Remember the $1.5 trillion permanent tax cuts Donald Trump signed into law in December?
Republicans told us the projected economic growth will ultimately result in the cuts “paying for themselves,” which is exactly what the American people were told in the 1980s under Presidents Ronald Reagan and George H.W. Bush.
It’s the old “trickle-down economics” theory; i.e., with more money on hand, corporations will spread more wealth to workers, reducing income inequality.
Back then, there were loopholes, offshore tax havens, and outsourcing CEOs and shareholders could exploit to satisfy their greed.
Today…
There are still loopholes, offshore tax havens, and outsourcing CEOs and shareholders can exploit to satisfy their greed.
Corporations currently boast record profits, stock buybacks, and obscene CEO pay, all while income inequality is rising to dangerous levels.
Moreover, CEOs are actually admitting they will not increase employee pay for which their new wealth is theoretically intended.
Troy Taylor, CEO of Florida’s Coca-Cola franchise, for example, said at the Dallas Fed:
“It’s [increasing employees’ salaries] just not going to happen. Absolutely not in my business.”
Not only are CEOs brazen enough to concede their greed; they are overtly working to “reduce their workforces further.”
Axios reports:
“The message is that Americans should stop waiting for across-the-board pay hikes coinciding with higher corporate profit; to cash in, workers will need to shift to higher-skilled jobs that command more income.”
This is no surprise.
Analysts predicted this would happen as the GOP slashed the corporate rate and the top marginal tax rate for individuals late last year.
One such analyst is Jack Lew, who served as former President Barack Obama’s Treasury Secretary.
He argues the “Tax Cuts and Jobs Act” could “leave us broke,” and fears how the deep cuts to social safety programs like Social Security could blight our country for decades.
Lew said in a Bloomberg interview:
“I fear that the next shoe to drop is going to be an attack on the most vulnerable in our society. How are we going to pay for the deficit caused by the tax cut? You’re going to see proposals to cut health insurance from poor people, to take basic food support away from poor people, to attack Medicare and Social Security. One could not have made up a more cynical strategy.”
Sen. Brian Schatz (D-Hawaii) argues this outcome is precisely what the congressional GOP and Trump intended.
Wisconsin congressional candidate Randy Bryce, aka “The Iron Stache,” running for Speaker of the House Paul Ryan’s seat, tweeted:
“CEOs at America’s largest firms make nearly 271 times the annual average pay of the typical worker. Of course the @GOP tax scam didn’t help working people. CEOs would rather pay themselves than pay us.”
Former Treasury Secretary Lew adds that instead of crippling cuts, what the country needs is investment more jobs training, education, and infrastructure.
He states:
“What we’ve seen is a tax cut that spends money we don’t have, to have very concentrated benefits for global corporations and the top one percent, and it’s leaving us broke so that we cannot deal with these fundamental problems.”
The “Tax Cuts and Jobs Act” Trump signed into law accomplishes the following:
- It slashes the top individual tax rate from 39.6% to 37%.
- The corporate tax rate falls to 21% from its current 35%.
- There is a 20% deduction for the first $315,000 of qualified business income for “pass through” entities–businesses not registered as corporations–such as law firms and doctors’ offices, worth $600 billion.
- Income above $315,000 phases in limits, ultimately culminating in an effective marginal tax rate of 29.6%.
- The previous 20% corporate alternative minimum tax, designed to prevent the wealthy and corporations from avoiding taxes entirely, is repealed.
- Those who make more than $1 million will enjoy a tax of cut $5.8 billion a year.
- Cuts will trigger PAYGO, a 2010 law requiring cuts to Medicare and other programs to offset deficit increases. This includes federal student loans, foster care subsidies, and Meals on Wheels funding.
- $25 billion will be cut from Medicare by 2018, $400 billion over the next decade.
- Gone is the estate tax worth $150 billion.
- Over $200 billion in cuts will be put toward a provision allowing a greater deduction for dividends on foreign earnings.
- Important state and local income tax deductions on which working Americans rely are eliminated.
- The individual mandate required under the Affordable Care Act (Obamacare) is repealed, leaving around 24 million Americans without healthcare and jacking up healthcare premiums.
- The “carried interest” loophole for private equity fund managers and some hedge fund managers remains.
- Oil companies will now be permitted to drill in Alaska’s Arctic national wildlife refuge (ANWR).
In April, the Congressional Budget Office (CBO) published a report stating the federal debt is predicted to rise to nearly 100 percent of Gross Domestic Product (GDP) by 2028.
According to the report:
“Federal debt is projected to be on a steadily rising trajectory throughout the coming decade. Debt held by the public, which has doubled in the past 10 years as a percentage of gross domestic product (GDP), approaches 100 percent of GDP by 2028 in CBO’s projections. That amount is far greater than the debt in any year since just after World War II.”
The federal deficit is expected to exceed $1 trillion by 2020.
Image credit: egbertowillies.com
