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Corporate give-away

GOP tax plan represents the worst in American governance

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Oh, the poor beleaguered American corporation. To hear GOP leaders, and even a few Democrats, tell the tale, companies in the U.S. are severely overtaxed and it’s limiting America’s competitiveness. And that’s why the GOP-controlled Congress wants to slash the corporate income tax from the current 35 percent, to just 20 percent.

At first glance, it almost sounds reasonable. Corporations in most advanced western countries do pay a lower statutory tax rate— averaging about 22-24 percent— than in the U.S. But once you account for the differences in the number of special breaks and loopholes that so riddle the U.S. tax code, the effective corporate tax rate drops sharply, to just over 18 percent according to most analyses, which puts the U.S. well down the list in terms of actual taxes paid by corporations.

This would hardly surprise anyone who has tracked who pays what in America today. Back in the socialist paradise of the Eisenhower administration, U.S. corporations paid a third of all taxes to the federal government. Today, it’s nine percent and if the GOP has its way, it will likely drop to less than five.

The proposed corporate tax cut is the biggest cost item in the GOP’s plan, and it will, by itself, wipe out almost $1.5 trillion in federal revenue over the next decade. If the cut in corporate tax rates were paired with a plan to eliminate the legions of special interest tax breaks that companies regularly deploy to trim their tax bills, that would be one thing. But that isn’t in the Republican plan. This is simply a huge tax cut for corporations at a time of record profits.

The GOP recognizes how this is going to look to the public, so they are using make-believe in order to convince voters that this isn’t what it looks like— i.e., a huge payoff to their well-heeled donor class. They are suggesting that once their tax bills are lowered, these U.S. corporations will use their extra profits to boost workers’ pay and create new jobs.

That’s absurd. We don’t have to guess where extra corporate profits will end up. We can simply use history as a guide. Since 1978, the average inflation-adjusted wage in the U.S. has grown by an anemic 10.9 percent, while the pay of corporate executives has increased by a whopping 997 percent according to the nonpartisan Economic Policy Institute. Large U.S. corporations have consolidated their power and most are making money hand over fist. And that money is going straight to the top, to executives and major shareholders, further exacerbating the already unprecedented level of income inequality in the U.S.

Far from helping average Americans, the GOP tax plan helps pay for its massive corporate give-away by closing loopholes and tax deductions for middle-class families. Depending on which version of the bill, if any, winds up on President Trump’s desk, the GOP would cut home mortgage interest deductions, state and local tax deductions, tax credits for medical expenses, family adoption, even a tax deduction for teachers who use their own money to buy their students school supplies. In other words, they’re more than happy to nickel-and-dime the middle class to pay for massive tax cuts for the very rich. Vermont Sen. Bernie Sanders was right to call it “Robin Hood in reverse.”

Republicans can’t even argue the point. Some, such as Sen. Lindsey Graham, have readily acknowledged what’s really going on here— their plutocratic donors have paid for their campaigns and they expect to be well compensated for their contributions, or the campaign funds will dry up. Republican leaders have suggested as much in hopes of scaring their members into supporting a tax plan that is very likely the most inequitable ever devised in American history.

The GOP should be ashamed at the dishonesty, inequity, and outright venality represented by their plan. This is American governance at its very worst.

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bonfire

I can't imagine many voters still believe that GOP tax cut plans for corporations and the richy rich will bring enormous prosperity to regular americans, the majority of us, or that huge tax cuts will pay for themselves yet Republicans continue pretending in trickle-down miracles. Kansas Gov Sam Brownback with advisor Art Laffer promised business tax cuts would produce "enormous prosperity," Brownback calling their plan "a real-life experiment". Five years later, Brownback's "experiment", a gigantic fail, Kansas in dire straits and Republican controlled legislature reversed the tax cuts. There are numerous articles about the rapid decline of Kansas that should be read as a warning to the rest of the country.

Past presidents, John Kennedy, Ronald Reagan, George W. Bush proposed tax cuts similar to what Trump has promoted but it was always when we were in a recession or just past one. Cutting corporate tax rates doesn't magically raise wages. In 1986 corporate tax rates were lowered to 34% from 46% and wages fell for ten years. We are not in or just out of a recession, unemployment is about 4.1% and Trump crows about our economy and stocks doing great. American corporations, 1/5 of world corps, are pulling half of the entire world's profits but gosh darn, the GOP says they need huge tax cuts! GOP donors warned Republican legislators no more money from them if they don't get a return on their investments. Rep Chris Collins said his donors basically told him, "Get it done or don't call me again." Repealing estate tax would give the heirs of just 11 billionaire donor(s) $67.5 billion on their investment of donating $20.5 million in 2016 federal races.

Gary Cohn, ex president of Goldman Sachs recently had a tax "reform" plan Q&A with a roomful of CEOs. The moderator asked for a show of hands asking the CEOs if they were planning to increase their business investment if they got tax cuts. Only five hands went up. Gary Cohan, Vanity Fair, interviewed a Wall Street executive who dismissed the idea that tax cut for multi national corporations would trickle down through the economy and pay for itself saying, "It's a ponzi scheme". Another corporate CEO explained customers drive business growth, not "mythical" job creators, labor markets determine salaries, not corp tax rates and tax rate cuts spent on stock buy backs and dividend increases to investors.

Mick Mulvaney, WH budget director defended tax plan repealing ACA individual mandate, cut of $300 billion, millions of Americans would no longer be able to pay for health care, Mulvaney calls that a choice. This is the same guy who said Social Security Disability was welfare. There are some differences so far between House and Senate tax cut plans but both would endgame is majority of tax cuts will be rapidly redistributed to the corporations and extremely wealthy and are permanent. Any tax cuts for everyone else are temporary and middle, lower income earners will have their taxes raised by 2027. Paul Ryan knowingly lied when he said middle income, hardworking families would get an average of $4,000 "raise" over 10 years.

What doesn't seem to be talked about much is the paygo law that would automatically cut $25 billion from Medicare in 2018. Trump visited the House Republicans in support of their tax plan, thanking the party leaders and hoped they would move to "welfare reform". The bulk of mandatory spending is Social Security, Medicare and Defense. $4 trillion will be cut from Social Security and Medicare over 10 years. The GOP is desperate to speed rush tax cuts to top tiers not only because of billionaire donor pressure but they can then pivot and suddenly be very, very worried about the extra $1.5 trillion they add to the current deficit, turn into deficit hawks again. Where oh where is the money to come from? Why mandatory spending of course, Social Security and Medicare. Starve the beast(s) which evidently is the majority of Americans. And we thought the Gilded Age was history.

Sunday, November 19