Editor’s Note: For an alternative viewpoint, please see: Counterpoint: Tax Reform Will Grow the Economy and Raise Wages
Republicans are on the brink of passing a massive tax overhaul, and it’s looking like the biggest con of the Trump era so far. And that’s saying a lot.
The legislation being jammed through by the House and Senate Republicans is a tax giveaway to corporations and the richest 1 percent, paid for by working and middle-income families.
Across the board, working people will be hurt by this plan, whether by the new incentives to corporations to send U.S. jobs overseas, the loss of the medical expense deduction, new taxes imposed on education benefits, the inability to deduct interest on student loans, the loss of state and local tax deductions, or the forced budget cuts to Medicare, transportation, health care and other critical programs.
Despite the doubletalk from Republicans anxious to sell this plan, it’s not hard to figure out who Republicans really want to help. Why else would tax cuts for corporations and tax changes that benefit the wealthiest Americans — like the estate tax — be permanent, while individual tax cuts for middle-income families are only temporary?
Why else would corporate hedge fund managers get to keep their cozy tax breaks that give them lower tax rates than schoolteachers?
Why else would two-thirds of the benefits of the plan go to corporations, including the new incentives for corporations to send good U.S. jobs overseas?
Why else would Republicans include cuts that would strip health care coverage from 13 million working people?
Why are these corporate tax cuts considered “necessary,” when so many big corporations have been posting record profits and have an effective tax rate of less than 20 percent, or even 10 percent. Some corporations don’t pay any federal taxes at all.
Yet an analysis by the Institute on Taxation and Economic Policy earlier this year found that job growth at corporations that paid an effective federal tax rate of 20 percent or less was just about non-existent. In fact, a majority of these companies cut U.S. jobs from 2008 to 2016.
Meanwhile, within 10 years, middle-income families earning $75,000 or less will be paying higher taxes, according to the bipartisan Joint Committee on Taxation. That means as many as 47 million families — and not wealthy families — will be paying higher taxes in just a few years.
Sometimes the truth comes out in unexpected ways. Recently, at an economic forum with the Trump administration’s chief economic adviser Gary Cohn, a roomful of CEOs was asked if they would use their tax cut to increase investment in the United States. The silence was overwhelming.
On more than one occasion, Cohn and his Council of Economic Advisers have stated that cutting the federal corporate tax rate from 35 percent to 20 percent would increase average household income in the United States by a conservative estimate of $4,000 a year. President Trump has done the same, speaking a few months ago in Pennsylvania, and declaring that the tax cuts “would likely give the typical American household around a $4,000 raise.”
Working people know better than to believe the boss’s promises unless they are in writing. That’s why my union has asked some of our biggest employers to sign an agreement that says if the tax plan passes, working people will get their $4,000.
Of course, many economists are skeptical, and predict that corporations will use the money from the tax cuts to buy back stock and give CEO’s and executives big raises, not raise working people’s wages or add jobs.
Economists are equally skeptical about the wild claims of economic growth. Analysis by the bipartisan Tax Policy Center found that anemic growth in the U.S. GDP would be more than offset by a massive loss of revenue, increasing the deficit by $1.27 trillion over 10 years. A survey of leading economists by the University of Chicago’s IGM Forum turned up just one supporter of the idea that this tax plan would produce economic growth.
Congress had the opportunity to simplify the tax code and reduce rates for working families while providing incentives for corporations to keep good jobs in the United States. Instead, Republicans have designed a tax plan that gives even more to those who have the most and that will hurt working and middle income families.
We have to say no to this corporate money grab.