Just as no one pleaded with Congress to repeal Obamacare because they wanted their health care more expensive and less accessible, no one has begged Congress for a tax plan that exacerbates growing income inequality, shifting $1.7 trillion from working people into the pockets of the already obscenely rich, adds to the national debt, slashes Medicare, Social Security and Medicaid, and would rob the nation of funding for infrastructure, education, national defense, public safety, public health and transitioning to a clean-energy economy.
When the “populists” demanded Tax Fairness, they didn’t mean that Congress should leave in all the loopholes, the tax-dodges and tricks that enable $2 trillion to be stashed in overseas tax havens, paying for tax cuts by stripping away the only deductions that enable working people to claw their way up the ladder of the American Dream.
I don’t believe “populists” think it is more important to be able to prepare their taxes on a postcard if it means they are bumped into a higher, if compressed, tax bracket.
And like Obamacare, the Republicans are concocting their mega-trillion dollar plan in secret, without any input from experts, analysts, or representatives of the vast majority of Americans, the Democrats, ramming their tax plan through the Congress, to satisfy billionaire donors and special interests, and put a “win” on the board before year-end so they don’t look like complete inept fools.
There was a time when paying taxes was considered patriotic, part of the social compact we make as citizens with a shared responsibility in our nation’s security and progress, paying forward so that those who come after us can benefit from the opportunities we had.
Instead, you have the Republicans in a rush to destroy the economy – at least that’s always been the complaint about the national debt – exacerbate income inequality, and the nation’s economic power.
Trump even boasted about his “brilliance” at claiming nearly $1 billion in tax refund, and said he had a “fiduciary” responsibility to pay the least amount of tax.
Is the problem with American tax system that the wealthy and most profitable corporations pay too much tax, strangling economic development?
A new investigative report, the “Paradise Papers,” highlight how the wealthy – including Trump’s Commerce Secretary Wilbur Ross, and fabulously profitable multi-national corporations like Apple use offshore tax havens to dodge paying their fair share.
The claim that companies and the ultra-rich, which nominally pay 39 percent tax, pay an unfair amount of tax is nonsense.
The reality is that with all the loopholes and deductions available, companies pay an average of 18 percent – well behind the effective corporate tax rates of Japan (24.5 percent), France (24 percent), Germany (21 percent), G-7 minus US (19 percent), and Britain (19 percent), as the New York Times reported.
“In fact, over several decades, the corporate tax rate has withered as a source of revenue for the government,” from accounting for 4 percent of gross domestic product in 1967 to just 1.6 percent last year. “By contrast, individual taxpayers are contributing a larger share through income and payroll taxes.”
Indeed, “worldwide multinational corporations shield an estimated 10 percent of global GDP from taxation through avoidance and evasion in obscure, unregulated financial enclaves,” The Nation reported.
The bigger problem for the health of this nation – and democracy – isn’t that taxes are too high and strangling investment, but growing income inequality.
The three wealthiest people in the US—Bill Gates, Jeff Bezos, and Warren Buffett—now own more wealth than the entire bottom half of the American population combined, 160 million people or 63 million households, according to a report by the Program on Inequality at the Institute for Policy Studies, reported in The Nation. More than half of U.S. wealth is controlled by 25 billionaires.
The Republican tax plan would only add to income inequality and with measures like eliminating the estate tax, effectively create an aristocracy.
Both House and Senate Republican bills end the Alternative Minimum Tax that is designed to make the wealthiest pay something into the pot (Trump, who has refused to reveal his taxes, in 2005 had to pony up something like $38 million on income of $150 million, instead of just $5 million, a 3 percent tax rate, without the AMT).
Alas, all the giveaways to the 1 percenters means that the cut in revenue to the treasury is $1.7 trillion – $200 billion more than would be allowed for the Senate to pass the tax bill with only its 50 Republicans, instead of 60 votes.
How do the Republicans intend to cut the tax cuts by $200 billion?
Why that’s easy: take away the deductions that middle class people use: So, if your employer gives you something to help you take care of aging parent or daycare for your child, those benefits will now be taxable income (that would offset $6.5 billion of the $200 billion).
They would tax the value of tuition and fellowships that help people finance higher education. They would cancel the deduction you could take when you move to take a new job, covering $10.6 billion.
Republicans would end a program that states and local governments use to help finance affordable housing and let homeowners take a tax credit on their mortgage, shaving $38.9 billion of that $1.7 trillion.
They take away deductions for state and local taxes, effectively double-taxing New Yorkers on that income (driving down home values, in the bargain), as well as deductions for education, medical expenses, home mortgage interest – in essence, the key rungs used by working people for upward mobility.
The New York Times, citing the Institute on Taxation and Economic Policy, estimates the Republican plan would raise taxes for 45 percent of middle-class taxpayers by 2026, while the top 1 percenters will get an average tax cut of $64,720 a year by 2027.
Meanwhile, the Treasury would be short some $3.4 trillion in the first 10 years, and $5.9 trillion the decade after.
Republicans are in a frantic rush to pass their tax plan – just to be able to chalk up something, anything, after a year with total control of government. But also, the longer the tax plan is out in the sunshine, the more it stinks.
