The GOP tax bill is an appalling piece of legislation, and just about everyone seems to know it. And yet 51 US Senators and 227 Representatives have voted for a bill that will hurt a most residents of every state, and virtually every congressional district.
This tax bill will make the rich richer. It will dump hundreds of billions of dollars into the already-overflowing coffers of US corporations. The news is way less rosy for the rest of us. The Tax Policy Center (TPC) estimates that by 2027, when the changes to the tax code are fully phased in, 53% of US households will pay higher taxes than they would have under current law. The Congressional Budget Office (CBO) estimates that this bill, which eliminates the Affordable Care Act’s insurance mandate, will increase the ranks of the uninsured by 13 million. Health care premiums will rise by about 10%.
But surely “The Tax Cuts and Jobs Act” will promote growth, right? Nope. The University of Chicago's Booth School of Business -- hardly a bastion of left-wing ideology -- asked 43 “leading economists” if this tax bill would accelerate growth. One – one! -- said yes. This tax plan is, in its essence and to its core, a brazen redistribution of income and wealth from the middle class and the poor to the very rich. It’s plunder, plain and simple.
A Quinnipiac poll found that just 26% of the US public favored the passage of this bill; 65% believe (recognize) that the bill will mostly benefit the rich.
So, WTF? Why would a majority of legislators vote for an unpopular bill that will benefit so few? The answer is as simple as it is revolting. Right wing billionaires wanted it. Chris Collins (R, NY): "My donors are basically saying ‘get it done, or don’t ever call me again.’” As Republicans defended their votes this week, you could almost see the Koch Brothers’ lips moving.
The non-partisan Tax Policy Center (TPC) estimates that in 2027 83% of the tax cut will go to the top one percent. Those in the top 0.1 percent (with an average annual income of about $28 million) will, on average, enjoy an annual tax cut of about $150,000 per year.
The center piece of this tax bill is a dizzying array of corporate tax cuts. Corporate profits are soaring, the effective rate of taxation of US corporations has fallen by about a third in recent decades, and US corporations are sitting on enormous stocks of cash. There are many things wrong with the US economy. Low corporate profits and a shortage of investment capital are not among them. This is, rather, another give-away to big capital. State assisted plunder.
A cut in the estate tax will return tens of billions of dollars to the super-rich over the next decade. Under the current tax code, 99.8% of estates (those under $5.98 million) already pay no federal estate tax. This GOP tax bill doubles this exemption. The effect, according to The Center for Budget and Policy Priorities, is to eliminate the estate tax entirely for half of households who were over the original threshold. The few households still subject to the estate tax -- heirs to the 0.1% largest estates – will enjoy an average tax cut of about $4.4 million. The big winners will include Paris Hilton, Jared Kushner, and Eric Trump. Another giveaway to the rich.
All of this is expected to add $1.5 trillion to the federal debt over ten years.
We can be sure that the GOP will continue to pursue cuts in spending on education, environmental protection, Social Security, Medicare and Medicaid, and infrastructure because, you know, “we can’t afford it.” These tax cuts will facilitate a fake fiscal crisis and thus, undoubtedly, higher costs (property taxes, sales taxes, tuition and more) and fewer services for the 99%. House Speaker Paul Ryan is already sharpening his knife. “We're going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit…” Ryan declared earlier this week. "Frankly, it's the health care entitlements that are the big drivers of our debt… that's really where the problem lies.”
This is all especially appalling given the current state (and recent history) of the US economy. Among the world’s rich countries, the US is – already and by far – the most unequal. In 1979, the top 1 percent captured about 9 percent of all US income; in 2016, they pocketed 22 percent. The incomes of the top 0.1 percent have grown even faster. Meanwhile, the incomes of the shrinking middle class have stagnated, and the incomes of those with a high school education or less have fallen substantially. The purchasing power of the federal minimum wage is 15 percent lower than in 1979, despite a doubling of labor productivity. In the meanwhile, CEO pay has soared. In 1965, the typical CEO earned 20 times as much as the average production worker. In 2015, they earned 300 times more. One in five kids in the US lives in poverty. And the US is the only rich country in the world without universal healthcare.
And while much has been made of the (very real) hard times endured by the “white working class” in recent decades, profound racial inequality remains an essential feature of the US economy. The income of the median African American household is about 60% that of the median white household. The wealth of the median African American household is one thirteenth that of the median white household. 24% of African Americans live in poverty—nearly three times the rate for whites—and a third of African American children live in poverty. This racial inequality manifests itself in other realms of social life as well: education, health care, housing, employment, capital markets, the criminal justice system, exposure to toxins, and more.
Despite this grim reality, the Republican Party’s economic policy agenda has not changed for decades. Cut taxes for corporations and the 1 percent. Reduce corporate accountability (“deregulate”) -- so that banks can run wild and corporations can pollute with impunity. Undermine the bargaining power of workers. And then blame the inevitable decline in workers’ incomes on people of color—"illegal immigrants," "welfare queens," food stamp recipients, and those who’ve “cut the line” thanks to "quotas" and "special preferences." In reality, the lost income of workers of all sorts—union and non-union, black and white, male and female, public sector and private sector—can be found in the pockets of the 1 percent.
Defenders of this tired agenda insist that the economy will grow if we provide a better "business climate"—lower taxes and fewer regulations will liberate corporations to create jobs. The problem is that it doesn't work. It’s Randian nonsense. Decades of lower taxes and reckless deregulation have saddled us with slow growth, soaring inequality, the financial meltdown of 2008, a devastating recession, rising tuition at our public universities, and diminishing opportunities for millions of Americans. And yet—like a zombie that will not die and despite its long record of failure—trickle-down economics is alive and well.
It is virtually impossible to find a reputable economist who supports this plan. Its defenders include a parade of opportunists and ideological hacks, many of them employed by Fox News and/or backed by Koch-funded think tanks. Other defenders include Trump, his economic adviser Gary Cohn and Treasury Secretary Steve Mnuchen (each a billionaire), a few Wall Street economists, and – oh yeah! -- the entire Republican Party, dutifully and mendaciously advancing the interests of its billionaire/corporate patrons.
This tax plan provides benefits to a tiny proportion of the Americans – those who are least in need and have, for 40 years, been grabbing a larger and larger slice of the economic pie. This bill is not about economic growth, or shared prosperity. It is about big capital and the richest of the rich grabbing an even bigger slice of the pie. It is plunder, plain and simple.
Ha Joon Chang, author of 23 Things They Don't Tell You About Capitalism, hits this nail on the head: "Once you realize that trickle-down economics does not work, you will see the excessive tax cuts for the rich as what they are—a simple upward redistribution of income, rather than a way to make all of us richer, as we were told."