From The Ramparts

                                                   

                                                     From The Ramparts

                                                 Junious Ricardo Stanton

       The Tax Cut Scam

The Republicans’ tax cut legislation disingenuously entitled The Tax Cuts and Jobs Act passed and was signed into law on December 22, 2017, thereby enabling them to claim a major victory for their party, congress and the president. The Republicans hyped this legislation as a huge catalyst that will spur investment, higher incomes, productivity and the creation of millions of jobs. Not so.

This is just spin and lies. Tax cuts for the rich have been a staple of the Koch Brothers and the other right wing billionaires who fund Republican (and some Democrat) politicians for years and is ideological fodder for the Libertarian economic mantra. But the historical fact and reality are; tax cuts both on the marginal and the corporate rates do not and have not translated into boosts for long term economic growth, increased productivity or higher worker wages. It is pure spin designed to dupe and fool the masses into passively supporting legislation that benefits the super rich.

The fact is, the tax cuts will give us a few extra dollars in our take home pay, but this is not a pay raise!!  Your wages will remain the same, meaning your gross pay stays the same but you will just take home a few more dollars in each paycheck. Wages for working class folks have remained stagnant since the 1970’s and the tax cuts are not going to change this reality. “The majority of Americans share in economic growth through the wages they receive for their labor, rather than through investment income. Unfortunately, many of these workers have fared poorly in recent decades. Since the early 1970s, the hourly inflation-adjusted wages received by the typical worker have barely risen, growing only 0.2% per year. In other words, though the economy has been growing, the primary way most people benefit from that growth has almost completely stalled.”  Why Wages Aren’t Growing In America Jay Shambaugh and Ryan Nunn. https://hbr.org/2017/10/why-wages-arent-growing-in-america

 The corporate tax reductions will put more money in the pockets of the corporate CEOs and their shareholders but the benefits will not trickle down to workers nor improve hourly wages.  “The centerpiece of the Republican tax plan is a massive corporate tax cut, from 35 percent to 20 percent, which is expected to disproportionately benefit the wealthy. Shares of stock in the businesses that pay corporate income are mostly owned by the wealthy, and the top executives whose compensation packages are linked to stock market performance are also much richer than the average American. So the bill’s cut in the corporate tax rate is going to help them the most. It would also overhaul the individual tax code in a way that almost every independent analysis has shown would direct most of the benefits to the wealthy. In 2019, a person in the bottom 10 percent gets a $50 tax cut and a person in the top 1 percent gets a $34,000 tax cut. Other provisions, like rolling back the estate tax, are unambiguous giveaways to the richest Americans.” https://www.vox.com/policy-and-politics/2017/12/2/16720952/senate-tax-bill-inequality

            The Republicans passed the legislation which was actually written by lobbyists without debate or support from the Democrats. “President Donald Trump rubber-stamped his party’s revision to the U.S. tax code on Friday, capping a year in which lobbyists working to influence tax law poured millions into the reelection campaigns of Congress. Lobbyists working on issues related to taxes donated $9.6 million to members of Congress during the first nine months of 2017. Among the 11,078 total lobbyists who have registered and actively lobbied so far in 2017, about 58 percent – or 6,421 – lobbied on the issue of taxes, according to quarterly disclosure forms filed between January and September. Almost a quarter of these “tax lobbyists” – or 1,476 – made political contributions. Their combined average contribution during the first three quarters of the 2018 cycle was $6,520.” https://www.opensecrets.org/news/2017/12/tax-lobbyists-contributions/. In other words the lobbyists bribed the congress critters.

It is a totally partisan bill but that’s not the worst of it. This bill is built on totally bogus presumptions that have proven over almost one hundred years to be untrue. A report by the Congressional Research Service in 2012 revealed there is no correlation between top tax rate cuts and economic growth. You can read the report at https://fas.org/sgp/crs/misc/R42729.pdf. The report was released in 2012 but Republicans demanded the CRS table it because they said it was too negative; but in reality it debunked their rationale for tax cuts for the rich.

The Tax Cut and Jobs Act contradicts human nature and how capitalism works. Absent strong and protracted pressure, the rich and multinational corporations aren’t going to transfer their money from tax havens in the Cayman Islands or Switzerland back to the US, they are not going to give their workers raises (since organized labor is almost non-existent) and they are not going to relocate their overseas factories and jobs to the United States!  They are going to take their extra money and pocket it or buy additional stock shares to drive up the Stock Market, give themselves raises and their shareholders additional dividends. That’s what capitalism is all about.  After all, they paid their lobbyists millions to influence and write legislation that favors them and makes their tax cut benefits permanent.

            Barnet Sherman wrote a report in Forbes that shows there is no correlation between tax cuts and economic stimulation. https://www.forbes.com/sites/investor/2017/10/17/tax-rates-and-economic-growth-is-there-really-a-correlation/2/#6e42b908433d  But the right wingers are planning to roll out massive ad and marketing campaigns to hoodwink us into believing tax cuts spur economic growth, increase savings, grow wages and productivity.

 “The Koch network will launch a multimillion-dollar push next year to sell the bill, with paid advertising and town halls to educate voters. A major GOP super PAC is planning to spend $10 million to protect House members. And another group, the Committee to Unleash Prosperity, plans to spend the majority of its $1 million annual budget selling the tax plan next year, according to one of the group’s founders, Stephen Moore, a distinguished visiting fellow at The Heritage Foundation and an informal economic adviser to the president.” https://www.politico.com/story/2017/12/21/gop-tax-plan-marketing-push-313231

            The tax cuts for working folks will expire seven years from now, while the breaks for the super rich are permanent!  This is a scam.  This is why honest economists are saying this legislation will widen the wealth gap between the rich and the poor. Take the miniscule tax cut (it’s already law) but don’t fall for the Republican’s okey-doke and flim flam about it creating more jobs, increasing savings and raising incomes.

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