Whenever Democrats propose policies to make college more affordable or to provide healthcare to all as a human right, there’s always (always!) someone asking, “How do we pay for it?”
The mainstream (so-called “liberal”) media is one of the worst offenders.
But when Donald Trump’s Republican party proposed permanently cutting $1.5 trillion in taxes for their wealthy donors, no one–least of all the corporate media–asked how we were going to pay for it.
Of course we know how.
We pay for it the same way we have always paid for tax breaks to the rich: by cutting social safety nets and public programs that benefit lower- and middle-income Americans.
One of the most consistently starved areas is public education.
Today is no different.
Weeks ago Education Secretary Betsy DeVos proposed $6.7 billion in spending cuts for the 2020 fiscal year, and earlier this month she testified before Congress about “tough choices” she had to make influencing that decision.
A recent analysis from the Center for American Progress Action Fund (CAPAF) indicates DeVos herself made enough from the “Tax Cuts and Jobs Act” to personally defray the programs she decided to eliminate.
According to 2018 personal financial disclosures, DeVos made between $46.8 million and $109 million, a $10 million savings under the new tax law.
Seth Hanlon, senior fellow at the Center for American Progress focusing on federal tax and budget policy, said:
“[DeVos was] illustrative of the windfall that extremely wealthy business owners were handed in 2017.”
Tax changes in the 2017 law reduced the top rate for “S-corporation” holdings from 39.6% to 29.6%.
As an “S-corporation,” the DeVos family business, Amway, is eligible for this deduction.
Hanlon said:
“They sold this new deduction as a small business tax cut, but the kinds of businesses that really benefit are Amway, the Trump Organization, and their owners.”
The $10 million DeVos saved in tax breaks could have provided 5,600 students with work-study funding.
It also could have paid for Nevada’s share of the 21st Century Community Learning Center after-school program, and fund 20 communities’ Full Service Community Schools academic and social services.
Michael Linden, a fellow at the Roosevelt Institute and a Tax March board member, explained:
“It [the tax law] was sold as a boon to small business, but Betsy DeVos’s $10 million tax break shows that’s not the case at all. It is appalling, if not surprising, that after pocketing a tax break that was supposed to be for small businesses, she is turning around proposing massive cuts to education programs that benefit everyday Americans.”
Seth Hanlon added:
“We knew what was gonna happen. As soon as the ink was dry, they would turn around and say ‘We can’t afford investment in children, investment in schools, and many other areas because of mounting budget deficits.’ And the biggest reason the budget deficit has increased in the past two years is the revenue loss in the tax bill.”
During the run up to the tax law’s signing, Trump claimed he and lawmakers “reached an agreement on tax legislation that will deliver more jobs, higher wages and massive tax relief for American families and for American companies.”
According to Bloomberg, instead of the higher wages the GOP guaranteed, actual average hourly compensation fell in the first quarter after the tax law was passed.
An indication of how effective the tax breaks are is how much businesses are spending, because, of course, when corporations have more money, so do their workers. (At least that’s the way it’s supposed to work.)
But that is not the case.
The White House recently confirmed 96% of workers did not benefit from the promised tax cuts.
Instead, stock buybacks appear to be soaring. Since the tax cuts passed, businesses have been using their additional capital to pay off shareholders–not employees–to the tune of more than $700 billion in the first two quarters.
What this means is investors can increase consumption; i.e., more resources transfer to the wealthy, who can invest the money in other companies with better growth potential.
CEOs are actually coming right out and admitting they will not increase employee pay.
The tax overhaul is also adding $1.5 trillion to the national debt over 10 years.
Former President Barack Obama’s Treasury Secretary Jack Lew argues the tax plan could “leave us broke,” and fears how cuts to social safety programs could blight our country for decades.
Add education to that list.
Image credit: Flickr
