The Tax bill that recently passed the House and the proposal to be voted on by the Senate has been sold to the American Public as, get this, the “Tax Reform and Jobs Act.” Just go online to find the celebratory photo of the House appropriations committee members, all Republicans, and you’ll see the slogan affixed to the podium. It’s a slick piece of advertising designed to disguise what this legislation is really all about – a massive corporate tax cut demanded by the Republican donor base – the billionaire class who have bluntly told the Republicans in Congress if they don’t cut corporate taxes they (the billionaires) will no longer fund those Republican’s races for elective office. As Senator Sherrod Brown (D-Ohio) said recently, “It’s all about the donors – essentially four or five billionaire families who are calling the shots!”
The whole effort by the Republican-led congress and White House is to get a “victory” – to demonstrate they can govern and get something done. However, it is noteworthy the House bill was crafted behind closed doors with no public hearings and with not a single Democratic vote. While we hear a lot of chatter from supporters of the tax plan about how “everyone” will have a tax cut, when you study the fine print, you see individuals at the low and middle income level get a minimum cut in taxes that is inconsequential; higher individuals get a bigger break – but these tax cuts will expire in 10 years while corporate tax reduction is permanent!
So what about “jobs” that will be created by all the money corporations will have since their tax rate will be reduced? That is pure myth. The U.S. has been losing jobs in the ever increasing global economy for years. Why? Corporations want to make their products paying the lowest wage possible and without expensive worker benefits. Is it realistic to think because a corporation has saved on its taxes it is going to build a plant in the U.S. and pay higher wages? Or, is it more realistic to think the money saved in taxes will go towards buying back shares and increased value to shareholders by paying higher dividends. If you think the former, I have a bridge to sell you in Brooklyn.
Also, if you think reducing taxes will stimulate the economy, with the benefits of lower taxes trickling down to the middle class, I have two things to say. There is no empirical evidence “trickle down” economics has ever worked. Take a look at what happened in Kansas when Republican Governor Sam Brownback slashed taxes – the state’s economy went into a severe nose-dive and the legislature had to raise taxes to keep essential services going and override his veto of the tax increase. There are now four Republicans trying to replace him.
What is truly insidious about these tax proposals is what is being cut from revenue to pay for the corporate tax cuts – $1.5 trillion over ten years! For example, the proposal to eliminate or reduce the state and local tax deduction (SALT) will have an impact on housing across the country and raise taxes on the middle class by up to 26 percent, if they can no longer deduct those taxes. There are many tax credits that are poised to be eliminated such as tax exempt municipal bonds that cities and towns have successfully used to pay for infrastructure improvements – if the tax exempt status is eliminated, cities will have to pay more interest on borrowing which ultimately is paid for by local taxes; same thing for low income housing credit and new markets tax credit – both are vehicles to get private investment into low income housing. Eliminate the credit (incentive) and it will be much harder to encourage private sector involvement in building low income housing which significantly contributes to making lives better for deserving people that are not fortunate enough to be in the wealthy class, let alone middle class.
The National League of Cities, of which Pinecrest is a member and where I serve as vice-chairman of the Transportation or Infrastructure Committee, has come out against the House bill as being “anti-city and town because it actually raises taxes on American families, diminishes local decision making over local taxes by eliminating SALT deductions and strips cities of tools like bonds that enable local leaders to build strong, healthy and economically vibrant communities.” See NLC.org/tax reform.
On top of all of this, if passed and enacted into law, this “tax reform” bill will raise the national debt by $1.5 trillion over the next ten years – in other words, the government will lose that much revenue – therefore, the government will have to borrow that much more to maintain today’s level of services or reduce services by slashing Medicare, Medicaid, Social Security and the like. Our children will pay the price and our country will be weakened all because corporations and the wealthy Republican donor class want more wealth. It is truly a historic example of unfettered greed.
