
Charter Communications Inc. (-883.9%)
2
Halliburton Co. (165.8%)
2
The Kraft Heinz Co. (-98.7%)
3
Citigroup Inc. (129.1%)
3
AT&T Inc. (-97.2%)
4
Eli Lilly and Co. (109.3%)
4
Berkshire Hathaway Inc. (-90.3%)
5
General Motors Co. (97.2%)
5
Pfizer Inc. (-73.5%)
6
Johnson & Johnson (92.6%)
6
Comcast Corp. (-49.5%)
7
Kinder Morgan Inc. (89.7%)
7
Verizon Communications Inc. (-48.3%)
8
Abbott Laboratories (84.2%)
8
MetLife Inc. (-41.6%)
9
The Coca-Cola Co. (82.5%)
9
Union Pacific Corp. (-40.4%)
10
Caterpillar Inc. (81.8%)
10
DowDuPont Inc. (-39.9%)
Key Stats
The overall tax rate that S&P 100 companies pay is around 39 percent.
S&P 100 companies pay roughly 65 percent lower rates on international taxes than U.S. taxes.
Tech companies, including Facebook Inc., Apple Inc. and Cisco System Inc., are still paying more than 15 percent lower rates abroad, continuing the trend from 2013, 2014, 2015 and 2016.
More than ten S&P 100 companies are actually paying a negative overall tax rate and are therefore due a discrete net tax benefit: Charter Communications Inc., The Kraft Heinz Co., AT&T Inc., Berkshire Hathaway Inc., Pfizer Inc., Comcast Corp., Verizon Communications Inc., MetLife Inc., Union Pacific Corp., DowDuPont Inc., Netflix Inc., NextEra Energy Inc., Exxon Mobil Corp., Altria Group Inc., Exelon Corp. and Chevron Corp.
The average S&P 100 company pays a 77 percent higher tax rate than the top 1 percent of consumers.
A woman holds a sign at a protest of the "Trump tax scam" on Dec.4, 2017. (Photo: CDEL Family/Flickr/cc)
As President Donald Trump and Republican leaders make clear that they intend to enact deep cuts to Medicare, Medicaid, and Social Security after next month's midterms in a supposed effort to rein in the soaring deficit—which has ballooned largely due to Trump's $1.5 trillion tax law—a survey published on Friday found that nearly two-thirds of Americans would prefer repealing the Republican tax cuts over slashing the safety net.
Conducted by NPR, PBS NewsHour, and Marist, the poll found that 60 percent of Americans would rather eliminate Trump's tax cuts than gut safety net programs to reduce the federal budget deficit. Just 21 percent of Americans said they would rather slash the safety net than repeal Trump's tax cuts, which have overwhelmingly benefited the rich and corporations.
The new survey comes just over a week after Senate Majority Leader Mitch McConnell (R-Ky.) blamed the nation's rising budget deficit on Medicare, Medicaid, and Social Security and declared that these programs must be cut to bring federal spending under control. Trump echoed McConnell just 24 hours later, promising "a lot" of spending cuts after the midterm elections.
Working families shouldn't have to pay for the #GOPTaxScam's bill. The rich and big corporations must pay their fair share of taxes! https://t.co/c1O6O5TQHm
These disproportionate rewards for the rich likely explain why Republican candidates have "barely" been mentioning the tax law with just 10 days left before the Nov. 6 midterms.
"When you vote for bunk economics," concluded Patriotic Millionaires, "don't expect it to be an electoral boon."
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Hard to believe, but the Trump administration is proposing yet another massive tax windfall for the rich.
It would be to reduce their capital gains taxes. Those are taxes on the increased value of their stocks and bonds, businesses, and other valuables, when they sell them. Trump would do this by eliminating whatever portion of that increased value was due to inflation.
Here are three reasons why reducing capital gains taxes would be another tax scam for the rich.
1. The people who’d get most of the benefits are already richer than ever and pay a lower effective tax rate than they have in decades. An estimated 63 percent of the benefits of this proposal would go to the wealthiest one-tenth of 1 percent of Americans, while the bottom 80 percent of us would get only 1 percent of its benefits, according to a University of Pennsylvania Wharton School analysis.
If anything, Congress should raise capital gains taxes, not lower them. The capital gains tax rate is already lower than the rate on ordinary income. Yet the wealthy now own most of the nation’s assets and enjoy most of the capital gains. In 2016 (the most recent date for which data are available), the richest 10 percent owned 84 percent of the entire stock market.
2. The cost of this change would be a whopping $10 billion a year, for the next 10 years. That’s just about the yearly cost of funding free lunches for 20 million poor kids. Yet the federal debt is already ballooning. Over ten years, this proposal would increase it by an estimated $100 to $300 billion.
3. Trump and his administration say they have the power to make this change by themselves without even being authorized to do so by Congress. Rubbish. Congress has already decided that capital gains taxes should not be indexed for inflation. That’s why, when the same idea came up during the George H.W. Bush administration, the Department of Justice’s Office of Legal Counsel stopped it cold.
It’s another big handout to the wealthy, another huge increase in the federal deficit, and it’s illegal. Don’t let Trump and his enablers get away with this tax scam for the rich.
Published on Friday, August 31, 2018 by Common Dreams
"Trump wants to send another kiss to the rich—unilaterally, without any approval from Congress. He ignores the law, governs for the top one percent, and doesn't give a hoot about the rest of us."
"Hours after cheating millions of middle class workers, Trump wants to send another kiss to the rich—unilaterally, without any approval from Congress," Rep. Bill Pascrell (D-N.J.) wrote on Twitter late Thursday. (Photo: Chip Somodevilla/Getty Images)
"Trump himself has pocketed millions over the years grifting off of taxpayers, but now he wants to make it harder for workers to get ahead." —Sen. Bernie Sanders
"Trump himself has pocketed millions over the years grifting off of taxpayers, but now he wants to make it harder for workers to get ahead." —Sen. Bernie Sanders"There are a lot of people that love it and some people that don't," Trump said of the plan, which would disproportionately reward the top 0.01 percent of Americans. "But I'm thinking about it very strongly."
Trump's Oval Office interview with Bloomberg came shortly after the president announced in a letter to congressional leaders that he is freezing a planned 2.1 percent pay increase for federal workers just ahead of Labor Day, claiming that "federal agency budgets cannot sustain such increases."
"Hours after cheating millions of middle class workers, Trump wants to send another kiss to the rich—unilaterally, without any approval from Congress," Rep. Bill Pascrell (D-N.J.) wrote on Twitter late Thursday. "He ignores the law, governs for the top one percent, and doesn't give a hoot about the rest of us."
In a Facebook post responding to Trump's decision to cancel federal employees' pay raise—which was set to take effect in 2019—Sen. Bernie Sanders (I-Vt.) wrote that Trump is once again "making it clear he has no interest in supporting working people."
"Trump himself has pocketed millions over the years grifting off of taxpayers, but now he wants to make it harder for workers to get ahead," Sanders added. "Trump and his Republican friends in Congress didn't have any problem finding $1.5 trillion in tax giveaways for the wealthiest people and hugely profitable corporations, but suddenly they don't have enough money to pay fair salaries to hardworking public servants."
In a Twitter thread on Thursday, Seth Hanlon, a senior fellow at the Center for American Progress, detailed why indexing capital gains to inflation is "both terrible policy and illegal":
Here, tax economist Len Burman explains why indexing capital gains would worsen inequality (since millionaires pay 77% of cap gains taxes), would add to budget deficits, and open up new tax shelters for the wealthy. 2/https://t.co/JHS3ROyIq9pic.twitter.com/F7xAMJDEoa
The Penn-Wharton team also found that the proposal would cost up to $102 billion, with a stunning 63% of the tax benefit going to the top 0.1%, 86% going to the top 1%, and 95% going to the top 5%.https://t.co/xPKFKCQOdD 5/
Indexing capital gains by executive fiat is also totally illegal, as George H.W. Bush's Treasury Department and his Justice Department's Office of Legal Counsel determined in 1992:https://t.co/TIdgqLV3Sa 6/
What will happen if the blue wave in the midterm elections falls short? Clearly, at this point it still might: Democrats will surely receive more votes than Republicans, but thanks to gerrymandering and population geography, the U.S. electoral system gives excess weight to rural, white voters who still have faith in President Trump. What if, thanks to that excess weight, the minority prevails?
One answer, obviously, is that the unindicted co-conspirator in chief will continue to be protected from the law. And for those concerned with the survival of American democracy, that has to be the most important issue at stake in November. But if the G.O.P. hangs on, there will also be other, bread-and-butter consequences for ordinary Americans.
First of all, there is every reason to believe that a Republican Congress, freed from the immediate threat of elections, would do what it narrowly failed to do last year, and repeal the Affordable Care Act. This would cause tens of millions of Americans to lose health insurance and would in particular hit those with pre-existing conditions. There’s a reason health care, not Trump, is the central theme of Democratic campaigns this year.
But the attack on the social safety net probably wouldn’t stop with a rollback of Obama-era expansion: Longstanding programs, very much including Social Security and Medicare, would also be on the chopping block. Who says so? Republicans themselves.
In a recent interview with CNBC’s John Harwood, Representative Steve Stivers, the chairman of the National Republican Congressional Committee — in effect, the man charged with containing the blue wave — declared that, given the size of the budget deficit, the federal government needs to save money by cutting spending on social programs. When pressed about whether that included Social Security and Medicare, he admitted that it did.
And he’s not alone in seeing major cuts in core programs for older Americans as the next step if Republicans win in November. Many major figures in the G.O.P., including the departing speaker of the House, Paul Ryan, and multiple senators, have said the same thing. (Meanwhile, groups tied to Ryan have been running attack ads accusing Democrats of planning to cut Medicare funding — but hey, consistency is the hobgoblin of little minds. So, apparently, is honesty.)
Now, Republicans who call for cuts in social spending to balance the budget are showing extraordinary chutzpah, which is traditionally defined as what you exhibit when you kill your parents, then plead for mercy because you’re an orphan. After all, the same Republicans now wringing their hands over budget deficits just blew up that same deficit by enacting a huge tax cut for corporations and the wealthy.
So it might seem shocking that only a few months later they’re once again posing as deficit hawks and calling for spending cuts. That is, it might seem shocking if it weren’t for the fact that this has been the G.O.P.’s budget strategy for decades. First, cut taxes. Then, bemoan the deficit created by those tax cuts and demand cuts in social spending. Lather, rinse, repeat.
This strategy, known as “starve the beast,” has been around since the 1970s, when Republican economists like Alan Greenspan and Milton Friedman began declaring that the role of tax cuts in worsening budget deficits was a feature, not a bug. As Greenspan openly put it in 1978, the goal was to rein in spending with tax cuts that reduce revenue, then “trust that there is a political limit to deficit spending.”
It’s true that when tax cuts are on the table their proponents tend to deny that they’ll increase the deficit, claiming that they’ll provide a miraculous boost to the economy and that tax receipts will actually rise. But there’s not a shred of evidence to support this claim, and it has never been clear whether anyone with real political power has ever believed it. For the most part it’s just a smoke screen to help conceal the G.O.P.’s true intentions.
The puzzle is why Republicans keep getting away with this bait-and-switch.
Fifteen years ago I wrote a long piece titled “The Tax-Cut Con,” describing what was even then a time-honored scam; it reads almost word for word as a description of Republican strategy in 2017-18. Yet I keep reading news analyses expressing puzzlement that men who were strident deficit hawks in the Obama years so cheerfully signed on to a budget-busting tax cut under Trump. To say the obvious: These men were never deficit hawks; it was always a pose.
And the gullibility both of the news media and self-proclaimed centrists remains a remarkable story. Remember, Ryan, who was utterly orthodox in his determination to cut taxes on the rich while savaging programs for the poor and the middle class, even received an award for fiscal responsibility.
Which brings us back to the midterm elections. Rule of law is definitely on the ballot. So is health care. But voters should realize that the threat to programs they count on is much broader: If the G.O.P. holds its majority, Social Security and Medicare as we know them will be very much in danger.
Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman
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.
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.
A trillion dollars, a figure with twelve zeros after a one, is by any measure a ton of money. It’s near impossible to comprehend how much a trillion is.
So, it’s admittedly hard to comprehend a new report that tallies the combined tax cuts of the Bush, Obama, and Trump administrations from the year 2000 to the time they’re fully implemented in 2025 at over $10 trillion. Of that $10 trillion, the Institute on Taxation and Economic Policy found, a whopping $2 trillion will have gone exclusively to the top 1 percent.
Sounds like big numbers, huh?
The Endowment for Human Development offers some tidy tips for visualizing a trillion. They point out that if you took a trillion one-dollar bills and laid them end-to-end, it would measure longer than the distance from the earth to the sun.
Spending a trillion dollars, at a rapid-fire clip of $20 per second, would take more than 1,500 years before you ran out of money.
So yes, when we’re talking about trillions, we’re talking about a lot, a lot, a lot of money. And what this new report really shows is a metric-crap-ton of cash going to the already exceptionally wealthy. That’s a problem.
The past four decades have seen a dramatic increase in income and wealth inequality as the rich have continued to get richer while the rest of the economy has stagnated. The lopsided tilt of the tax code plays no small part.
As this new report points out, it’s not just the Trump tax cuts. Bush cut taxes too, especially for the rich, and Obama extended many of the Bush tax cuts.
And at last the results have arrived. Put very simply, the top 1 percent of households will pay $111 billion less this year alone in federal taxes combined than they would have if the laws had remained unchanged since 2000.
The wealthiest households and most profitable corporations have gotten big tax breaks while everyone else remains relatively stagnant.
The Trump tax cuts have rightfully generated a tremendous amount of press coverage. A lot of that press coverage has accurately pointed out that the tax cuts overwhelmingly benefit the rich. Trump’s claims that his tax package would usher in wage and job growth have been proven utterly false. Instead, the wealthiest households and most profitable corporations have gotten big tax breaks while everyone else remains relatively stagnant.
Why should you care about the tax status of the ultra-wealthy?
Consider what gets lost when funds are diverted from the public good to private fortunes.
Since the Trump cuts were passed last December, Congress has debated a budget that includes major cuts to Medicaid, Medicare, and Social Security. They’ve considered cuts to programs families depend on to live — like Supplemental Nutrition Assistance Program (SNAP) and the Women, Infants, and Children (WIC) program, which provides nutrition assistance to half the babies born in the United States.
It’s not an exaggeration to say that choosing to cut taxes on the rich while cutting vital programs is taking food out of babies’ mouths.
It’s not an exaggeration to say that choosing to cut taxes on the rich while cutting vital programs is taking food out of babies’ mouths.
Meanwhile, our nation’s transportation infrastructure is in shambles. The American Society of Civil Engineers gives the country’s infrastructure a D+ and calls for $2 trillion in increased investment over ten years to get back up to a passing grade. That number sounds familiar doesn’t it?
So, ask yourself, would you rather have the wealthiest 1 percent be $2 trillion wealthier, or would you rather have safe and sound roads and bridges?
Hindsight is helpful, but only if we put its lessons into practice. Will we repeat our mistakes of the past 20 years and head further towards extreme inequality? Or will we invest in our public good and ask those at the top pay their fair share?
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"This proposal is a shameful betrayal of children. This administration and congressional Republicans passed a massive tax giveaway to their donors and big corporations, and now they want vulnerable children to pay for it."
President Donald Trump, flanked by House Ways and Means Committee Chairman Rep. Kevin Brady (R-Texas) and House Speaker Paul Ryan applaud in the Rose Garden of the White House. (Photo: Evan Vucci/AP)
Months after ramming through deficit-exploding tax cuts for billionaires and large corporations, President Donald Trump and the GOP are now looking for programs to slash to make up the difference—and they're starting with children's healthcare.
According to a Washington Post report late Monday, Trump is "sending a plan to Congress that calls for stripping more than $15 billion in previously approved spending," $7 billion of which would come from the broadly popular Children's Health Insurance Program (CHIP).
"Not much surprises me anymore in American politics. But this is despicable on every level," wrote Rep. Barbara Lee in response to Trump's proposed cuts. "But this is despicable on every level."
The #GOPTaxScam gave a trillion dollars to billionaires & massive corporations. Now, Republicans want to gut the Children’s Health Insurance Program to pay for it.
Not much surprises me anymore in American politics. But this is despicable on every level. https://t.co/8KhY2xz4OM
Described by one Trump administration official as "the biggest rescission request that has ever been sent to Congress," the proposal needs a mere majority in both the House and Senate to pass.
Speaking with the Post on Monday, Rep. Mark Walker (R-N.C.) said the Trump administration has assured Republicans that this package of spending cuts is just the first of many.
As the Post reported, CHIP and is just one over over 30 programs the White House is moving to slash.
"This proposal is a shameful betrayal of children," Sen. Bob Casey (D-Penn.) wrote in response to reports of Trump's proposal. "This administration and congressional Republicans passed a massive tax giveaway to their donors and big corporations, and now they want vulnerable children to pay for it."
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Amazon, led by the world's richest man, Jeff Bezos, halted expansion plans in Seattle to make clear its opposition to a proposed local tax to address the city's homelessness crisis. (Photo: David Ryder/Getty)
After Amazon stocks soared last week—making founder Jeff Bezos, the world's richest man, $12 billion richer—Sen. Bernie Sanders (I-Vt.) tweeted that the company paid no federal income tax last year, which was confirmed by independent analysis on Thursday, and comes as Amazon is trying to kill a proposed tax that aims to end Seattle's homelessness crisis.
"You know what Amazon paid in federal income taxes last year? Zero." —Sen. Bernie Sanders (I-Vt.)
"You know what Amazon paid in federal income taxes last year?" Sanders said Monday. "Zero."
"He's right," PolitiFactdeclared. "We've taken a look at a series of exaggerated claims about Amazon inthepast. But in this case, Sanders is on the money."
With no public tax return and no cooperation from Amazon, fact-checkers dug into the company's annual filings to the Securities and Exchange Commission (SEC). They found, based on a February 2018 filing, "that not only would the company not be paying anything in 2017 federal income taxes, but it would be getting a $137 million tax refund."
PolitiFact's findings come as the company has halted massive expansion plans in its hometown of Seattle, in an apparent effort to bully the City Council into rejecting a tax measure that the New York Timesreports "would charge large employers in the city about $500 per employee, with the money going to help alleviate a housing crisis" that the company has been accused of fueling.
Amazon vice president Drew Herdener confirmed to the Seattle Times "that pending the outcome of the head-tax vote by City Council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sublease all space in our recently leased Rainier Square building." Those moves are jeopardizing plans to add 7,000 to 8,000 local jobs.
"You know what Amazon paid in federal income taxes last year? Zero." —Sen. Bernie Sanders (I-Vt.)
"I'm deeply concerned about the impact this decision will have on a large range of jobs—from our building trades, to restaurant workers, to nurses, manufacturing jobs, and tech workers," Mayor Jenny Durkan, who has supported the tax measure, responded in a statement.
"At the same time, our city must urgently address our homelessness and affordability crisis and lift up those who have been left behind. I fundamentally believe we can do both by working together," Durkan added, vowing to convene meetings with community leaders "to see how we might forge common ground in dealing with our challenges while keeping jobs."
Our Revolution, the progressive political group that grew out of Sanders' 2016 presidential run, noted that "Amazon is on pace to be the first trillion dollar company—which makes it all the more despicable that it's extorting the city of Seattle over a modest tax to fund affordable housing in the city."
Sanders also weighed in on the company's recent decisions, tweeting: "This is what corporate power and oligarchy is all about."
Amazon is using its enormous power to dissuade the city of Seattle from passing a modest tax on profitable corporations to address their severe housing crisis. This is what corporate power and oligarchy is all about. https://t.co/qVNxMX5CKZ
Published on Friday, March 30, 2018 by Common Dreams
"While most of the corporate tax cuts flow to the top of the income distribution, what this shows is that even in the direct changes to the individual-side of the tax code, most of those changes are still being allocated to the top."
As the Washington Post's Jeff Stein noted in a breakdown of TPC's analysis on Friday, the tax break for the wealthiest is even larger—$51,140—when the corporate tax cuts and the reduction of the estate tax are factored in. (Photo: Stop the GOP Tax Scam)
In its first analysis of how the GOP tax plan will affect Americans' personal income taxes alone, the nonpartisan Tax Policy Center (TPC) this week underscored what experts and most of the public already knew: that the Republican tax law will pour tens of thousands of extra dollars into pockets of the wealthy few while providing mere crumbs for the poor.
Specifically, according to TPC's new report, the top one percent of earners will receive an average annual tax cut of around $33,000 just from individual tax changes under the GOP law. The poorest Americans, by contrast, will see an average break of about $40 per year.
"While most of the corporate tax cuts flow to the top of the income distribution, what this shows is that even in the direct changes to the individual-side of the tax code, most of those changes are still being allocated to the top," Kim Rueben, a senior fellow at TPC, told the Washington Post.
The Postpublished a visual of the disproportionate gains seen by those at the very top:
As the Post's Jeff Stein noted in a breakdown of TPC's analysis on Friday, the tax break for the wealthiest is even larger—$51,140—when the corporate tax cuts and the reduction of the estate tax are factored in.
TPC's analysis of the Republican tax plan—which President Donald Trump signed into law last December—comes as profitable companies continue their stock buyback binge while most Americans report seeing very few if any changes in their paychecks.
Despite Treasury Secretary Steve Mnuchin's promise that Americans would start seeing a positive bump in their checks no later than February 15, the majority of the public said they have yet to see any boost from the GOP tax law, according to a CNBC poll published on Tuesday.
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The tech conglomerate Amazon, headed by the world's richest man, Jeff Bezos, released a shortlist of 20 cities that could be the new home of the company's second headquarters on Thursday. (Photo: David Ryder/Getty)
Critics of Amazon's "race to the bottom" as it searches for a home for its second headquarters said on Thursday that the company's newly released shortlist of 20 cities highlights a crisis in the U.S. economy—one exemplified by the huge incentives offered to Amazon in the bidding war among potential hosts.
Rep. Keith Ellison (D-Minn.) was among those slamming Amazon and the state and local governments willing to give billions of dollars in tax breaks to the extremely wealthy multinational company.
Tax breaks to Amazon promised by New Jersey: $7 billion. Tax breaks promised by Illinois: $2 billion. Something is deeply wrong with our economy & democracy when local governments offer up their tax base to a corporation worth over $500 billion. https://t.co/csnETiF5zT
In addition to the incentives mentioned by Ellison, Boston offered $75 million to provide affordable housing to Amazon employees, while Maryland's offer exceeded $5 billion.
Some noted that Amazon's top 20 contenders—also including New York, Los Angeles, Atlanta, and Raleigh, N.C.—are fairly prosperous cities, with the company leaving out areas that could benefit from an influx of jobs and economic activity.
Compare Amazon's HQ2 finalist map with a map of where 50% of our GDP is coming from. Notice anything striking? It's kind of like the GOP tax reform. We just love to throw money where the most money is already piled instead of where it's most needed.#AmazonHQ2#inequalitypic.twitter.com/RmlVUKtQ1u
After Amazon announced its search in September, promising to bring 50,000 jobs to the city it chose for its $5 billion headquarters, groups including Jobs With Justice and the Working Families Party released their own set of demands for the company.
As Common Dreamsreported, the groups asked the company to "reserve a substantial number of construction jobs for local residents, especially underrepresented people of color and women," protect the right to form unions, pay living wages, and—in light of reports of unsafe conditions at Amazon warehouses—"allow independent, third party organizations to conduct health and safety trainings."
But as Lina Khan of the Open Markets Institute noted last month on Ellison's podcast, We the Podcast, Amazon's meteoric rise has been due largely to unfair business practices—leaving critics skeptical of the idea that Amazon's arrival in one of the 20 finalist cities will actually benefit those who call it home.
"In many instances, Amazon has gotten where it is because it has undertaken business practices and forms of conduct that previously used to be illegal," Khan said.
"In many instances, Amazon has gotten where it is because it has undertaken business practices... that previously used to be illegal."
A protester holds a sign during a demonstration outside of an Apple Store on April 15, 2014 in San Francisco, California. Over a dozen activists staged a demonstration outside of an Apple Store demanding that Apple Inc. pay taxes on money being held in overseas accounts. (Photo: Justin Sullivan/Getty Images)
Tech giant Apple made international headlines and inspired President Donald Trump to brag overnight about his role in making it all possible after announcing it would pay approximately $38 billion in taxes as it repatriates large sums of overseas cash holdings—but that dollar figure is less than half of what tax analysts say the country should be paying for those earnings.\
The repatriation measure included in the "tax scam" law passed by Republicans and signed by Trump last year will result in a multinational corporations receiving an overall estimated tax cut of $413 billion.
According to estimates, Apple has kept more than $252 billion in profits overseas in order to avoid paying U.S. taxes. But with the Trump and GOP lowering the repatriation tax rate from 35% down to 15.5%, the lobbying by powerful and wealthy corporations—including Apple—is finally paying dividends. As Ars Technicanotes, Apple didn't really have a choice about this. "Under the new tax bill," the outlet noted, "all overseas cash is subject to a one-time 15.5 percent tax whether Apple leaves it overseas or moves it to the United States."
But as pointed out by Richard Phillips, senior analyst at the Institute on Taxation and Economic Policy (ITEP), there's even more to these numbers than most are reporting or pointing out:
We estimate that Apple owes about $78.6 billion in taxes on their accumulated offshore earnings (https://t.co/Lnqb4GYXRU), so if they pay $38 billion under the new tax bill (https://t.co/4p1MXgvfTQ), that equals a tax break of about $40.6 billion.
As the analysis Phillips references warns, the repatriation measure included in the "tax scam" law passed by Republicans and signed by Trump last year will result in multinational corporations receiving an overall estimated tax cut of $413 billion.
A Senate investigation found that Apple already has between 75% and 100% of their "offshore earnings" invested in the United States. Really the tax bill just gave Apple a huge tax windfall. https://t.co/DZGAKUifS7https://t.co/USoNCb21WH
"We have a deep sense of responsibility to give back to our country and the people who help make our success possible," declared Timothy D. Cook, Apple's CEO, said in a statement on Wednesday.
But if Apple's sense of responsibility to "give back" is so deep, why avoid paying U.S. taxes on its earnings at the set rate for all these years? Of course many taxpayers around the world feel their rates are too high, but most pay their taxes dutifully nonetheless—many happily and gladly.
Perhaps, as Jason Rhodes wrote for Salon earlier this month, it's because Apple's most significant innovation over recent years is not its mind-blowing and fast-selling tech gadgets but its ability to dodge taxes across the globe. As Rhodes argues, it's very difficult to even imagine what a large number $252 billion actually is. "$252 billion. That's more than the foreign-currency reserves of Britain and Canada. A quarter trillion dollars. Sound that out in your mind, and then say it with your mouth. The phrase "quarter trillion dollars" is 22 letters and six syllables, and I'm afraid it doesn't quite do justice to the amount of capital involved."
And, he notes, "When Trump signed the Tax Cuts and Jobs Act on Dec. 22, 2017, he rewarded Apple for keeping its money overseas, away from starving Americans and veterans with health problems. And Apple was party to all of this. Last year, the Big Five Tech companies increased lobbyist spending by 24.3 percent. By the third quarter of 2017, Apple spent $2.23 million petitioning Congress."
Apple (paraphrase, not real quote): "Please applaud us for doing the right thing, which we should have done in the first place instead of 'innovating' as much in tax dodging as technology." https://t.co/I2mpE0w7DT
As journalist David Dayen warned recently, as he explored how many corporations are enjoying the GOP tax cuts even as they lay off workers or fail to increase wages, "don't let a twisted and dishonest PR scheme by massive companies grateful for Trump's huge Christmas present distort the truth."
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Published on Tuesday, December 19, 2017 by Common Dreams
Despite Republicans' efforts to portray bill as beneficial to average Americans, more than two-thirds in recent poll say the tax plan is best for the wealthy
Protesters risked arrest on Capitol Hill on Monday as they joined the final push by resistance groups to convince Republican legislators to vote against the Party's unpopular tax bill. (Photo: @NYJusticeLeague/Twitter)
Hours ahead of expected votes in the House and Senate on the Republican tax plan, a new poll released Tuesday by CNN shows that President Donald Trump's last hope at passing a major agenda item in 2017 will likely award him few points with voters. Sixty-six percent of those surveyed view the bill as mainly benefiting the wealthy.
Opposition to the bill—officially the "Tax Cuts and Jobs Act" but denounced as the "GOP Tax Scam" by critics—has gone up in the past month, with 55 percent saying they disapprove of the plan. Republicans including President Donald Trump have tried to push the narrative that the bill will lift middle class Americans, but it appears few voters are convinced—which makes sense given that nearly every independent analysis shows the benefits are wildly skewed to corporations and the rich.
As Congress headed for expected votes, constituents nationwide and advocacy groups kept up their momentum at protests directed at Republicans, several of whom are expected to receive their very own real estate tax breaks as a result of the legislation.
The House will vote on the #GOPTaxScam TODAY! This is the final chance to tell your Rep how this tax scam gives the rich & large corps massive tax cuts & makes tens of millions of working families pay the bill.
Protests were planned at the offices of Sen. Susan Collins (R-Maine), who announced Monday that she planned to support the bill, and on Wall Street, while People's Action urged supporters to continue calling their representatives to voice their opposition:
We have to make calls and tell every member of Congress that our lives are truly on the line. Our survival and that of our children are at risk.
We have to make sure they know that a vote for this tax plan is a vote against the people. There’s still time to stop this bill, but it’s not going to be easy. And that’s exactly why we need all hands on deck.
Contact your Senators and Representatives using the Capitol switchboard by dialing 202-224-3121 NOW.
Several analyses by tax policy groups have shown that the bill would offer short-term, relatively minor benefits to the majority of Americans, while disproportionately benefiting corporations and the wealthiest households with permanent tax cuts.
The Tax Policy Center's latest analysis shows that under the bill, "higher income households receive larger average tax cuts as a percentage of after-tax income" and while average tax bills would go down for all income groups in 2018, millions of lower- and middle-class working families would actually see their taxes go up within a decade.
Americans for Tax Fairness reached similar conclusions in their analysis last month, reporting that 53 percent of the bill's tax cuts go to corporations and the rich, and that those cuts are largely paid for by taking away healthcare from working families.
House Speaker Paul Ryan (R-Wisc.) spoke on a radio show Monday about "entitlement reform"—slashes to Medicare, Medicaid, and Social Security—in order to tackle the national debt, which is expected to soar by $1.5 trillion as a result of the tax bill.
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The Republican tax plan to be voted on this week is likely to pass. “The American people have waited 31 long years to see our broken tax code overhauled,” the leaders of the Koch’s political network insisted in a letter to members of Congress, urging swift approval.
They added that the time had come to put “more money in the pockets of American families.”
Please. The Koch network doesn’t care a fig about the pockets of American families. It cares about the pockets of the Koch network.
It has poured money into almost every state in an effort to convince Americans that the tax cut will be good for them. Yet most Americans don’t believe it.
Polls shows only about a third of Americans favor the tax plan. The vast majority feel it’s heavily skewed to the rich and big businesses – which it is.
In counties that Trump won but Obama carried in 2012, only 17 percent say they expect to pay less in taxes, according to a recent NBC News/Wall Street Journal poll. Another 25 percent say they expected their family would actually pay higher taxes.
Most Americans know that the tax plan is payback for major Republican donors. Gary Cohn, Trump’s lead economic advisor, even conceded in an interview that “the most excited group out there are big CEOs, about our tax plan.”
Republican Rep. Chris Collins admitted “my donors are basically saying, ‘Get it done or don’t ever call me again.’” Senator Lindsey Graham warned that if Republicans failed to pass the tax plan, “the financial contributions will stop.”
By passing it, Republican donors will save billions – paying a lower top tax rate, doubling the amount their heirs can receive tax-free, and treating themselves as “pass-through” businesses able to deduct 20 percent of their income (effectively allowing Trump to cut his tax rate in half, if and when he pays taxes).
They’ll make billions more as their stock portfolios soar because corporate taxes are slashed.
The biggest winners by far will be American oligarchs such as the Koch brothers; Peter Thiel, the Silicon Valley investor; Sheldon Adelson, the Las Vegas casino magnate; Woody Johnson, owner of the New York Jets football team and heir to the Johnson & Johnson fortune; and Carl Icahn, the activist investor.
The oligarchs are the richest of the richest 1 percent. They’ve poured hundreds of millions into the GOP and Trump. Half of all contributions to the first phase of the 2016 election came from just 158 families, along with the companies they own or control.
The giant tax cut has been their core demand from the start. They also want to slash regulations, repeal the Affordable Care Act, and cut everything else government does except for defense – including Medicaid, Medicare, and Social Security.
In return, they have agreed to finance Trump and the GOP, and mount expensive public relations campaigns that magnify their lies.
Trump has fulfilled his end of the bargain. He’s blinded much of his white working-class base to the reality of what’s happening by means of his racist, xenophobic rants and policies.
The American oligarchs couldn’t care less about what all this will cost America.
Within their gated estates and private jets, they’re well insulated from the hatefulness and divisiveness,
They don’t worry about whether Social Security or Medicare will be there for them in their retirement because they’ve put away huge fortunes.
Climate change doesn’t concern them because their estates are fully insured against hurricanes, floods, and wildfires.
They don’t care about public schools because their families don’t attend them. They don’t care about public transportation because they don’t use it. They don’t care about the poor because they don’t see them.
They don’t worry about the rising budget deficit because they borrow directly from global capital markets.
Truth to tell, they don’t even care that much about America because their personal and financial interests are global.
They are living in their own separate society, and they want Congress and the President to represent them, not the rest of us.
The Republican Party is their vehicle. Fox News is their voice. Trump is their champion. The new tax plan is their triumph.
But if polls showing most Americans against the tax cut are any guide, that triumph may be short lived. Americans are catching on.
The recent electoral results in Virginia and Alabama offer further evidence.
A tidal wave of public loathing is growing across the land – toward Trump, the GOP, and the oligarchs they serve; and to the deception, the wealth, and the power that underlies them.
That wave could crash in the midterm elections of 2018. If so, the current triumph of the oligarchs will be the start of their undoing.
Here are the 3 main Republican arguments in favor of the Republican tax plan, followed by the truth.
1. It will make American corporations competitive with foreign corporations, which are taxed at a lower rate.
Rubbish.
(1) American corporations now pay an effective rate (after taking deductions and tax credits) that’s just about the same as most foreign based corporations pay.
(2) Most of these other countries also impose a “Value Added Tax” on top of the corporate tax.
(3) When we cut our corporate rate from 35% to 20%, other nations will cut their corporate rates in order to be competitive with us – so we gain nothing anyway.
(4) Most big American corporations who benefit most from the Republican tax plan aren’t even “American.” Over 35 percent of their shareholders are foreign (which means that by cutting corporate taxes we’re giving a big tax cut to those foreign shareholders). 20 percent of their employees are foreign, while many Americans work for foreign-based corporations.
(5) The “competitiveness” of America depends on American workers, not on “American” corporations. But this tax plan will make it harder to finance public investments in education, health, and infrastructure, on which the future competitiveness of American workers depends.
(6) American corporations already have more money than they know what to do with. Their profits are at record levels. They’re using them to buy back their shares of stock, and raise executive pay. That’s what they’ll do with the additional $1 trillion they’ll receive in this tax cut.
***
2. With the tax cut, big corporations and the rich will invest and create more jobs.
Baloney.
(1) Job creation doesn’t trickle down. After Ronald Reagan and George W. Bush cut taxes on the top, few jobs and little growth resulted. America cut taxes on corporations in 2004 in an attempt to get them to bring their profits home from abroad, and what happened? They didn’t invest. They just bought up more shares of their own stock, and increased executive pay.
(2) Companies expand and create jobs when there’s more demand for their goods and services. That demand comes from customers who have the money to buy what companies sell. Those customers are primarily the middle class and poor, who spend far more of their incomes than the rich. But this tax bill mostly benefits the rich.
(3) At a time when the richest 1 percent already have 40 percent of all the wealth in the country, it’s immoral to give them even more – especially when financed partly by 13 million low-income Americans who will lose their health coverage as a result of this tax plan (according to the Congressional Budget Office), and by subsequent cuts in safety-net programs necessitated by increasing the deficit by $1.5 trillion.
***
3. It will give small businesses an incentive to invest and create more jobs.
Untrue.
(1) At least 85 percent of small businesses earn so little they already pay the lowest corporate tax rate, which this plan doesn’t change.
(2) In fact, because the tax plan bestows much larger rewards on big businesses, they’ll have more ability to use predatory tactics to squeeze small firms and force them out of business.
***
Don’t let your Uncle Bob be fooled: Republicans are voting for this because their wealthy patrons demand it. Their tax plan will weaken our economy for years – reducing demand, widening inequality, and increasing the national debt by at least $1.5 trillion over the next decade.
Shame on the greedy Republican backers who have engineered this. Shame on Trump and the Republicans who have lied to the public about its consequences.
The Vermont senator tells the Guardian why the tax bill – which could become law next week – is the result of 40 years’ scheming by the Kochs and others
Bernie Sanders in Washington on Friday in protest against the tax bill. ‘It is based on the fraudulent theory of trickle-down economics that never worked, never will work.’ Photograph: Alex Edelman/AFP/Getty Images
Bernie Sanders has accused Donald Trump and Republican party leaders of capitulating to the demands of the Koch brothers and other wealthy rightwing donors in railroading $1.5tn tax cuts through Congress.
In an interview with the Guardian, the independent US senator from Vermont denounced the tax bill as payback for the billions of dollars that donors have invested in conservative politicians over decades. “What this is all about is nothing more than the Republican party very generously rewarding their wealthy campaign contributors,” he said.
The former presidential challenger said the reform of the tax code, which could clear both the House and the Senate and be signed into law by the the US president as early as next week, was based on the “rightwing extremist ideology of the Koch brothers. You can read it in what they were saying 40 years ago. What they want is an oligarchic form of society in which government plays virtually no role in public education, healthcare or addressing the needs of middle-class and working families.”
The end game, Sanders said, was that “you are on your own. You are 80 years old and you have cancer – good luck to you. Government is not there for you.”
The legislation, which has now been merged to form a single version from earlier Senate and House bills, marks the most substantial redrawing of taxation in America since Ronald Reagan’s 1986 tax cuts. It would slash the tax burden on corporations from 35% to 21%, and the top level of individual taxes from 39.6% to 37%.
But while the bonus to corporations is permanently set in stone, benefits to working families would expire after a number of years. That would leave millions of middle-class families – 83 million, Sanders said – eventually paying more in taxes under the changes, while the most wealthy Americans would continue to cash in.
“This is nothing more than an effort to make the very rich richer,” Sanders told the Guardian. “It is based on the fraudulent theory of trickle-down economics that never worked, never will work.”
Sanders warned of a double blow to working people in which the vast increase in the deficit caused by the tax cuts would subsequently be used by Republicans to justify an assault on welfare benefits. Paul Ryan, the GOP Speaker of the House, has announcedthat he intends to turn to healthcare and anti-poverty programs next year to reduce spending, and conservatives continue to harbor ambitions of destroying Barack Obama’s signature legislation, the Affordable Care Act, also known as Obamacare.
Paul Ryan looks set to reduce welfare programs to limit spending. Photograph: Jim Lo Scalzo/EPA
Sanders said that “after running up a $1.4tn deficit over 10 years they are going to offset that deficit by making massive cuts to social security, Medicare and Medicaid. That is clearly the intention.”
The senator ran Hillary Clinton to a close second place in the 2016 race for the Democratic presidential nomination. Since then he has become arguably the most prominent critic of America’s growing income and wealth inequality and the plight of the working poor.
His attack on the Republicans’ tax plans came a day after the UN special rapporteur on extreme poverty and human rights, Philip Alston, issued a withering report that denounced growing in equality in the US. Alston’s initial findings, released on Friday, criticized the tax bill currently going through Congress for hugely increasing already large disparities between rich and poor.
Sanders’ claim that the tax cuts are a thinly disguised reward to billionaire extreme rightwing donors is supported by the statements of some Republican politicians themselves. Chris Collins, a New York congressman, told reporters that pressure from donors made the reform essential.
“My donors are basically saying, ‘Get it done or don’t ever call me again,’” he said.
Last month the leader of the powerful conservative Super Pac the Congressional Leadership Fund, made it clear to the Washington Post that lawmakers who stood in the way of the tax cuts in the House should not expect to receive any of the $100m the body expected to spend on candidates in next year’s midterm elections.
David and Charles Koch have leveraged their own vast wealth – they own Koch Industries, the second largest private company in the US, and are valued by Forbes at $49bn each – by creating a network of other similarly minded wealthy conservatives that runs parallel to the Republican party. In the 2016 election cycle it spent about $250m on candidates who followed their anti-government creed, and the plan for next year is to increase that investment to $400m.
The Koch network has thrown its muscle behind the tax cuts this year. One of its periodic retreats for super-rich donors in New York in October was devoted to the subject of tax reform and attended by the vice-president, Mike Pence.
The brothers first entered the political arena in the 1970s when they began agitating for a bonfire of restrictions on spending by rich individuals and companies on political campaigns. They have consistently fought against government regulations and social programs helping low-income families, in ways that have been advantageous to their business interests that include oil and other energy concerns.
“Anyone who has looked at the Koch brothers and folks like them who have contributed over the years probably billions of dollars in right-wing efforts should not be surprised at the policies coming from Paul Ryan and Donald Trump,” Sanders said.
The senator lamented the unprecedented speed with which the tax plans have been rushed through Congress, and the consequent lack of public debate. As a result, he said, many details of the legislation were still so sketchy they were impossible to understand.
One area that Sanders is especially wary of in the unfolding bill are provisions that would benefit hedge fund managers based on tax havens such as the Virgin Islands. “We believe the provision will apply to probably fewer than 10, maybe even as few as three, hedge fund managers that will result in some $600m in tax breaks over 10 years.”
He added that he had raised the issue on the floor of the US Senate, asking for an explanation from the Republican group, “but we have not been given one”.
Sanders said the tax cuts were particularly punishing for those working Americans who had voted for Trump last November partly on the expectation that his promised tax cuts would ease their financial burdens.
“The tax package is just another Trump lie. Many millions of middle-class Americans will pay more in taxes and if Republicans get their way – and we are going to fight them tooth and nail on this – there will be cuts to social programs that many of Trump’s supporters have depended on for years.”
President Donald Trump speaks to members of the White House Press Corps prior to his Marine One departure from the South Lawn of the White House December 15, 2017 in Washington, D.C. (Photo: Alex Wong/Getty Images)
Asked about the GOP tax bill, which is expected to hit the floor of the House and Senate for a final vote early next week, Trump said: "I think we're doing very well, it's something that's going to be monumental. It will be the biggest tax increase—or tax cut—in the history of our country."
Even if it was just a slip of the tongue, Trump's characterization of the GOP tax bill as the "biggest tax increase" in American history is accurate, according to some analysts.
As The Intercept's Ryan Grim noted in an analysis earlier this month, the GOP tax bill is "routinely referred to as a $1.5 trillion tax cut. And, in some ways, that's true: On net, it would reduce the amount of taxes collected by the Treasury by about $1.5 trillion over 10 years."
However, "that figure masks the eye-popping scale and audacity of the GOP's rushed restructuring of the economy," Grim adds. "[The bill,] properly described, is two things: the largest tax cut—and also the biggest tax increase—in American history."
This tax increase, as research by the Center on Budget and Policy Priorities (CBPP) has found, would primarily be shouldered by low-income and middle class Americans. Additionally, while the GOP bill would give corporations permanent tax cuts, many of the cuts for middle class and low-income Americans would expire after a decade.
As Common Dreamsreported on Wednesday, House and Senate Republicans reached a backroom "deal" that tilts the benefits of their bill even further toward the wealthiest Americans by reducing the top marginal tax rate from from 39.6 percent to 37 percent.
"Overall, in 2027—when only the corporate tax cuts, slower inflation measure, and individual mandate repeal would remain in place—the Senate bill would, on average, raise taxes or reduce federal expenditures for households with incomes below $75,000 by about $60 billion—while still giving large tax reductions (through its corporate tax cuts) to those at the top," noted CBPP's Chuck Marr.
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Trump and congressional Republicans are engineering the largest corporate tax cut in history in order “to restore our competitive edge,” as Trump says.
Our competitive edge? Who’s us?
Most American corporations – especially big ones that would get most of the planned corporate tax cuts – have no particular allegiance to America. Their only allegiance is to their shareholders.
So restoring their “competitive edge” has little or nothing to do with helping American workers.
For years they’ve been cutting the jobs and wages of American workers in order to generate larger profits and higher share prices.
Some of these jobs have gone abroad or been outsourced to lower-paid contractors in America. Others have been automated. Most of the remaining jobs pay no more than they did four decades ago, adjusted for inflation.
When GM went public again in 2010 after being bailed out by American taxpayers, it boasted of making 43 percent of its cars in places where labor is less than $15 an hour – often outside the United States. And it got its American unions to agree that new hires would be paid half the wages and benefits of its old workers.
Capital is global. Big American corporations are “American” only because they’re headquartered and legally incorporated in the United States. But they could (and sometimes do) leave at a moment’s notice. They employ or contract with workers all over the world.
And they’re owned by shareholders all over the world.
According to research by the Tax Policy Center’s Steven Rosenthal, about 35 percent of stock in U.S. corporations is now held by foreign investors.
So when taxes of “American” corporations are cut – as the Trump-Republican tax bill seeks to do – foreign investors get a windfall.
That’s money that foreign investors would otherwise be paying into the U.S. Treasury.
By way of comparison, the combined tax cuts for families in the bottom 80 percent of the income distribution in the 30 states won by President Donald Trump comes to just $39.4 billion. That’s far less than the House bill gives away to foreign investors.
I’m not blaming American corporations. They’re in business to make profits and maximize their share prices, not to serve America.
I’m blaming politicians like Trump and the Republicans who are trying to persuade Americans that tax cuts on American corporations will be good for Americans.
It’s different for many corporations headquartered in Europe or Canada. Big corporations headquartered there are far more responsible for the well-being of the people living in those nations. That’s mainly because labor unions there are typically stronger there than they are here – able to exert pressure both at the company level and nationally.
As a result, American corporations distribute a smaller share of their earnings to their workers than do European or Canadian-based corporations. And top American executives make far more money than their counterparts in other wealthy countries.
Governments in other rich nations often devise laws through bargains involving big corporations and organized labor. This process further binds their corporations to their nations.
But in America, lawmakers respond almost exclusively to the demands of big corporations and of wealthy individuals (typically corporate executives and Wall Street moguls) with the most lobbying prowess and deepest pockets to bankroll campaigns. Meanwhile, unions are weak here, and “the preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy,” according to researchers.
Which is one reason why most Europeans and Canadians receive essentially free health care, generous unemployment benefits, paid medical leave, and an average of five weeks paid vacation.
So it shouldn’t be surprising that even though U.S. economy is doing well by most measures, and American-based corporations are overflowing with profits, the benefits are not trickling down to most Americans.
Given the dominance of American corporations on American politics, combined with their singular concern for share prices rather than the well-being of Americans, it’s folly to think they’ll turn tax cuts into good American jobs.
The tax bills big corporations are pushing through Congress are designed for one thing: to boost their share prices, not to boost the vast majority of Americans.
Amazon is looking to build a second headquarters somewhere in the US, and cities are falling all over themselves to offer Jeff Bezos the moon. CEO Bezos of Amazon is now worth $100 billion, the first man or woman to achieve that distinction, but cities are worshiping at his feet to offer up their first born sons to get him to locate his new headquarters in their cities. The Seattle Times reports it's not so much a takeover of these cities intent on wooing him. It's more like a surrender ... a surrender to the Lord and King in return for a mess of pottage. Last month Amazon announced it got 238 offers for its new, proposed 50,000-employee HQ2.
30 of these offers have been released so far under public-record acts so we can see what sordid depths cities will go to to get multi-billionaire Bezos, who obviously doesn't need the money, to locate the new Amazon headquarters in their city. All hail the Lord and Master. There’s a new wave, in which some City Halls seem willing to go beyond just throwing money at Amazon. They’re turning over the keys to the democracy. Here, Jeff. Here's the Key to the City. You run it and do whatever you want with the tax money. You run the government.
Chicago has offered to let Amazon pocket $1.32 billion in income taxes paid by its own workers. This is truly perverse. Called a personal income-tax diversion, the workers must still pay the full taxes, but instead of the state getting the money to use for schools, roads or whatever, Amazon would get to keep it all instead. As if Amazon and Bezos needed the money. He could probably afford to buy Chicago outright.
“The result is that workers are, in effect, paying taxes to their boss,” says a report on the practice from Good Jobs First, a think tank critical of many corporate subsidies.
Most of the HQ2 bids had more traditional sweeteners. Such as Chula Vista, California, which offered to give Amazon 85 acres of land for free (value: $100 million) and to excuse any property taxes on HQ2 for 30 years ($300 million). New Jersey remains the dollar king of the subsidy sweepstakes, having offered Amazon $7 billion to build in Newark. Stonecrest, GA has even offered to rename itself "Amazon."
But the City of Fresno, CA takes the cake. That city of half a million isn’t offering any tax breaks. Instead it has a novel plan to give Amazon special authority over how the company’s taxes are spent. Fresno promises to funnel 85 percent of all taxes and fees generated by Amazon into a special fund. That money would be overseen by a board, half made up of Amazon officers, half from the city. They’re supposed to spend the money on housing, roads and parks in and around Amazon. The proposal shows a park with a sign: “This park brought to you by Amazon,” with the company’s smiling arrow corporate logo.
As Fresno takes groveling to a new low level, we wonder why there is an economic divide, why the rich get richer and the poor get the shaft? Well, democracy is for sale to the highest bidder, to the city that will grovel the most before their future Lord and Master ... Jeff Bezos ... who, by the way owns the Washington Post. Now the Koch brothers are taking over Time magazine. We won't have to worry about getting unbiased news any more. We'll just get news that's favorable to the ruling class.
Demonstrators descended on Capitol Hill on Tuesday, demanding that Republican lawmakers who voted for the Tax Cuts and Jobs Act hear their concerns about the legislation. (Photo: @riseandresistny/Twitter)
Opponents of the Republican tax plan moving through Congress showed they were not backing down on Tuesday as hundreds of protesters chanted "Kill the bill!" and "Tax the rich, not the sick!" as they assembled outside the offices of GOP lawmakers.
While numerous arrests were made in the crowded hallways, the demonstrators made it clear that the fight to defeat the bill is not over yet.
Hundreds of demonstrators protested the House GOP tax bill. They targeted @RepRyanCostello (R-Pa) congressional office. Many got arrested as they took over a hallway in the Cannon building shouting #KillTheBillpic.twitter.com/8xo4fmaJeT
Demonstrators targeted Reps. Ryan Costello (R-Penn.), Barbara Comstock (R-Va.), and other Republicans who voted for the tax plan, visiting their offices and telling staffers how they would be impacted by the law. Both Costello and Comstock are up for re-election in 2018.
Capitol Police began arresting protesters at about 2:30pm outside Costello's office, with chants of "Kill the bill, Costello!" continuing as people were led away in handcuffs.
The Senate passed its bill in the middle of the night on Saturday, after finalizing the proposal just five hours earlier. Democrats protested that no hearings had been held about the potential impact of the bill, which a number of bipartisan groups found would raise taxes on middle-class families by 2027. A Quinnipiac University poll released on Tuesday found that 53 percent of Americans disapprove of the legislation, while just 29 percent support it.
The Senate and House must still reconcile their two versions of the bill in a conference committee which was formed on Monday. Nine Republicans and five Democrats from the House have been named to the panel, with the Senate expected to send members later this week. The committee will debate the two bills with the goal of sending one piece of legislation to President Donald Trump's desk by Christmas.
With continued pressure in the coming days and weeks, said opponents of the #GOPTaxscam on social media, there is still a chance of keeping the bill from becoming law:
Republicans say the tax bill they've just passed will create economic growth. By giving corporations and the wealthy huge tax reductions, this will stimulate the economy. GDP will surge. However, all economic growth in the last few years has redounded to the benefit of ... you guessed it ... the corporations and the wealthy. 95% Of Income Gains Since 2009 Went To The Top 1%. So why should the middle class and the poor buy this Republican drivel that giving tax breaks to the rich is going to be good for them. They shouldn't.
The Republican tax plan phases out tax breaks for the middle class while keeping in place tax breaks for the rich. Plus it gets rid of social programs that benefit the poor and middle class. But I guess this is what the Trump supporters really want - tax "reform" that screws them. As long as it screws the poor, people of color and immigrants more. Besides corporate CEOs have flat out said that they would not use the tax breaks to create jobs for the middle class. Noooo, they will use them to buy back their own stock, thereby giving themselves a raise.
Business Insider said: "But what's the point of GDP growth if it doesn't translate into broadly shared gains in income and living standards?" That's exactly the point, isn't it? What good is economic growth if it doesn't produce more jobs? And if it doesn't produce more jobs, it won't benefit the middle class or the poor. It will only benefit the rich. So they get a two-fer: tax breaks plus higher income.
The Guardian said: "The economic case for maintaining a progressive income tax structure and targeting welfare payments to those most in need is overwhelming." That's because the poor and middle class will buy more stuff if they have the wherewithal to do so. But the rich don't really care whether the middle class and poor buy more of the kinds of stuff that they usually buy. The rich deal in asset classes and growth in the financial sector of the economy. They don't care if the middle class upgrades from hamburger to steak. It's not the kind of business most of them are in.
The rich only care about economic growth in the financialized debt based economy, that is socking it to the middle class and making them pay more interest on their student, credit card and mortgage loans. They care about economic growth in the asset classes like the stock market and real estate. Economic growth in the retail sector is so passe.
So all you Trump Republicans who just want a win for tax reform are only winning it in such a way that you will never see any of the gains. Losers!
It’s often thought that Democrats care about fairness and not economic growth, while Republicans care about growth even at the cost of some fairness.
Rubbish. Growth and fairness aren’t opposites. In reality, Democrats are the party of economic growth and fairness. Republicans are the party of neither.
The only way to grow the economy is by investing in the education, healthcare, and infrastructure that average Americans need in order to be more productive. Growth doesn’t “trickle down.” It rises up.
Consider the two biggest legislative initiatives over past decade – the Affordable Care Act, achieved without a single Republican vote, and the current Trump-Republican tax overhaul, speeding ahead without a single Democrat.
The ACA extends coverage to 21 million mostly lower-income Americans, including millions of children.
It’s largely paid for by two tax increases on the rich – a 3.8 percent increase on their capital gains taxes and other investment-related income, and a 0.9 percent surcharge on their Medicare taxes. Those tax increases are a major reason why Republicans have wanted to repeal it.
But the ACA isn’t just about fairness. Healthier Americans are also more productive workers. Children who receive health care are better learners. The Act thereby fuels economic growth and widens prosperity.
Republicans say their tax overhaul will promote growth by increasing the profits of American corporations and investors. This is trickle-down nonsense.
Every major study (including Congress’s own Congressional Budget Office and Joint Committee on Taxation) finds that its benefits would go mainly to big corporations and the wealthy.
Share prices may rise for a time. They’re already at record highs in anticipation of the tax cut. But higher share prices don’t trickle down, either. The richest 1 percent owns almost 38 percent of the stock market. Eighty percent of Americans together own just 8 percent of all shares of stock.
U.S. Treasury Secretary Steven Mnuchin speaks to members of the White House press corps during a daily briefing at the James Brady Press Briefing Room of the White House August 25, 2017 in Washington, D.C. (Photo: Alex Wong/Getty Images)
The Trump White House has pulled out all the stops in its efforts to help the GOP ram through its widely disliked tax bill, including—as the New York Timesreported Thursday—citing a Treasury Department analysis one government whistleblower says doesn't even exist.
"I have covered tax policy for more than three decades. This is a shocking abdication of responsibility by the Treasury Dept." —Glenn Kessler, Washington Post
For months, Treasury secretary Steve Mnuchin has peddled the ambitious claim that not only would the GOP's proposed tax cuts for the rich "pay for themselves" through a massive surge in economic growth, but also that the cuts would help the U.S. "pay down debt."
"In our models, we believe there will be $2.5 trillion of growth," Mnuchin said during a recent CNN interview. "And we're happy to go through the numbers. We're happy to give the details. We want full transparency to the American public."
Despite such lofty promises and his expressed commitment to "transparency," however, Mnuchin has yet to release the promised analysis, even as the Senate is expected to vote on the GOP tax plan as early as Thursday night. According to an economist at the Office of Tax Analysis, he hasn't done so for good reason: there is no such study.
As the Times reports:
Mr. Mnuchin has promised that Treasury will release its analysis in full. Yet, just one day before the full Senate prepares to vote on a sweeping tax rewrite, the administration has yet to produce the type of economic analysis that it is citing as a reason to pass the tax cut.
Those inside Treasury’s Office of Tax Policy, which Mr. Mnuchin has credited with running the models, say they have been largely shut out of the process and are not working on the type of detailed analysis that he has mentioned.
An economist at the Office of Tax Analysis, who spoke on the condition of anonymity so as not to jeopardize his job, said Treasury had not released a "dynamic" analysis showing that the tax plan would be paid for with economic growth because one did not exist.
Tax analysts expressed shock and dismay at the fact that, on the eve of the vote on a plan that could have devastating consequences for millions of families, the Treasury Department still hasn't released anything resembling a comprehensive exploration of the it's long-term implications.
Mnuchin's misleading promises fit with a pattern of deception that has characterized the Republican tax cut push, which has been denounced by Sen. Bernie Sanders (I-Vt.) and others as "pathetic" and "immoral."
As Common Dreamsreported earlier this month, Senate Majority Leader Mitch McConnell (R-Ky.) was forced to admit that he "misspoke" when he promised that no middle class families would see their taxes rise under his plan.
Likewise, President Donald Trump has continued peddling easily debunked falsehoods about the plan's projected impact on workers and the rich. Despite his insistence that the wealthy are not happy with the bill and that workers will love it, countless breakdowns of the plan's details have demonstrated that it will overwhelmingly favor the wealthiest Americans—including Trump and his family—at the expense of the working class.
Recent nonpartisan analyses have consistently found that the Republican tax plan, expected to hit the Senate floor for a vote as early as Thursday, would deliver even more wealth to the richest Americans. (Photo: vishpool/Flickr/cc)
If any more evidence were needed to show that the wealthiest Americans really don't need a tax cut, here it is: Between 2007 and 2016, the average wealth of those in the top one percent grew by a whopping $4.9 million.
What about everyone else? In that same period, the average wealth of the bottom 99 percent declined by $4,500.
This is according to an analysis put out Wednesday by Matt Bruenig of the People's Policy Project, based on data from the Federal Reserve's Survey of Consumer Finances
Recent nonpartisan analyses have consistently found that the Republican tax plan, expected to hit the Senate floor for a vote as early as Thursday, would deliver even more wealth to the richest Americans. And contrary to GOP rhetoric, the plan would also hike taxes on millions of low-income and middle class families.
As tax analyst Hunter Blair of the Economic Policy Institute noted on Wednesday, the top one percent of households would on average see a $32,500 tax cut per year under the GOP plan. The bottom 20 percent of earners, by contrast, would pay $10 more annually.
Further undermining Republicans' "trickle down" selling points, numerous business leaders have already conceded that they are not planning to invest any of the extra cash they are set to receive into raising wages for workers, but will instead shower the windfall to their investors and stockholders.
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Published on Tuesday, November 28, 2017 by Common Dreams
"The bottom line is that the American people have a right to know exactly how you plan to pay for a $1.4 trillion increase in the deficit before, not after, tax legislation is signed into law," Sanders wrote in a letter to GOP leaders
House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) are pushing to strip healthcare from millions of Americans while they accept generous healthcare subsidies from the government. (Photo: Getty)
As the deficit-exploding GOP tax plan hurtles toward a final vote in the Senate this week, Sen. Bernie Sanders (I-Vt.) delivered a letter to Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Paul Ryan (R-Wis.) on Monday demanding to know how much they are planning to cut from Medicare, Medicaid, Social Security, and other key programs in order to offset the costs of tax cuts for the ultra-wealthy.
"Will you attempt to end Medicare as we know it by giving seniors vouchers to purchase private health insurance, something long supported by Speaker Ryan? How much will you cut Social Security? Will you try to increase the retirement age to 70?" —Sen. Bernie Sanders"I am very concerned that if you succeed in passing tax legislation that significantly adds to our national debt, you will then move aggressively to balance the budget on the backs of working families, the elderly, the children, the sick, and the poor," Sanders wrote. "In other words, in order to pay for tax breaks for the rich and large corporations, you will make massive cuts to Social Security, Medicare, Medicaid, nutrition, environmental protection, and every other program designed to protect the needs of the middle class and working families of our country."
Highlighting nonpartisan analyses predicting that the Republican tax plan would increase the federal deficit by $1.4 trillion over the next decade, Sanders implored McConnell and Ryan to provide the American public with a "specific and detailed explanation as to how the Republican Congress will achieve its commitment of balancing the budget."
"Will you attempt to end Medicare as we know it by giving seniors vouchers to purchase private health insurance, something long supported by Speaker Ryan?" Sanders asked. "How much will you cut Social Security? Will you try to increase the retirement age to 70?"
Sanders' questions come as the Senate Budget Committee is expected to vote on the GOP's deeply unpopular tax bill on Tuesday, setting the stage for a final vote as early as Thursday.
TABLE 1 is a short rather shocking summary of the federal tax benefit (or non-benefit) shares among different income groups under Trump’s tax plan in 2019 and 2027. Tax decreases and (increases) are based on the Joint Committee on Taxation’s (JCT) analysis of latest Senate adjustments to Trump’s tax plan which the president and the Paul Ryans deceptively claim largely benefits middle/lower working classes. Nothing could be further from the truth in the JCT’s view. Like the Congressional Budget Office’s (CBO) non-partisan status, the JCT is also a non-partisan judge on tax legislation.
My much condensed summary below of JCT’s overall tax figures’ analysis for 2019 and 2027 shows that the tax cut benefits go predominately by far to the wealthiest taxpayers, particularly the Top 10%. By 2027, Trump’s tax plan IN FACT calls for high tax increases for middle-lower class people with incomes below $100,000 while still reducing taxes for incomes above $200,000.
TABLE 1: (Millions $)
2019 Tax Decrease(Increase)
2027 Tax Decrease(Increase)
Amount
% of Tax Benefits
Amount
% of Tax Benefits
$1 to $50,000
$14,258
5.9%
($23,281)
(87.8%)
$50,000 to $100,000
$43,902
18.3%
($3,234)
(12.2%)
Sub-Total
$58,160
24.2%
($26,515)
(100.0%)
$100,000 to $200,000
$64,130
26.7%
$3,918
24.6%
$200,000 to $500,000
$59,377
24.8%
$4,589
28.9%
$500,000 to $1 Million
$24,753
10.3%
$1,817
11.4%
Above $1 Million
$33,670
14.0%
$5,580
35.1%
Sub-Total
$181,930
75.8%
$15,904
100.0%
Total All Taxpayers
$240,090
100.0%
($10,611)
100.0%
Source: Joint Committee on Taxation
The “Big Picture” message is clear: for incomes below $100,000 in 2019 and 2027, middle/lower income earners’ tiny 24% share of high total tax cut benefits of $240.1 billion in 2019 will be phased out to substantial tax increases on incomes leading to zero tax benefits in 2027. In sharp contrast, for incomes above$100,000, higher income earners receive a stupendous 76% share of high total tax benefits of $240.1billion in 2019, rising to a 100% share of lower total tax benefits of $15.9 billion in 2027. For incomes above $200,000 in 2019, income earners receive a 49% share of high total tax benefits of $240.1 billion, rising to a 75.4% share of lower total tax benefits of $15.9billion in 2027. However, middle/lower income earners will be paying more taxes by end of first decade and the rich will be still paying less. By 2027, taxpayers that would be paying higher taxes would have grown substantially, mainly because Trump’s tax legislation insures that individual tax cuts expire in 2026.
One of the most dangerous consequences of this awful period in American life is the denigration of the truth, and of institutions and people who tell it.
There are two kinds of liars – fools and knaves. Fools lie because they don’t know the truth. Knaves lie because they intend to mislead.
Trump is both, because he doesn’t even care enough about the truth to find out what it is. He’ll say whatever he thinks will get people to believe what he wants them to believe.
What about people like Treasury Secretary Steve Mnuchin, Trump’s point person on the Republican tax bills now making their way through Congress?
Mnuchin continues to insist that the legislation puts a higher tax burden on people earning more than $1 million a year, and reduce taxes on everyone else. “I can tell you that virtually everybody in the middle class will get a tax cut, and will get a significant tax cut,” Mnuchin says repeatedly.
But the prestigious Tax Policy Center concludes that by 2025, almost all of the benefits of both bills will have gone to the richest 1 percent, while upper-middle-class payers will pay higher taxes and those at the lower levels will receive only modest benefits.
So is Mnuchin a fool? His career before he became Treasury Secretary doesn’t suggest so. He graduated from Yale, and worked for seventeen years for investment bank Goldman Sachs.
Perhaps Mnuchin doesn’t find the Tax Policy Center credible. Maybe he agrees with Trump economic adviser Peter Navarro, who describes it as “a left-leaning center that produces analyses that favor Democratic tax-and-spend programs and disfavor Republican programs.”
In the age of Trump, even prestigious organizations once considered non-partisan are either “with us” or “against us.”
Problem is, virtually all other studies by every other source show the House and Senate tax bills overwhelmingly benefit the rich and, within a few years, harm the middle class.
The National Day of Action is planned for Monday as the Trump resistance fights the Republican tax plan, which is expected to raise taxes on middle-income Americans while cutting them for corporations and the richest families. (Photo: @Indivisible12th/Twitter)
The grassroots resistance group Indivisible was gearing up on Friday for a planned National Day of Action, targeting Republican senators who are thought to be potential "no" votes on the GOP's tax plan—in a final push to keep the bill from passing. The Senate is expected to vote on the plan as soon as Thursday.
The group was preparing for #TrumpTaxScam Sit-Ins taking place across the country on Monday, at the offices of several senators including Arizona's John McCain and Jeff Flake, Sens. Lisa Murkowski (R-Alaska), and Susan Collins (R-Maine)—focusing attention on some of the lawmakers who were targeted last summer during the fight against the Republican healthcare plan.
"Republicans have made it crystal clear: the Trump Tax Scam fight and the TrumpCare fight are one and the same," the group wrote on its website, noting the Senate Finance Committee's plan to repeal the Affordable Care Act's individual mandate, which was revealed earlier this month. The move would leave 13 million Americans uninsured according to the Congressional Budget Office—in the interest of reducing the federal deficit that would be caused by the Republican plan to lower taxes for corporations and the wealthiest Americans.
Members of the Trump resistance are expected to assemble at the offices of so-called "moderate" Republicans to demand that the elected officials listen to their concerns about the tax bill, which groups including Americans for Tax Fairness and the Tax Policy Center say would eventually raise taxes for middle-income Americans, after giving them temporary, meager tax cuts.
"A sit-in expresses that your group is willing to sit there until your senator or his or her staff address your concerns—that you are demanding to be heard," read Indivisible's breakdown of the action plan. "That is what makes these actions powerful."
Americans for Tax Fairness released a study on Tuesday showing that 82 million middle-class households would pay more in taxes in 2027, should the GOP plan become law. The Tax Policy Center's analysis came to the same conclusion this week, while finding that the plan would only produce $169 billion in additional revenue over the next decade, while adding a $1.5 trillion deficit.
As of Friday, at least 50 events were planned as part of Indivisible's National Day of Action.
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I'm tired of hearing politicians pander to the citizenry by calling them "hardworking Americans." "Hardworking Americans should keep more of their money." And "They worked hard for their money." No they didn't. The richer they are, the less they worked hard for their money. They sat in an office somewhere and raked in billions. Did billionaires work hard for their money? If so, maybe they should have worked less hard and enjoyed life more. No one needs a billion dollars.
Most rich people simply sit back and collect rent or watch the stock market go up. Is that working hard? They call it passive or unearned income. That distinguishes it from income actually earned in the labor force from an actual job. That's how rich people don't work hard in a capitalist economy. They make money off of money. That's the whole purpose of capitalism: get rich by not working hard. So do these rich people deserve a tax break because they worked so hard? I don't think so.
Many people are one paycheck away from homelessness. They shouldn't be paying any taxes. The rich can afford to pay taxes on all that money they made from not working hard. Yet Republicans want to give these people (those who make their money off of capital gains and corporate profits) a tax break. They are only doing it because their rich donors, who are so greedy no amount of money suffices, demand it. If the rich don't get their tax break, they will stop donating to the Republican party.
After several tax breaks for the rich did not trickle down to the rest of us, they shouldn't have been able to sell this nonsense to the American people again. But they're still at it. They just don't care, really. Tax breaks for hardworking Americans is just propaganda, but a lot of people believe it even though it's never worked in the past.
So the Republicans are going to take money away from hardworking Americans so they can give it to the not hardworking Americans. Furthermore, they're going to cut the money going into health care for the poor. But that's not all, folks. They're going to run the country into another trillion and a half dollars of debt. Is this any way to run a country? I don't think so.
The non-partisan Institute for Taxation and Economic Policy (ITEP) found that while U.S. households would receive $8 billion in net benefits from the plan in ten-years time, wealthy overseas investors would capture an astonishing $22 billion. (Image: Indian Express)
If the Senate Republicans' latest version of their tax overhaul bill passes, foreign investors will receive a financial benefit nearly three times larger than all U.S. taxpayers combined, according to a new analysis released Saturday.
In its updated analysis, the non-partisan Institute for Taxation and Economic Policy (ITEP) found that while U.S. households would receive $8 billion in net benefits from the plan, wealthy overseas investors would capture an astonishing $22 billion.
"By 2027," the anlysis states, "foreign investors would benefit more than American households overall under the bill as written. While some households would pay more and others would pay less, in 2027 the average net effect for U.S. households would be a tax cut of $8 billion, which is much smaller than the $22 billion benefit to foreign investors."
As Seth Hanlon, a senior fellow at the Center for American Progress, explained, "The reason that foreign investors are the biggest winners is that they own about 1/3 of the shares of U.S. corporations." And because the plan drops the corporate tax rate from 35% down to just 20%, he added: "Corporations are getting a huge tax cut, paid for by tax increases on Americans, and by fewer Americans [with] health insurance."
At the same time, the new ITEP analysis shows that low- and middle-income taxpayers will see tax increases while high-income earners receive massive tax cuts:
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Demonstrators hold signs during a rally against the GOP tax plan in Washington, DC, on Nov. 15, 2017. (Photo: Zach Gibson/Bloomberg via Getty Images)
OK, you know the scenario by now. Congressional Republicans propose — surprise! — tax cuts. The vast bulk of these cuts go to the very wealthiest Americans and to corporations, which are headed by these wealthy Americans and which give them dividends that are taxed at lower rates. Meanwhile, ordinary working Americans, and by “working” I include professionals who earn a wage or salary, get modest cuts or no cuts at all.
The Republicans hail their cuts as a way to stimulate the economy, because in their infinite charitableness, rich people will now hire poorer ones with all the dough they save. In fact, they say, this is the only way to stimulate the economy. But even if the economy is roaring, the cuts are necessary to continue stoking it. Tax cuts, then, are the policy for all seasons — in truth, the panacea for all seasons.
And then Republicans pass the tax cuts, and a good many Americans — even those blue-collar Joes — cheer, because after all, they may get a few pennies on the dollar.
There is a name for this: “playing us for suckers.” And Americans seem to fall for it every single time. Who doesn’t want tax cuts? They are the opiate of politics.
But a funny thing happened on the way to the new GOP cuts, billed fallaciously as “tax reform.” This time, the public hasn’t seemed to swallow the bait — at least not hook, line and sinker. Polls are all over the place, from those showing outright opposition to those showing decreasing support the more the public learns about the bill.
No, this isn’t exactly a political earthquake, but it isn’t nothing. Having been played for suckers for decades, Americans may be wising up. That doesn’t mean, of course, that the tax-cut package won’t pass. The Republicans and their fearless leader, Donald Trump, are desperate — really, really desperate. They need a victory, whether the American people oppose the policy or not. Any sort of victory will do.
This isn’t exactly a political earthquake, but it isn’t nothing. Having been played for suckers for decades, Americans may be wising up.
Besides, Republican benefactors — those wealthy Americans who are always trying to redistribute wealth from us to them and whose greed can never be sated — are demanding the cuts. Otherwise, they say, they won’t fund the GOP. So the incentives are huge, and they are entirely political.
However shameless, in the past, this tax cut adage that you can fool all of the people all of the time has worked for several reasons. First, taxes are just so damn complicated. They have so many moving parts, so many contingencies, that it’s difficult to develop a powerful counter-narrative to the GOP narrative that if your taxes go down, jobs will bloom — a proven fallacy, by the way. In fact, at a Wall Street Journal conference of CEOs this week with Trump’s top economic adviser Gary Cohn, only a few hands went up when attendees were asked if they intended to invest their new windfall. So much for trickle down.
Second, because tax policy is complicated, the media seem helpless to explain it. When the media did their yeoman work on the Obamacare repeal earlier this year, helping to rally the public against it, they had a single, simple Congressional Budget Office number to dramatically demonstrate its effects. And they were not loath to show us the casualties — parents with a disabled child, sons and daughters with ill parents, cancer patients, people suffering from chronic conditions. By the time the Senate held its first repeal vote, only 17 percent of Americans supported the effort.
The challenge of tax reform is much greater, and the media haven’t risen to it. There is no single data point that captures its effects. There is no group of individual casualties that illustrate what would happen if they pass. But rather than provide explanations, the media have left the field to the Republicans. Just the words “tax cuts” are pretty potent stuff. It would take a lot for the media to survey the consequences and push back, and they don’t seem to be up to it. Nor does it help that Republicans are trying to rush it through before people can see the details.
In total, the House GOP tax plan would raise taxes by 400 percent on many graduate students, the Harvard Crimson estimated. (Photo: Andrew Harrer/Bloomberg)
"Soaking broke-ass grad students to pay for a private jet subsidy. All-out class war on the 99 percent."
"An educated population is dangerous to an oligarchy. The GOP claims to be for jobs and economic prosperity for all, but this action shows otherwise." —Jess Phoenix, California congressional candidateThat was how one commentator described a pair of provisions buried in the GOP tax plan that passed the House on Thursday and is likely headed to the Senate floor for a vote as early as next week.
One provision—crammed in the middle of the latest version of the so-called "Tax Cuts and Jobs Act"—would provide a windfall to the wealthy few who own or lease private planes by exempting them from certain taxes related to "maintenance and support," "the hiring and training of pilots and crew," and "administrative services such as scheduling, flight planning, weather forecasting, obtaining insurance, and establishing and complying with safety standards."
Graduate students, however, would not fare so well if the GOP plan becomes law.
As CNBCreports, "[s]ome programs provide graduate students with a modest stipend for food and housing. For instance, Ryan Hill, a fourth-year Ph.D. student at MIT, receives a $30,000 living stipend and a tuition waiver allowing him to forego paying $50,000 in tuition. He currently pays taxes on his $30,000 stipend, but under the proposed House tax bill, his tuition waiver would also be taxed—meaning he would be taxed as if he was earning $80,000 a year."
In total, the House GOP tax plan would raise taxes by 400 percent on many graduate students, the Harvard Crimsonestimated.
Such a tax on students who are already drowning in loan debt "would be devastating," Samantha Hernandez, legislative director of the National Association of Graduate-Professional Students, toldWired. "I monitor all legislation at the state and federal levels that could affect graduate and professional students, and this is just—this would have the greatest negative impact of anything I've seen."
Historian Nick Kapur pointed to his own experience as a PhD student and described the proposed tax hike as "the height of Republican insanity."
And it gives America’s wealthiest citizens trillions more, when the richest 1 percent now hold a record 38.6 percent of the nation’s total wealth, up from 33.7 percent a decade ago.
The reason Republicans give for enacting the plan is “supply-side” trickle-down nonsense. The real reason is payback to the GOP’s mega-donors.
A few Republicans are starting to admit this. Last week, Gary Cohn, Trump’s lead economic advisor, conceded in an interview that “the most excited group out there are big CEOs, about our tax plan.”
Republican Rep. Chris Collins admitted that “my donors are basically saying, ‘Get it done or don’t ever call me again.’”
Republican Sen. Lindsey Graham warned that if Republicans failed to pass tax reform, “the financial contributions will stop.”
Republican mega-donors view the tax payback as they do any other investment. When they bankrolled Trump and the GOP, they expected a good return.
The biggest likely beneficiaries are busily investing an additional $43 million to pressure specific members of Congress to pass it, according toThe Wall Street Journal.
They include the 45Committee, founded by billionaire casino oligarch Sheldon Adelson and Todd Ricketts, whose family owns the Chicago Cubs; and the Koch Brothers’ groups, Americans for Prosperity and Freedom Partners.
They’re not doing this out of love of America. They’re doing it out of love of money.
How do you think they got so wealthy in the first place?
As more of the nation’s wealth has shifted to the top over the past three decades, major recipients have poured some of it into politics – buying themselves tax cuts, special subsidies, bailouts, lenient antitrust enforcement, favorable bankruptcy rules, extended intellectual property protection, and other laws that add to their wealth.
All of which have given them more clout to get additional legal changes that enlarge their wealth even more.
Forty years ago, the estate tax was paid by 139,000 estates, according to the non-partisan Tax Policy Center. By 2000, it was paid by 52,000. This year it will be paid by just 5,500 estates. Under the House tax plan, it will be eliminated altogether.
Why do Americans pay more for pharmaceuticals than the citizens of every other advanced economy? Because Big Pharma has altered the laws in its favor. Why do we pay more for internet service than most other nations? Big cable’s political clout. Why can payday lenders get away with payday robbery? The political heft of big banks.
Multiply these examples across the economy and you get a huge hidden upward redistribution from the paychecks of average working people and the poor to top executives and investors. (I explain this in detail in the documentary “Saving Capitalism,” airing next week on Netflix.)
All this is terrible for the American economy.
More and better jobs depend on increasing demand for goods and services. This must come from the middle class and poor because the rich spend a far smaller share of their after-tax income.
Yet the middle class and poor have steadily lost purchasing power. Partly as a result, a relatively low share of the nation’s working-age population is employed today and the wages of the typical worker have been stuck in the mud.
The Republican tax plan will make all this worse by burdening the middle class and the poor even more.
A slew of analyses, including Congress’s own Joint Committee on Taxation, show that the GOP plan will raise taxes on many middle-class families.
It will also require cuts in government programs that middle and lower-income Americans depend on, such as Medicare and Medicaid.
And the plan will almost certainly explode the national debt, eventually causing many middle class and poor families to pay higher interest on their auto loans, mortgages, and credit cards.
I don’t care whether the top executives of big corporations, Wall Street moguls, and heirs to vast fortunes salute the flag and stand for the national anthem.
But they enjoy all the advantages of being American. Most couldn’t have got to where they are in any other country.
They have a patriotic duty to take on a fair share of the burden of keeping America going. And Trump and his enablers in Congress have a patriotic responsibility to make them.
Rep. Kevin Brady, R-Texas, and House Speaker Paul Ryan, R-Wis., right, unveil the GOP's tax overhaul plan. (J. Scott Applewhite / AP)
Tax Cuts and Jobs Act of 2017, introduced by House Republicans, is certainly about tax cuts (but almost entirely for wealthy Americans and corporations) but hardly about jobs at all. The 429-page whopper of a bill is a medley of discredited fiscal policies and political gifts to the GOP’s conservative base. It is also a crucial marker for whether or not Republican overreach will work. Having failed to pass health care reform, as I predicted earlier this year, the GOP’s tax reform bill is arguably the biggest test of the party’s ability to sell greed in the guise of helping most Americans.
Even more so than President Donald Trump, House Speaker Paul Ryan has owned the heart of the tax reform bill and deserves the most scorn for his hypocrisy in selling the plan as beneficial to the public. Ryan, joined by Texas Rep. Kevin Brady (who introduced the bill into the House Ways and Means Committee last week), surrounded himself with a group of ordinary-looking Americans and claimed the bill was “for the middle-class families in this country who deserve a break.” Without showing an iota of shame, Ryan added, “It is for the families who are out there living paycheck to paycheck, who just keep getting squeezed.”
But claims about how the bill will benefit ordinary people are being debunked. Before the bill was formally introduced, White House press secretary Sarah Huckabee Sanders claimed on Twitter: “The average American family would get a $4,000 raise under the President’s tax cut plan.” She innocently asked, “So how could any member of Congress be against it?” Amazingly, that $4,000 figure was not drawn from estimates of what “average” Americans might save on their tax bill, but rather was based on an unsubstantiated assumption that corporate America will be floating in so much extra cash from passage of the bill that some of its immense wealth will trickle down to Americans in the form of wage increases. Many studies show that trickle-down economics is nothing but a trick—one designed to help the rich.
Paul Ryan looking on as President Trump speaks about tax reform at the White House, last week.Credit Drew Angerer/Getty Images North America
According to news reports, Donald Trump wanted the House Republican tax “reform” bill to be called the Cut Cut Cut Act. Alas, he didn’t get his wish, and it was instead given a boring name nobody can remember. But there’s still time to change it! So let me propose, as one reader suggested, that it be renamed the Leona Helmsley Act, after the New York hotelier convicted of tax evasion, who famously declared that “only the little people pay taxes.”
That, after all, is the main thrust of the bill. It hugely favors the wealthy over the middle class, which is pretty much always true of Republican proposals. But it’s not just about favoring high incomes: It also systematically favors people who live off their assets, especially inherited wealth, over the little people — that is, poor shlubs who actually have to work for a living.
To get an idea why, consider four hypothetical taxpayers and how they would fare under the G.O.P. bill.
First is the poster child family Paul Ryan keeps talking about, a family with two children making $59,000 a year. In the first year of the Cut Cut Cut Act, such a family would indeed receive a tax cut. But this cut comes from several special tax credits that are basically loss leaders to help sell the plan; they all either expire in later years or will get eroded by inflation. By 2027, with the plan fully phased in, that exemplary family would actually be facing a significant tax increase relative to current law.
Second, consider someone who is much further up the scale, but still works for a living. In the movie “Wall Street,” Gordon Gekko sneers at “a $400,000-a-year working Wall Street stiff flying first class and being comfortable.” What would happen to that guy? Well, I’ve done some back-of-the envelope calculations: If you ignore deductions, he’d end up paying a few hundred dollars less in taxes. But once you take lost deductions into account, especially reduced deductions for state and local taxes, he almost certainly ends up facing a tax hike, not a cut.
And of course it’s not just Wall Street stiffs who would find themselves in that situation: So would doctors, lawyers, engineers, and other well-paid professionals. Overall, the Tax Policy Center estimates that more than a quarter of the population would see taxes go up, not down, under the G.O.P. proposal; for those with incomes between $200,000 and $500,000, that fraction rises to more than 40 percent.
But what about owners of small businesses? Under current law, their business income is “passed through” to their personal income, and taxed accordingly. The Cut Cut Cut Act would instead allow people with such income to pay only 25 percent, a big tax break for those with high incomes. But this raises obvious possibilities for abuse, with every well-paid professional reclassifying herself or himself as a business.
To limit these abuses, the G.O.P. bill imposes rules that basically limit the 25 percent rate to “passive” income recipients. That is, you get the full tax break only if you own a business but don’t, you know, actually run it.
Finally, let’s imagine a very lucky individual — let’s arbitrarily call him Eric Trump — who stands to inherit a stake in a business he doesn’t run, plus a bunch of stock. He’ll get his inheritance tax-free, because the estate tax gets phased out in the G.O.P. bill. He’ll get to pay a low tax rate on his business income. And his stocks will pay higher dividends, because the G.O.P. bill also sharply cuts corporate tax rates, and most of the benefit of those cuts will probably flow to shareholders.
So when Gary Cohn, Trump’s top economic adviser, says that the bill’s goal is “to deliver middle-class tax cuts to the hard-working families in this country,” he’s claiming that up is down and black is white. This bill does little or nothing for the middle class, and even among the affluent it’s biased against those who work hard in favor of the idle rich.
Also let’s not forget that tax increases on working Americans are only part of the story. This bill would also, according to the Congressional Budget Office, add $1.7 trillion to the national debt over the next decade. You know what that means: If this bill or anything like it passes, Republicans will immediately revert to their previous pretense of being deficit hawks and start demanding spending cuts.
And since federal spending is dominated by programs — Social Security, Medicare and Medicaid — that benefit the middle and working classes, the end result of this tax bill would be to leave most working Americans, even those who wouldn’t face direct tax increases, worse off, all for the benefit of a tiny minority, especially those who haven’t even worked for their wealth.
You might wonder how Republicans imagine that they can get away with this. But anyone who has paid attention to U.S. politics knows the answer. First, they will lie, unashamedly, about what their bill actually does. Second, they will try to distract working-class voters by stoking racial animosity. That didn’t work too well in Tuesday’s elections, but they’ll keep on trying.
