Keeping their greedy eyes on the tax-cut prize
The Republicans' tax plan isn't just a smash-and-grab scheme to make the rich richer. It's part of the neoliberal offensive to impose declining living standards on the rest of us.
YOU KNEW it was coming, but the scale of the planned heist and the shamelessness of the lying to pretend it's good for everyone still come as a shock.
As Puerto Rico suffers through a catastrophe with no help from an inert federal government; as climate change sets more tragedies in motion; as infrastructure crumbles; as the broken U.S. health care system causes more misery; and as one in five children in the U.S. live in families that fall below the poverty line; Donald Trump and the Republican Party last week focused on the one thing they really care about: Making sure rich people get richer.
The tax overhaul proposal that Trump announced in Indianapolis will cost at least $2.4 trillion over 10 years. The "everyday working Americans" who Trump claimed would benefit will get an annual income tax break of several hundred dollars at most, according to a Tax Policy Center report.
Meanwhile, the richest 0.1 percent of taxpayers would pocket an extra $1 million a year.
After failing to "repeal and replace" Obamacare and not even taking up other Trump campaign promises such as infrastructure investment, Republicans are rallying around their one agreed-upon priority.
"Why am I here?" Gary Cohn, the former Goldman Sachs bankster and now head of Trump's National Economic Council, said at a White House press briefing. "I am here just for this reason. Think about the opportunity I'm involved in with President Trump, being able to rewrite the tax code...This is a once-in-a-lifetime opportunity, and I would never miss this."
Will they get away with highway super-robbery? The Republicans are united for now--and facing an official "opposition" in the Democratic Party that is mortally afraid of appearing to support higher taxes on anyone, even the rich.
But the GOP proposal is highly unpopular. According to a new Washington Post-ABC News poll, 65 percent of people say corporations pay too little in taxes--only 11 percent say they pay too much--and 62 percent of people oppose reducing taxes for higher-income people.
If a grassroots opposition--like the one that arose against Trumpcare earlier this year--mobilizes around exposing how the Republican tax plan will cause massive cuts in popular programs like Medicare, while still blowing up the deficit by as much as $5 trillion over 10 years, the Trump tax-cut juggernaut could fracture and fall apart under the pressure.
IT'S NOT just those of you reading this Socialist Worker editorial who don't need persuading. Even before Trump spoke last week, a majority of people was already convinced that the Republicans' tax plan was for the benefit of the wealthy, according to the Post-ABC News poll.
But for the record, here are the numbers.
An analysis by the nonpartisan Tax Policy Center found that the richest 1 percent of taxpayers would get half of the total benefits from the Republican proposals on income taxes if they become law.
The after-tax income of the top 1 percent, already making more than $730,000 a year, would increase by an average of 8.5 percent. By contrast, the after-tax income of the bottom 95 percent of taxpayers would increase by between 0.5 percent and 1.2 percent on average--and by 2027, one in four middle-income families would actually be paying more in taxes.
Trump had the gall to claim that the Republican tax proposal "is not good for me, believe me."
That's bullshit, according to a New York Times analysis of the Trump tax return from 2005 leaked earlier this year.
Trump stands to gain tens of millions from various measures like repealing the alternative minimum tax. But the real windfall will go to Trump's idiot sons and daughters if Republicans get away with their cherished goal of repealing the estate tax.
Only one in 500 estates are taxed because those worth less than $5.49 million are exempt. Obviously, no one except multimillionaires would benefit from repealing the estate tax, but that didn't stop Trump from making the pants-on-fire false claim that the Republicans want to "protect millions of small businesses and the American farmer."
Turns out Trump was off by "millions" minus 80. The Tax Policy Center estimates that only 5,460 estates will be big enough to owe any tax in 2017--and of those, about 80 will be "small farms or closely held businesses."
THE OTHER top priority of the Trump proposal besides giving tax breaks to the super-rich is giving tax breaks to corporations owned predominantly by the super-rich.
The main provision here is a reduction in the corporate income tax rate from 35 percent to 20 percent. This is supposed to be offset somewhat by closing loopholes and limiting certain business deductions. But the Republicans are dangling other presents to Corporate America, including a yet-to-be-specified scheme for a tax holiday to get U.S. businesses to "repatriate" the vast sums of money they keep abroad to game the tax system at home.
Trump rolled out some familiar rhetoric to justify giving a helping hand to some of the world's most powerful corporations. "[T]he biggest winners," he said in Indianapolis, "will be the everyday American workers as jobs start pouring into our country, as companies start competing for American labor, and as wages start going up at levels that you haven't seen in many years."
In other words, tax cuts at the top will "trickle down" to workers at the bottom--it's the same con that George Bush Sr. called "voodoo economics" when he ran against Ronald Reagan, who presided over the first great tax cut heist of the neoliberal era.
There are now decades of evidence to prove that Bush was right for once in his life. Investment by companies across the U.S. economy has dropped over the long term since 1980--during exactly the same period when the effective corporate tax rate also fell, while corporate profits reached historic highs.
Instead of investment that creates new jobs or an even less likely increase in wages, another tax break for business will likely go toward Corporate America's favored strategy of building up a cash hoard to pay off stockholders in dividends or buy back shares to boost share prices.
Trump's economic nationalism adds one less-than-moldy twist to "voodoo economics": He claims U.S. corporations won't create jobs because they are uncompetitive as a result of paying higher taxes.
But the evidence doesn't support this either. Once deductions and tax credits are taken into account, U.S. businesses pay taxes at about the same effective rate as companies in other countries, according to the Treasury Department.
Uncompetitive? The proof is in the pudding: The after-tax profits of U.S. corporations are higher than ever, swallowing nearly half of all profits in the global economy, even though the U.S. economy only accounts for one-fifth of the world economy, as liberal economist Robert Reich points out.
THERE'S ANOTHER way that the trickle-down flimflam helps America's rulers get away with their Robin-Hood-in-reverse crusade: They pretend that tax cuts will stimulate the economy so the government deficit won't skyrocket. Then, when the deficit inevitably does skyrocket, this becomes the all-purpose excuse for ever-deeper spending cuts in any program that doesn't primarily serve the rich and powerful.
The bosses make out coming and going. There's the multibillion-dollar bonanza of tax breaks in the here and now--and the justification to make everyone else pay when the bill comes due.
In 1978, Alan Greenspan, the free-market fanatic and soon-to-be chair of the U.S. Federal Reserve, put things plainly when he testified to Congress: "Let us remember that the basic purpose of any tax cut program in today's environment is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending."
So Trump and the Republicans may decry deficits for the camera, but they count on using them as a weapon to further starve government spending.
The massive tax giveaways to the rich during the Reagan and Bush Jr. administrations are among the main reasons why inequality in the U.S. has reached record proportions. They further enriched the tiny few at the top, but also strangled social programs that transfer some small amount of wealth to those on the lower part of the income ladder.
And here's where the Democrats are complicit in a program championed most openly by Republicans: Both Bill Clinton and Barack Obama won small tax increases on the wealthiest--though by nowhere near as much as they were cut by their Republican predecessors--but they were just as vigilant or more so in imposing the austerity measures that are the flip side of the tax-cut coin.
Our opposition to the trickle-down tax-cut gang needs to begin now. It can start with people around the country confronting the Republican thieves wherever they appear--as so many thousands did when the GOP confidently rolled out their plans to wreck health care--and challenging the Democratic enablers to do more than complain for the cameras.
But protest against the Republicans' tax-cut robbery should be part of all our struggles for justice--like demanding immediate and massive aid for the people of Puerto Rico instead of giveaways for the rich.
Trump has announced another offensive in the class war against working people. We need to mobilize to fight like we know it.