With the great tax-bill unveiling about to take place, here are five major points to keep in mind:
1.) The GOP plan is predicated on the claim that American corporations are so overtaxed that they can no longer turn a sufficient profit or compete internationally, and that investors lack the incentive to invest. That's the justification for dropping the current top corporate tax rate of 35 percent all the way down to 20 percent, with little effective effort to close loopholes.
That claim is pure, self-serving myth. Here's the reality:
The reality is that since the turn of the millenium, corporate AFTER-TAX profits have quadrupled from already historic highs. To put it mildly, that does not suggest a corporate sector strangled by overtaxation. That huge surge in corporate profitability explains why the stock market is so high. It's why corporate CEO pay has soared into the stratosphere. And this stunning increase in corporate AFTER-TAX profitability has been achieved in large part by ensuring that workers get a smaller and smaller share of the nation's economic output. Nothing in the bill attempts to change that. To the contrary, and as we'll see below, every independent analysis predicts it will concentrate ever more wealth in the hands of the richest 1 percent.
(As Steven Rosenthal of the Tax Policy Center also points out, 35 percent of the benefits of that corporate tax cut will accrue to foreign investors, not to Americans.)
2.) By their own admission, the Republican tax plan will increase the national debt by $1.5 trillion in the next decade. Nonpartisan analysts such as the Tax Policy Center put the number at more like $2.5 trillion. Those increases are over and above the substantial debt increases that are already baked into the nation's financial cake, increases that Republicans have previously depicted as posing a serious, even existential threat to the American economy.
Put another way, Republicans want to pile an additional 1,500,000 million dollars to 2,500,000 million dollars on top of a debt that was supposedly already unsustainable. In their giddy, irrational exuberance, they show not the slightest bit of concern about doing so.
3.) The debt increase would be substantially worse if not for the $1.4 trillion that the GOP plan cuts over the next decade from Medicare and Medicaid, just as the baby-boom generation moves into its retirement years. Put simply, the GOP tax bill robs Peter to pay Paul, and the Peter being robbed is everyone who depends on government programs -- children, the elderly, the disabled, those in nursing homes -- to help pay their medical bills.
The Paul being paid is those already in the top 1 percent.
4.) Speaking of which:
"Taxpayer groups in the bottom 95 percent of the income distribution would see modest tax cuts, averaging 1.2 percent of after-tax income or less," predicts the Tax Policy Center. "The benefit would be largest for taxpayers in the top 1 percent (those making more than $730,000), who would see their after-tax income increase 8.5 percent."
By 2027, the TPC estimates, the top 1 percent would be collecting 79.7 percent of the benefits of the tax cuts. These numbers may change marginally once we are allowed to see actual legislative language that can be plowed back into economic models, but the overall thrust is clear.
5.) This major tax reform is being handled in much the same fashion as the GOP's attempt to repeal and replace Obamacare. It has been written in secret, without the participation, input or knowledge of Democrats or even of most Republicans. There have been no hearings, no transparency, no outside input. And while the Obamacare repeal effort attempted to transform one-sixth of the nation's economy with very little oversight, this effort would affect 100 percent of the economy. The Republican plan is to pass the still-unseen bill in the House by Thanksgiving, which is now three weeks away.
The last major rewrite of the tax code, in 1986, took more than two years hundreds of hours of open meetings to hammer out. The rush to unveil and pass this bill so quickly tells you a lot about its drafters' confidence in its ability to withstand scrutiny.
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