Ask not for whom the closing bell tolls. If you are a working wage earner, it does not toll for thee.
The NY Times Editorial Board poses a question about Republican promises and performance: You Know Who the Tax Cuts Helped? Rich People.
When Republicans were pitching a massive tax cut for corporations and wealthy families last year, they promised voters many benefits: increased investment, higher wages and a tax cut that pays for itself. The tax plan, congressional leaders said, would turbocharge the American economy and provide a much-needed helping hand to working-class families.
“Most people, half the people in this country, live paycheck to paycheck, so there’s a lot of economic anxiety,” the House speaker, Paul Ryan, told The Times in November. “And I think just one of the key solutions is faster economic growth, more jobs. And I think the best thing we could do to deliver that is tax reform.”
So, more than six months since President Trump signed the tax cut into law, is it delivering on the promises Mr. Ryan and other leaders made?
Here are snippets providing evidence for an answer to that question. The short answer is NO!
The most notable outcome of the tax law is one that few Republicans talked about: Companies are buying back their own stock — a lot of it. Stock buybacks are expected to reach a record $1 trillion this year. After Congress reduced the top federal corporate tax rate from 35 percent to 21 percent, businesses are flush with cash. Lawmakers also let companies repatriate foreign earnings that they have been amassing at a rate of 15.5 percent for cash and 8 percent for other assets.
By spending a big chunk of their tax windfall on buying back shares, businesses are boosting demand for and, thus, the price of their stock. It is no wonder then that the S&P 500 stock index is trading near its high.
Everyone in Washington knew companies would do the buy-back thing. The last time there was a tax cut, that’s what companies did. Well, maybe everyone except for Republicans knew what to expect.
But those buybacks do nothing for workers’ wages.
The idea that the tax cuts were going to line workers’ pockets was always a mirage. Most people will enjoy only a modest and temporary tax cut — families earning $25,000 or less will save on average just $60 on their federal tax this year, and those making between $48,600 and $86,100 will save $930, according to the Urban-Brookings Tax Policy Center. Families in the top 1 percent, on the other hand, will save an average of $51,140.
The Times presents graphical evidence that spending on buybacks resulted in flat-lined investment and actual decline of real wages.
And we are experiencing a massive increase in national debt to pay for the corporate tax give-aways.
“Not only will this tax plan pay for itself, but it will pay down debt,” Steven Mnuchin, the Treasury secretary, said. This statement was absurd when Mr. Mnuchin made it, but it looks even more ridiculous now. The deficit and the federal debt are growing — and at a stunning pace. In the current fiscal year, the federal government will spend $912 billion more than it collects in revenue, an increase of 39 percent from the 2017 fiscal year, according to the Congressional Budget Office.
Thanks to the tax cut, the government will take in about 1 percent less in the 2018 fiscal year than it did the year before. Corporate tax revenue is plummeting — the C.B.O. predicts a drop of 27 percent this year. At the same time, the federal government will spend nearly 5 percent more, due, in large part, to Mr. Trump’s insistence on more defense spending.
Over the coming decades, the federal debt could nearly triple as a share of the gross domestic product if Congress makes the Trump tax cut and spending increase permanent, according to the Committee for a Responsible Federal Budget. Lawmakers have talked about extending the cuts in last year’s law beyond the next 10 years — something they did with some of the cuts passed during the George W. Bush administration. “I don’t know why we wouldn’t want to do that,” the Senate majority leader, Mitch McConnell, said in April.
The evidence presented here leads me to paraphrase McConnell: I don’t know why you WOULD want to do that.
One thing we now know for certain (although we have known it for some time already) is that the GOP is the party of tax gifts for the rich and deficit spending that will be born on the backs of workers like a cross of orange hair.
Today, many Republicans seem to realize that the tax cut has become a political liability, which is why they aren’t talking about it ahead of the November election. Even they realize that it doesn’t do any of what they promised.
We should view this tax policy as a major contributor to the rising income and wealth inequalities. Not since just before the Great Depression has the 1% controlled this much wealth—what that means writes Leslie Salzillo at Daily Kos.
Via MarketWatch, a news group considered to be one of the most prominent in today’s financial industry, Karl Paul reports that in the last 20–30 years, the disparity between the rich and more as grown more than it did right before the devastating Great Depression. Paul adds:
“In 2015, ‘the top 1% of Americans made 26.3 times as much income as the bottom 99 percent — an increase from 2013, when they earned 25.3 times as much, according to a recent study released by the Economic Policy Institute, a left-leaning Washington, D.C. think tank.’”
That means to become part of the 1% elite, a family needs to have an average annual income of over $420k with some states having a higher bar. “The top 1% took home more than 22% of al income in 2015—the highest share since the peak of 23.9%—just before the 1928 Great Depression.”
Paul mentions that in early August, Amazon founder Jeff Bezos became the richest person of today when his wealth surpassed $150 billion. To break that down, one would have to make $1 million dollars 150,000 times. Bezos fortune and those of the richest in Silicon Valley and Hollywood affects the country. The 1% grew faster than the bottom 99% in 43 states.
“Meanwhile, the median net worth of Americans currently hovers at $68,828 per household. One in five Americans says savings and less than 40% of Americans say they have enough savings to cover a $1,000 emergency room visit or car repair.”
“The EPI — a liberal nonprofit associated with the labor movement — recommends returning bargaining power to U.S. workers, increasing political participation by all citizens, and boosting public investments in child care, education, housing and health care. ‘Such policies will help prevent the wealthiest few from appropriating more than their fair share of the nation’s expanding economic pie,” Sommeiller said..”
So, where does this lead? Could there be another Great Depression? It seems if things don’t change, a real financial catastrophe for the rich could happen any day affecting the poor even worse. How do we remedy the problem? Perhaps one way would be by getting rid of the current illegitimate so-called president and his complicit and corrupt administration and Republican-led Congress. Not giving billions in tax breaks to the ultra rich and corporations, and having those billions of over at least 10 major taxes benefits, job cuts, and write-offs (via Mother Jones)—be distributed to the poor instead—might help. Imagine how the economy could change for the better if the poor could afford to buy more.
It’s hard to say if change will happen unless any time soon unless, as the EPI says, there is an increase in political participation by all citizens: unless less country’s Resistance grows.