Won’t Get Fooled Again (Thanks Pete Townsend)
The Congress is dead set on passing a tax cut. As it’s a Republican tax cut, there should be no surprise that the bulk of the “cut” will be for corporations (especially big ones) and the very wealthy. This falls right in line with the core Republican belief that: “if those that have money have more money, they will spend it and the economy will ‘do better.’”
There is a great deal of argument about whether that belief is valid. Whether corporations will pass on the money saved by the tax cut to employees or consumers, or whether it will be absorbed by shareholders and top executives, is certainly open to question. The efficacy of “trickle down” economics is questionable; after the last “tax reform” passed by Reagan Republicans in 1986, the GDP growth rate fell for years.[1]
What we know for sure is that this is NOT a tax cut for everyone else. The Congressional Budget Office has estimated that the lowest income levels will see dramatic tax increases in the next few years. This does not include the “sunset” provisions of the current tax proposals. The corporate tax cuts proposed are permanent, the individual cuts will expire by 2027, raising taxes even more. [2]
In fairness, Republicans believe that the corporate tax cuts will increase economic growth to such an extent that it will overcome the tax increases that lower incomes will suffer. The concept: “a rising economy lifts all incomes.” They also believe that growth will increase the government revenue to overcome the $1.4 trillion their plan currently adds to the US debt. And for Republicans, there is a “win-win” proposition to these changes. If the economy does respond and grow, fine. But if it doesn’t, the increased US debt will hamstring any future Congress from spending on programs beyond current entitlements. If Democrats regain control, they still won’t be able to legislate outside of the constraints of the debt.
The current particulars of the legislation are even more egregious. The Senate version will end the individual mandate to buy health insurance with an estimated 13 million people losing their coverage. It will impact “blue” state citizens more than “red,” by taking away much of the state and local tax deductions. And it will cripple graduate students, requiring them to take as income their stipends for school.
So let us be very clear. When the President claims that this is a “major-major tax cut” he isn’t talking to those who most need it.[3] This is NOT a tax cut to folks who earn less than $40000, and it won’t be a tax cut for those who earn less than $75000 after a few years. Don’t be fooled by the title: this is a tax cut for corporations and the wealthy, and it is clear that that this “cut” will bleed those who can least afford it.
[1] https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=US
[2] https://www.washingtonpost.com/news/wonk/wp/2017/11/26/senate-gop-tax-bill-hurts-the-poor-more-than-originally-thought-cbo-finds/?utm_term=.d709068823f4
[3] https://www.nytimes.com/2017/11/02/us/politics/middle-class-tax-cut-republican-bill.html
