One frustration of being a Democrat is witnessing the willful denial our Republican friends exercise regarding the disastrous consequences that GOP economic theories and policies relentlessly inflict on Americans, including Republicans. The tax bills before the U.S. House and Senate could be aptly named “The Republican Politicians’ Welfare-For-The-Rich Act.”
Under the guise of tax “reform” Americans may soon undergo the greatest fleecing in modern history. The “deal” promises a tiny initial cash rebate for some, but not all, middle income families — actually, 21 percent of Idaho middle-income taxpayers would see their taxes increase $390 on average. Meanwhile $2 trillion are given to corporations by increasing the national debt.
This “deal” is leveraged by ending: health coverage of 13 million Americans, state and local tax (SALT) deductions (affecting 160,000 Idahoans), graduate-student stipends and undergraduate loan deductions, personal expenses incurred by professionals (like teacher-donated classroom supplies) and half of the existing mortgage loan interest deductions. Meanwhile truck-loads of freshly minted dollars will spill onto billionaires’ doorsteps from platinum-plated front-loaders.
Economists and the Congressional Budget Office project a $2.3 billion ballooning of our national debt. That will likely initiate an inflationary cycle, decreasing middle class buying power and quality of life. Inflation will also increase interest rates for mortgages, auto-loans and consumer financing. That’s what suddenly adding $2.3 trillion of debt (borrowed from Chinese banks) does to a country.
Republican politicians have a peculiar bipolar condition affecting their perception of national debt. They see it as a catastrophe (regardless of size or whether it’s increasing or decreasing) when Democrats are in power, but it’s supposedly a godsend when Republicans swell it to historic levels.
Apparently, for GOP economic prestidigitators, “America First” means first in line at China’s automatic teller machine. As usual, the magic words are “trickle down economics.” And after watching this burlesque for 50 years everyone in the peanut gallery knows the trick only works for folks in the box seats.
The American Tax Policy Center and Center for American Progress determined that the proposed tax bills are a bad deal for all but the ultra-rich. Corporations and the richest 1 percent of Americans would reap a colossal 47 percent of tax cuts over the next 10 years, with individuals among the richest 0.1 percent paying $280,000 less in taxes. Meanwhile many working-class families will actually see taxes increase over that period.
Idaho’s richest 1 percent will reap an average $42,000 tax cut. That’s 120 times what average Idaho middle-class families would realize.
This is caused by changes in several major deductions. The CAP reports that 8.8 million Americans, including 6.3 million earning below $75,000, deducted medical expenses in 2014, for average deductions just under $10,000. In 2014, medical expenses were deducted by 49,749 Idahoans. Their average tax savings was $9,236. Seniors will be hardest hit because they experience higher annual medical expenses.
Rural Idaho communities would likely lose key funding for hundreds of hospitals, daycare facilities, alternative energy projects and small businesses if the House GOP plan eliminates the New Market Tax Credits program. Since 2003 Idaho saw $124 million in community investments by NMTCP that created 450 full-time jobs.
The GOP tax scam will hurt Idahoans putting kids through college. It eliminates the student loan interest deduction currently benefiting 63,000 Idaho graduates to the average sum of $1,000. Charitable donations in Idaho and across America may drop precipitously if taxpayers cannot gain an advantage by itemizing.
An amazing aspect about this debacle is that major businesses and corporations neither need the cuts, nor have most of them asked for them. America’s top corporations are awash in cash, stuffing it into offshore banks until they can identify worthy investments.
In fact, last week the Washington Post’s Heather Long reported that over 400 millionaires sent a joint letter imploring Congress not to pass these tax cuts for the rich. The letter especially scorns the House proposal to totally eliminate estate taxes, which are only paid on assets exceeding $5.5 million ($11 million for couples) bequeathed to heirs. The Senate would double the tax threshold. Significantly, only 5,000 U.S. families per year pay any estate taxes. The loss of that revenue would total nearly $270 billion by 2027. The letter notes that’s more than the combined budgets of the FDA, CDC and EPA. The main real effect would be creation of an American economic dynastic class.
It’s often argued America’s 35 percent nominal corporate tax rate is too high to compete internationally. Of course, few corporations actually pay the nominal rate. An analysis compiled from Forbes data shows that in 2016, 20 top American corporations, representing 20 percent of GDP, had revenues of $3.2 trillion but paid only $109 billion in taxes (3.4 percent of revenue or 0.6 percent of GDP and 3.6 percent of the total $3 trillion in federal taxes collected).
Arguably, percent of earnings is a better tax metric for comparing national economies. Furthermore, only comparable industrialized economies should be used (i.e. exclude banana republics and proto-economies). When the Center on Budget and Policy Priorities made that analysis they found: “The average corporate tax rate on profits from new investments made in the U.S. is 24 percent; the average corporate rate on profits from new investments made by companies in other “Group of Seven” (G-7) industrialized, democratic countries, weighted by the size of their economies, is 21 percent;” and “The share of worldwide profits that U.S. multinational corporations pay in U.S. and foreign income taxes is about 28 percent; the average for companies headquartered in other G-7 countries, weighted by the size of their economies, is 29 percent.”
Be thankful this Thanksgiving Day that, so far, this grandiose charade being enacted solely as payback to the GOP donor elite, and perhaps as a conflict of interest by the president, hasn’t succeeded, and we’ve yet to be formally and utterly transformed into a banana republic.