by Joseph O’Shaughnessy
Let’s establish one thing right away. The new tax bill proposed by President Trump and Treasury Secretary Mnuchin is a tax cut for the super-rich. For the rest of us, it will bring an average tax cut of about $600 a year. The thing that they don’t mention is that the national debt will increase and they will come back later to cut your Social Security, health care subsidies (not just for the poor) and Medicare. This is already in the works but if this tax bill goes through, it will be certain.
In this age of 1% versus 99% inequality, the plan is so outrageously callous that one hardly knows where to begin. Let’s start with the Inheritance Tax. It goes 100% by definition to the rich. The only people involved at all are those who would have paid taxes if their inheritances were over $5 million–$10 million for a married couple! So if someone with orange hair says that this tax break does not favor the rich, well folks, he’s lying. The next tax break goes to the uber-wealthy who now pay a 39.6% top rate which starts at $415,000 (you know…the middle class.) Now they will start at 25% (minus deductions of course) but if they own the company, they start at 15% and work down.
Now let’s have a quick test about who…rich or middle class or poor…is getting the best tax breaks. Which group most closely describes the person making over $415,000 per year, and owning the company? Multiple choice: A. Donald Trump’s buddies, B. Steve Mnuchin’s buddies, C. Dick Cheney, or D. a homeless family. The question answers itself.
Dick Cheney got it wrong. Deficits do matter. They kill programs for child care, pre-school, assistance to the disabled, veterans’ programs, and help for the chronically ill and mentally ill, plus huge numbers of programs that working families deserve. They destroy infrastructures. On the other hand, taxes raise up society.
But now, with the new tax cuts, the rich should be happy.
Some economists. such as Thomas Sowell, the first nationally visible Black economist of the television age, which doesn’t make him a great economist, just the first nationally visible Black economist of the television age, objects to the idea that tax cuts for the rich are damaging. On the contrary he says, “look at revenues they went up more every year under Reagan than they did under previous administrations.” Yes, Thomas, but so did populations, those who pay the taxes. So of course there were more revenues. There are always more revenues as population increases. Duh! But guess what? After the Reagan draconian tax cuts, the national debt tripled!
In 2003, this matter was settled once and for all when George W. Bush sent his whiz bang, no-one-understands-why-he-is-even-there CBO director Douglass Holtz-Eakin, Phd, to have a study done about whether tax cuts pay for themselves in greater economic activity, GDP growth and increased revenues to government. Oops! The economists at CBO are professionals, impartial and objective. They came out with some bad news for Republicans.
Tax cuts do not increase revenues because tax cuts have a cost. Revenues are supposed to do more than equal the cost of the tax cut. If you spend $1,000 on a tax cut, you expect to get something like $1500 in revenues back at least. Optimally $2,000. CBO said that you only get back, at best, $1 to a high of $200! The actual numbers are a return of from less than 1% up to a maximum return of 20% of the cost. So Democrats have been screaming about this for a long time but their megaphone is drowned out by the 900 Right Wing talk shows sponsored by “conservatives.”
This brings up the subject of the Koch Brothers sponsored organization called ALEC. Look it up. We won’t bother with it now. It is a national lobbying group made up mostly of global corporations that has been working against the very people who buy their products—you. You can find out about it on the Internet at ALECEXPOSED.org. If you don’t look it up, don’t complain later when your children’s school is closed or your Social Security is cut to pay for a new plant for Boeing or a billion-dollar subsidy for Comcast.
Let’s get back to taxes. I read that one year Trump paid $31 million in taxes on income, I think it was, of $152 million, leaving him with a measly $121 million. Let’s face it…$31 million is a load. But $121 million is also a lot left over. You could live on that.
The governor of Illinois recently let a tax rate expire. He personally saved about $750,000. The state lost $5 billion in revenue. Then he complained that the state legislature, who voted in the tax increase but couldn’t stop him from letting it expire, won’t cooperate with him. The state is trying to close a $100 billion pension deficit. He cashiered a $5 billion source of revenue and made a cool $750,000. Does anyone see a problem here? He has destroyed the state because the legislature won’t let him kill unions, the only thing that stands between good jobs and minimum wage jobs.
The Republicans have been very clever about tax cuts and revenues. They claim that their tax cuts produced increased government revenues and they point to increased revenues every year. Let’s examine that.
Bill Clinton raised taxes and didn’t apologize. In 1999, his administration produced $2.03 trillion in revenues. That was more revenue than George W Bush’s economy could generate, only $1.88 trillion, in 2004, a year after his first tax cuts, even with a continuing greater population. There is another difference. In his 8 year term, Clinton, who raised taxes, actually balanced the federal budget. Bush who cut taxes left a legacy of debt unlike anything seen since the Stock Market Crash of 1929 and the subsequent Great Depression.
The first year that Bill Clinton took office, President Bush, the elder and smarter, left him an outstanding debt, for his last year alone, of $346 billion dollars. When he left office, Bill Clinton left George W. Bush, a debt, for the year, of $17.9 billion dollars.
Bill Clinton took office with a national debt of $4 trillion and left with a balanced budget and a debt of $5.6 trillion dollars. (-$1.6T) George W. Bush began with a national debt of $5.8 trillion dollars and a budget that CBO said could not only have stayed in balance but would have paid down the national debt by 2011. He left office with a national debt of $11.9 trillion, a Wall Street Crash, a Great Depression, which cost the nation under President Obama another $6.041 trillion. In all, President George W. Bush, and maybe primarily, Richard Cheney, are personally on the hook for $12.1 trillion of our nation’s nearly $20 trillion in debt. God only knows what Trump will do to us if we cannot find a way to completely block him.
Please remember this if you remember nothing else. Clinton raised taxes and got his good administration as a result. Bush cut taxes twice and you see the disaster he left us. Then, in our brilliantly mature way of conducting Democracy, having learned our lesson from having elected what can only be described as a disaster like Bush II, we proceeded to elect a television age carnival barker, a huckster, a clown, an inheritance, daddy’s boy millionaire and even perhaps, some evidence would suggest, a pervert, as President. I am sure Europeans are saying that we do not deserve this Democracy and deserve everything that is coming to us…and it is…if we do not fight to preserve it.
