Tag Archives: Tax Cuts

Free Stuff.

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The GOP, its propaganda network, and the corporate-owned media are fond of accusing progressive Democrats of trying to buy votes by offering “free stuff” to voters. Disregarding the fact that nothing the government does is, in fact, free, this has been a popular accusation for longer than I can remember. The GOP used the same talking point when Social Security and Medicare were first proposed, claiming that the programs were unaffordable and that they would bankrupt the nation. Then, like now, the GOP also accused the Democrats who backed those programs of being socialists.

But it’s important to note that GOP candidates also regularly offer free stuff as a way of buying votes. And they also engage in a form of socialism. The difference is in the beneficiaries.

Social Security and Medicare are, in reality, retirement and medical insurance that directly benefit those who pay the premiums through payroll deductions – ordinary working Americans. And the current Democratic proposals, like universal health care and debt-free college education, would also directly benefit ordinary American workers.

The GOP proposals, on the other hand, pander to a different audience: Large multinational corporations, the military-industrial complex and the very, very wealthy.

Take the GOP-passed Tax Cuts and Jobs Act of 2017. Most working Americans saw little to no cuts in their income taxes while corporations and the wealthy realized dramatic cuts to their tax burden. The law also allowed multinationals to “repatriate” corporate profits held offshore to avoid paying US income taxes. The GOP promised that the bill would boost the economy and create jobs. It didn’t. Instead, most of the money was used to pay executive bonuses and to buy back stock. That had the effect of starving the companies of capital resulting in layoffs. The same thing happened in 2004 when the US last “repatriated” corporate dollars at reduced tax rates. That year, 58 giant corporations realized 70 percent of the benefit, saving an estimated $64 billion in taxes while, at the same time, slashing an estimated 600,000 jobs.

The real cost of the 2017 tax cut has yet to be tallied. But it has already resulted in record deficits and a record national debt. It was nothing less than a giant gift to corporations paid for by average working Americans!

And that’s but one example. There are many, many others.

The GOP has pushed cuts to inheritance taxes and cuts to capital gains taxes that benefit the wealthy. And, under the guise of its repeatedly debunked trickle-down economic theory, the GOP offers much more free stuff to corporations. Those gifts take the form of corporate incentives to expand or to relocate, long-term tax relief to corporations for expanding in their current locations and promising, but seldom delivering, new jobs, and Tax Increment Financing which exempts corporate facilities from property taxes whenever their owners build or purchase a building and promise to create jobs – a practice so pervasive that many cities have never collected property taxes on their most iconic buildings. Sadly, some “moderate” Democrats have voted for these things, too.

In addition, there are many less obvious free gifts to corporations. Governments pay the cost of building utilities and other infrastructure to reach corporate building sites. And governments are often forced to pick up the cost of food stamps and housing assistance for the employees of Walmart and other companies that fail to pay a living wage. (The cost of subsidizing Walmart’s underpaid workers was estimated at $6.2 billion in 2014.) Governments also pick up the cost of cleaning up mines and other sites despoiled by extraction industries after the corporations have walked away with the resources and profits.

Even more subtle are the allocations to defense contractors who have little oversight and few, if any, real penalties for cost over-runs and delays. In fact, a 2016 study found that the Pentagon can’t account for trillions of dollars in spending. Similarly, private prison corporations have been given sweetheart deals by their GOP sponsors. During the current border crisis, it has been reported that private prison corporations are being paid more than $700 per day to house the refugees and economic immigrants in horrific conditions. For that price, the detainees should be living in luxury hotels. Not suffering in conditions where they are denied access to sufficient food and water, denied basic hygiene, and forced to sleep on concrete with only a foil blanket.

The estimated cost of universal healthcare and free education is dwarfed by the gifts currently being passed along to corporations and the uber-wealthy. Moreover, the progressive Democratic candidates have done something the GOP hasn’t. They’ve explained how they will pay for their “gifts.”

So, the next time you hear someone deride progressive Democratic candidates by calling them socialists and attacking them for their offers of “free stuff,” keep in mind that what’s being “given away” is simply a matter of priorities. The question is: What’s more important to you? American workers? Or greedy corporations and the very wealthy?

Beyond Tribalism.

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Today, most Americans are members of a political tribe – Trump’s tribe, the Republican tribe, the Conservative tribe, the Libertarian tribe, the Democratic tribe, the Liberal tribe, the Evangelical tribe. But no matter which of the labels we prefer, we should find many issues upon which we can all agree.

On the most important issues, we should all be members of the same tribe – the American tribe.

So, for the time being, let’s set aside the questions of possible conspiracy between Russia and the Trump campaign and whatever Hillary Clinton was accused of doing or not doing. We should all be concerned that all of our intelligence-gathering agencies agree that Russia – one of our greatest rivals – interfered with our elections. If we, as Americans, are to have confidence in our elected leaders, we need to know that they were fairly elected.

In addition, there should be plenty of other areas of agreement among ordinary Americans. For example, we should all be worried that many of our longest-standing institutions – the press, FBI, CIA, justice system, educational system, science, even the truth – are under attack. Moreover, it should be abundantly clear that there is also an all-out attack on America’s working class.

Ideology aside, we should all be horrified that corporations and the very rich received 83 percent of the benefits from the most recent tax cuts – cuts resulting in deficits that will add multiple trillions to our national debt. We should all be concerned that the president ignores the Constitution’s emoluments clause by spending nearly every weekend at one of his resorts in order to charge taxpayers millions for the rooms needed for Secret Service, as well as government and foreign officials.

We should all be outraged over reports that the president’s longtime lawyer – his “fixer” – paid hundreds of thousands to buy the silence of women with whom he had affairs. And we should be even more troubled by reports that the same “fixer” was apparently selling access to the White House and accepting millions from a Russian oligarch.

We should be skeptical of Betsy Devos’s push to privatize education, thereby taking money away from public schools in order to finance parochial and private schools for the well-heeled. We should recoil at the dozens of reports detailing Scott Pruitt’s corruption and his rollback of environmental protections, thereby threatening clean air and water.

We should be angered by Steven Mnuchin’s use of government planes for his honeymoon and other private trips. We should be equally alarmed at Ryan Zinke’s taxpayer-funded vacations, his unjustified cuts to national monuments and his sweetheart deals for campaign donors who have placed bids for drilling rights on public lands. We should be universally sickened by Ben Carson’s plan to triple the cost of rent for poor Americans (many of them seniors) who live in public housing while others in government scheme to cut funding for food assistance, Medicaid, Medicare, SNAP and Social Security.

It cannot be stated often enough or strongly enough: This is not normal!

The GOP Tax Scam.

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For weeks, the GOP Congress has been working behind closed doors to craft a tax “reform” bill. They promise that their bill will “give everybody a raise.” They claim that it will simplify tax codes so much that you will be able to “file your income taxes on a postcard.” And they claim that the tax cuts will accelerate the economy so much that they will pay for themselves.

We’ve heard all of this before. Remember Ronald Reagan’s trickle-down economics? Or how about George W. Bush’s tax cuts?

Instead of stimulating the economy, those plans merely stimulated the bank accounts of the very wealthy while ballooning deficits and our national debt. And though we haven’t yet begun to pay for those tax cuts, the GOP is back with more cuts and more empty promises.

Indeed, most economists who have looked at the GOP plans have concluded that they will result in adding at least $1.5 trillion to the federal deficit over the next 10 years. Further, the nonpartisan Tax Foundation concluded that the impact on economic growth would only pay for about a third of the costs. In other words, in a best case scenario, the tax cuts will add more than $1 trillion to the deficit. And some economists worry that the tax cuts could actually slow economic growth based on increased debt and government borrowing which will result in higher interest rates!

Undeterred, the GOP responded by saying, “We don’t expect the plan to pay for itself. The only way to reduce the deficit is through spending cuts.” What they’re really saying is, “We don’t care about the consequences, the billionaires who fund our campaigns demand tax cuts.” Indeed, the GOP has admitted as much. Both the Mercers and the Kochs have threatened to stop funding GOP candidates unless they get what they want.

And fear of the sponsors is only part of the reason the GOP is in such a hurry to pass the tax cut bills. The temporary spending bill that is funding our government expires on December 8, and the GOP has made tax reform mandatory for a budget deal.

Moreover, by rushing a bill through Congress with little debate, the GOP can bury some unsavory items in the bill. For example, the Senate is considering repealing the Affordable Care Act’s individual mandate, which would for all intents and purposes repeal Obamacare.

The House tax bill would also repeal the Johnson Amendment which prohibits churches and other nonprofits from endorsing or opposing candidates for public office. Though the amendment is seldom enforced – pastors, especially evangelicals and conservative Catholics have been politicking from the pulpit for years without consequences thanks to GOP. This provision could impact our elections as negatively as the Supreme Court’s Citizens United decision that opened the floodgates for campaign donations by nonprofits – all of which can be made anonymously through money laundering from one nonprofit to another.

The House tax bill even includes an abortion poison pill. It has a provision that would, for tax purposes, give a fetus “personhood.” That would make any abortion, for any reason, murder.

However, the most disingenuous claim made by the GOP is that their tax plan will give most working Americans a $4,000 raise – a claim refuted by most economists. But let’s, for a moment, assume that it’s true. Who wouldn’t be in favor of giving less money to the government and having more money to spend on themselves? But what if getting that money meant that there would be a cut to most government services combined with increases in fees?

What if they told you that $4,000 tax cut would be offset by eliminating tax deductions for home mortgage interest, and for state and local tax payments – deductions that could total far more than $4,000. What if they told you that there wouldn’t be enough federal revenue to rebuild our infrastructure and that the result would be toll roads? What if they told you that cutting taxes would result in less money for medical research, less money to help with natural disasters, less money for environmental clean-ups, and less money for food safety inspections?

What if they told you that the tax cuts would mean that the cost of your health care and prescriptions would, once again, skyrocket? What if they told you that, as part of the tax cut, your Social Security savings would be given to millionaires and billionaires? What if they told you that you would be asked to subsidize big bonuses for the executives of multinational corporations? What if they told you that you might have to pay for your parents’ medical costs because their Medicare would be gutted? What if they told you it would mean the end of veteran’s benefits? What if they told you there would be no more money for food stamps and welfare, so millions of Americans would have to beg for food or die? What if they told you that that their tax cut would result in trillions more in debt for your children and grandchildren?

All of those things are likely under the GOP tax plans.

If that doesn’t give you pause, ask yourself this: Since the people writing the bills are millionaires who were put into office with the help of billionaires, do you really think they have your best interests at heart? And, if the GOP ideas for tax reform are so good, why are they being crafted in back rooms out of the view of the public? Why have they not included Democrats in the discussions?

Perhaps the best question of all is one posed by Catherine Rampell of the Washington Post in a recent editorial: “If the tax bill is so great, why does the GOP keep lying about it?”

Feeding The Rich And Starving “The Beast.”

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The top 10 percent control 76 percent of the nation’s wealth. Yet a new study* found that the bottom 99.9 percent pay 175 times as much income tax as the top 0.1 percent! That’s because the wealthy use a variety of tax shelters, both offshore and in tax havens such as Delaware and South Dakota. In addition, our largest, multinational corporations dodge taxes by moving their headquarters offshore (at least on paper) and by parking large sums of cash in offshore tax shelters.

Obviously, tax reform is sorely needed, and it’s the next big item on the Trump agenda. But, with Trump and the GOP in charge, don’t expect it to benefit you. While true reform would be almost universally welcomed, the people shaping the process are all billionaires and multi-millionaires with ties to Wall Street.

What are the chances that they will introduce a bill to benefit ordinary working-class Americans?

The short answer is zero if you look at the framework being considered by the administration as reported by Politico. For example, the administration is planning to raid your 401k savings account by forcing you to pay taxes on the money up front. Other proposals include eliminating the mortgage interest deduction for homeowners, eliminating federal deductions for the money you pay for state and local taxes, and eliminating charitable deductions. All of these proposals will result in a substantial tax INCREASE for ordinary Americans. They will also punish the poor by eliminating incentives for taxpayers to donate to charities.

Even more worrying are the tax rates being proposed.

At the heart of the “reform” is a plan to reduce the number of tax brackets from 7 to 3. That, alone, will punish taxpayers at the bottom of each bracket.

Of course, there is plenty of good news in the plan for the wealthy. The new plan would repeal the Alternative Minimum Tax – a boon to many well-off households. It would repeal the estate tax, a tax that currently applies only to 2 out of every 100 estates. (The tax is levied only on the portion of an estate’s value exceeding $5.49 million per person.) The plan would repeal the tax on investment income that helps pay for Obamacare. And it would cut the top marginal rate for the wealthiest Americans from 39.6 percent to 35 percent.

The Tax Policy Center estimates that the administration’s tax “reform” plan will cut taxes by $6 trillion over 10 years with almost half of the savings going to the top one percent.

And if you’re an executive for a large corporation, the news is just as good.

Though the current top marginal corporate rate of 39 percent is one of the highest in the world, very few US corporations actually pay that rate. Indeed, according to the 2015 ranking by World Bank, the total corporate tax burden for US corporations as a percentage of profits is tied with Tanzania for 64th in the world! And our corporate taxes as a percentage of GDP are lower than 22 of 32 of the world’s most advanced nations. Yet the Trump plan would cut the corporate tax rate to just 15 percent, making it one of the lowest tax rates in the world. The plan would also create a territorial tax system permitting multinational corporations to pay tax only on income earned in the US. Just what they need – yet another tax dodge! Additionally, Trump’s proposed tax plan would gift multinationals a one-time reduced tax on the trillions of dollars currently being held offshore.

The Center for a Responsible Federal Budget estimates that the cuts in corporate taxes alone will deprive the federal government of at least $2 trillion in the next 10 years! The administration’s belief is that the cuts in revenue will be offset by a yuuuge spurt of business growth. But that belief is wildly optimistic. Indeed, except in times of deep recession, there is no evidence that tax cuts grow the economy. And, following 8 years of private sector job growth, we are most certainly not in a recession.

If this plan – or anything approaching it – is approved, Grover Norquist will finally realize his dream. The federal government will be starved to the point where he can “drown it in a bathtub.”

* Study by John Hatdioannides of the Cass business school, Marika Karanassou of Queen May University and Hector Sala of the Universitat Autonoma de Barcelona and IZA in Bonn.

The Balanced Budget Fraud.

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It may sound like a good idea to require the federal government to balance the budget, but it’s nothing more than a thinly-disguised way for Teapublicans to shrink government and give corporations free reign to exploit people and resources.

Make no mistake, as soon as a balanced budget amendment is passed, if it ever is, Teapublicans will cut taxes at the first opportunity. That will result in less revenue, which, in turn, will result in large budget cuts. Of course, those cuts will not affect corporate welfare or the military-industrial complex. Instead, there will be cuts to regulatory agencies and safety nets. Already we’ve seen the GOP propose the repeal of the Affordable Care Act which will deny affordable health insurance to more than 16 million Americans. We’ve seen GOP-sponsored budgets that propose cuts to Medicaid, Medicare, Social Security and Supplemental Nutrition programs. We’ve seen Teapublican initiatives to defund the Department of Education, the Environmental Protection Agency, the IRS, and the Department of Labor.

All of this will be made much easier if Teapublicans can muster enough votes to pass a balanced budget amendment.

The truth is, our federal government has often operated at a deficit. Not because of bad management or negligence. But out of necessity. Indeed, the Constitution was created to replace the failed Articles of Confederation over federal deficits. The fledgling government had run up substantial debts during the Revolutionary War and, without a central government, it had no way of collecting the funds to repay those debts. And that’s but one example: Had FDR not expanded government programs to put people back to work, we likely would have never emerged from the Great Depression. Had the US not operated at a deficit, we would not have been able to conduct military operations for WWII and most of our other all-too-frequent wars.

The Reagan administration operated at massive deficits in an attempt to outspend the Soviet Union. The Bush administration operated at enormous deficits in order to create the Homeland Security Department and to prosecute the Afghan and Iraq Wars. And the Obama administration has operated at deficits (albeit steadily decreasing deficits) in order to wind down operations in Iraq and Afghanistan and to dig our economy out of the trench created by Bush.

Since 1975, only two administrations have produced surpluses, and both of them were Democrats! Taking it a step further, in the past 100 years, there have been eight Democratic presidents and nine Republicans. Five of the eight Democrats oversaw deficits smaller than they inherited, while seven of the nine Republicans oversaw deficits larger than they inherited.

Given their history, do you really think Teapublicans are pushing a balanced budget amendment out of a sense of fiscal responsibility?

Moreover, balanced budget requirements are no guarantee of fiscal responsibility. In Arizona, for example, once the legislature passed a balanced budget requirement, Teapublicans set about starving the state with tax cuts. Of course, those tax cuts have not been shared equally. The state not only cut taxes for the wealthy. It has cut corporate taxes for 24 of the past 25 years. Meanwhile, it has raised sales taxes to push the costs of government onto those who can least afford it. The resulting lack of revenue has, in turn, led to catastrophic cuts to education and other services.

Since no Teapublican will ever again agree to raise taxes, the state is caught in a downward spiral fueled by ideologues, greedy corporations, self-serving politicians, dark money donations to lapdog candidates, and a series of “studies” and propaganda from conservative “think tanks.” It’s a death spiral from which the state may never recover.

What’s The Matter With Kansas Now?

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In 2004, Thomas Frank wrote the book “What’s The Matter With Kansas?” which looked into the state’s religious and political extremism. It was a fascinating read. But it’s time for him to write a sequel because the answer to that question is now more clear. What’s wrong with Kansas is Governor Sam Brownback and his version of Horse and Sparrow economics (feed the horse enough oats and a few will pass through to fall on the road for the sparrows to eat), aka Trickle Down economics, aka Supply Side economics, aka Reaganomics, aka Voodoo economics.

Most economists have known for years that this economic policy doesn’t work. Even the architects of Reaganomics now repudiate the philosophy. But Brownback is certain that he knows better. So, since he was elected governor, he has implemented Reaganomics on steroids. He cut taxes for the wealthy and eliminated taxes for thousands of corporations, promising that businesses would flock to the state bringing thousands of new jobs with them.

It hasn’t quite worked that way.

There have been no businesses flocking to Kansas from neighboring states. And the resulting loss in tax revenue ($333 million in 2014 alone) has not only caused the state to burn through the $700 million reserve fund that existed before Brownback took office, it has led to cuts for public schools, community colleges and state universities. But Brownback steadfastly refuses to return taxes to their previous levels or to raise taxes even a little bit. So the governor and the state’s Republican legislature are hoping to meet this year’s $710 million deficit by cutting funding to pensions for public employees and by cutting the budget for roads and infrastructure.

And Kansas isn’t alone in this right wing-fueled misery. After more than 20 years of corporate tax cuts and, with almost nothing left to cut, the Arizona Republican-led government is facing a $1 billion annual deficit. After the failed policies of a Republican governor, Pennsylvania’s new Democratic governor is facing a $2.3 billion deficit. And, after Gov. Scott Walker’s $541 million tax cuts in 2014, Wisconsin is now facing a two-year deficit of $2.2 billion. In all, there are 16 states facing deficits…most of them controlled by tax-cutting Republicans. Meanwhile, Democratic-controlled states like California and Minnesota have some of the nation’s lowest unemployment figures, the nation’s best job creation and…wait for it…budget surpluses!

So tax cuts combined with budget cuts equals few new jobs, reduced revenue and even larger deficits, while reasonable taxes, reasonable spending on education and other services equals more jobs, more revenue and thriving economies.

It can’t be any more clear than that.