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“Tax Cut Fever” Is as Nutty as Trump. Who’s Behind It?

August 5th, 2017 · No Comments · General, Politics, Populism, Taxes

by Joseph O’Shaughnessy

Even the Liberal Media, in the form of the PBS Newshour has touted the success of the economy. Lowest unemployment in decades. Highest stock market ever. You can’t find a home to buy anywhere close to your price. So what is wrong? Why do we need tax cuts? Even if they produced a “stimulus” which they don’t…why do we need them?

We don’t. Nothing is wrong. Not with most of us. And definitely not with the economy. But in Wall Street and among the very rich everywhere, the opportunities to get another million…or, these days….to get another billion easily are topping out.

When you are just putting money into the market at ten million a pop and you only make a return of $300,000 or $400,000 in a week, why, good gracious…the sky is falling. When incomes are so high that investment becomes a parlor game, then currency literally becomes play money to billionaires. So, naturally, not remotely understanding or caring the hardship a tax cut for them will mean for hundreds of millions of other Americans, they stomp their feet and ask for “more.”

So, when everything is already going full speed, how do they make money faster for more and larger planes, boats, castles and private islands? Cut taxes. Let the rich keep ALL their money, they say. With Republicans having no shame whatsoever, feeling that they have no obligation to their constituents and no worry about treating their public office as a right, provided them by the rich, they will eliminate Medicaid for millions of Americans…it’s back to the emergency room for care.

You and I will be expected to get by on bigger deductibles and higher co-pays on Medicare and smaller Social Security checks from which Medicare is deducted.  Republicans want tax cuts for their constituents, the billionaire class (now over 50,000 in this country.)  But, are they more important than whether 50.000 to 100,000 people will die without access to health care as a result of these cuts…needed, the GOP says, so the rich can simply have “more?”

Tax cuts do NOT improve the economic condition of the country. Despite the hundreds of studies by Koch brothers and Chamber of Commerce and national corporate lobbying groups and Right Wing “think tanks” tax cuts do not help the People at large. Here are the simple numbers. You do not need to know anything other than these simple facts.

We had a very small national debt, less than a trillion, when Reagan took office. When he cut taxes in half…in half…from top rate of 74% down to 28%, the debt tripled, to over $2 trillion right away, then to $4 trillion under Bush the Smarter, then up to $5.6 trillion after Clinton. But it was finally balanced because Clinton, without one Republican vote, was able to raise taxes only very slightly. And, with slight tax increases, the economy boomed under Clinton.

Then came Bush the Dumber and Cheney. They cut taxes on the rich and everyone else twice. They had a Republican Congress, just as Bush has, and they raped the country. At the end of their term, with two tax cuts, the debt was $12 trillion! But that wasn’t enough. Not only did the tax cuts not prevent deficits, they didn’t even prevent a Depression. The Great Bush Stock Market Crash and Second Great Depression cost the country another $4 trillion before the economy could be brought back into some semblance of balance. But, without tax increases, which Republicans would not allow, annual deficits though decreasing, stayed in the hundreds of billions.

That is how we got to the terrible shape we’re in through tax cuts that we have continually been told would raise revenues. That was a lie. They knew the truth. So this was a lie. And here is the worst part. While Europeans live a life style, with the exception of enough physical space….Western Europe is less than half the size of the U.S., (1.7 million sq.mi. vs 3.97 sq mi.)…the average European lives the “American” dream.

The average Western European, pick a country, lives in a nice place, with safety and security, clean air and water, outstanding free schools, including most universities and technical schools, free health care, 4 week vacations (at least,) 35-hour work weeks, job security, unemployment insurance, if necessary at about half-pay for up to two years or more if needed, and retirement security much better than Social Security (over and above pensions, which are more common in Europe because there are more unions.) For this, on average, they pay about 10% more in taxes. We are about, something like 20th in taxes at about 35% and they are at about 45%. But there is no comparison in lifestyle.

We, of course, lead a life of race-based politics. We have 26 Southern states that vote based on race as a bloc and several Western states that vote against policies because they might favor blacks. This is because the Republicans and their backers have used race to promote the idea of blacks as lower class citizens. This, despite the fact that Blacks basically have lower incomes and far, far less net worth because of generations of being prohibited from attending white schools or being allowed to obtain any kind of decent education, from the year 1650 through 1950.

So long as the Right Wing rich, like the Kochs, like the Scaifes, like the Trumps, like the Anschutzes and Adelsons have any say in the matter, racial politics will be used to divide Americans, black from white, middle class from upper class, elderly from young, and gay from straight. When the wife of an executive has $90 million in her purse to spend on a failed Senatorial campaign or when a multi-multi-millionaire can buy an election for Governor in Illinois using $89 million of his own money and that of a handful of his closest friends….and almost take the state into bankruptcy and threaten to keep schools closed unless he, personally, and those friends do not have their taxes raised–then they do not need more federal tax cuts! They do not need more money in their pockets to spend to try to damage the People.

So, if you  thought the battle against the Republican “repeal and replace” of the Affordable Care Act, that would leave 20 million Americans or more without any health care….was difficult and dangerous then you have another unpleasant surprise in store with the proposed Republican tax plan.

The Republican Tax Bill will pass unless the American people rise up in defiance. Make no mistake about it, this is a tax cut fro the rich and for corporate CEOs to use to get rich.

. The Democrats cannot stop it. The only option is two things. One,organize in the most vulnerable Republican states to rally against and threaten removal of the weakest Republican Senators through massive, relentless, Sanders-style Populist fund raising and rallying, similar to what was done with Jon Ossoff. This would have a similar result, only this campaign would have much more focus and immediate meaning, because it might get this Senator to change his or her vote on a specific bill of great value to the People.

Who is vulnerable? Well, here are the prime Republican candidates for removal and the “tax-cut-for-billionaires, entitlement-cuts-for-citizens” issue is the right one to use to throw them out. Massive anti-Medicare, Medicaid, Social Security cut rallies to throw out Heller for his presumed vote for billionaires is the way to stop this tax cut bill. And other Senators are equally as vulnerable.

Here are some other Senators who could be tossed out in 2018: Bob Corker of Tennessee, Deb Fischer, a do-nothing from Nebraska, and even weird and unpredictable, but definitely a Right Wing-billionaire-panderer like Ted Cruz of Texas. You never know. Texas is a big state. They may be fed up with his nonsense. He can not be gerrymandered into a victory. It may be time for Texas Democrats to get off the couch or away from the barbecue. There are enough poor and middle class people in Texas…who would be destitute without Social Security, Medicare or Medicaid…to offer a serious threat to defeat Cruz.

We only need two Senatorial seats to change in 2018 and the party is over for Republicans for a long, long time….because 2020 will be a deluge of Democratic victories. Independents know now that the Republican Party works for the rich and the very wealthy and, unfortunately, for the wider group of upper-middle class who aren’t paying attention to the fact that their meager net worth is very insecure. The next big recession…and it will come…and it will be big….will wipe out any minimal security on which the remaining middle class depends.

So what are the provisions of the Republican Tax Bill?

First, a reduction in the corporate tax from 35 percent to 2o percent. This will cut government income by $2.5 trillion. It will allow corporate CEOs to make the 400 times what the average worker makes and it will reduce the corporate share of income taxes down from 1% (revenues will NOT go up when rates do down…trust me) from 1% of GDP now down to about .8% of GDP. Contrast that with the 7%  of GDP that corporations used to pay in the 1950s when U.S. industry was the strongest in the world. An even better number is this. Today, corporations pay about $343 billion annually in taxes or about 10.6% of total revenues as opposed to between 24-36% of total revenues before the Reagan era.

It should be pointed out that U.S. manufacturing management is so bad that it is only profitable because manufacturing is done in Asia at labor rates of fifty cents an hour. Germany, the Netherlands. France, Germany and even Sweden export worldwide at labor rates of $17 and $20 and up. In the U.S. wages have been lowered while CEO compensation and shareholder equity has skyrocketed. Many large pampered U.S. global corporations get so many tax breaks that they often pay no taxes at all or are actually owed money by the government.

Remember two things that are facts about corporate tax cuts. Nothing goes to increasing government revenues, increasing jobs or industrial productivity and zero goes to workers. Those are facts supported by many independent…independent and government…studies, even some done by Republican administrations, hoping no one would notice.

Second, the individual income tax rates on the rich will be a reduction in the top rate from 39.6% to 33%. Other rates would drop to 25 percent and the lowest bracket to 10%. The problem with this is that it would cost another $3 trillion in government revenues and lower the revenues to the point that in order to prevent massive deficits, government would need to cut government services. Now, remember that the incomes paid by people in that top bracket right now do not amount to 39.6% of all their income. These income earners, who right now are in the over $480,000 income area (and up) pay something like a 20% down to an 18% effective net income tax at best. So why isn’t $180,000 a lot of money to pay in taxes, even though it leaves you $820,000? Well it is. But the fact is that those now paying 17% like Warren Buffet (who doesn’t seem to mind paying his current level of taxation) want to cut their taxes further, but in addition want to take the Social Security payments you put in as part of your payroll deductions for 40 or 50 years, and that is not fair.

So, in summary, these tax cuts will cut government income resulting in cuts to Social Security, Medicare and  Medicaid…plus other important services. You will not benefit in any meaningful way from these cuts. The right way to fix what is wrong with society is to raise taxes on the rich to 45 to 49% on those with incomes over $1 million a year. That is where the money is and that is where we should go to balance the budget. After all, these are the people who have benefited from the tax policies since Ronald Reagan that have enable the rich to become richer beyond all imaginings of super-wealth.

Next….increase in the standard deduction. An attempt to simplify deductions, this would be a standard deduction that some people apparently would choose that would be higher than itemizing. At any rate, this would cost government–you and me–about $700 billion. Not worth it. We need more government revenues, not less.

A special rate for sub chapter S corporations and sole proprietorships. Apparently most of the supposed tax breaks would actually go to big corporations, Cost…another $2 trillion.

Finally, eliminating the estate tax. This alone should be enough to send anyone who votes for it to prison. There is no reason to revoke what I  call the Paris Hilton Retirement Tax. If you inherit great wealth earned by a father or grandfather, you should be able to keep $5 million plus half the rest. ($10 million for a married couple) That is the way it used to work, only the deductibles were smaller when incomes were less and fortunes were less. Numerous studies have showed that, based on the fortunes involved and the deductions allowed under the original tax, seldom was someone (who never worked for the money at all) taxed more than a net about 15% of the inherited amount. But to eliminate this tax for no good reason at all…which is the case…would be criminal. Most estates aren’t taxed at all because they are too small anyway.

So this is the tax bill coming from the Republicans. It is a scam. It is a scam because there are no good reasons at all, not revenue generation, not increased economic activity and certainly not jobs and economic development. The ONLY reason for this proposed tax cut is to pay off people like the Koch brothers and the rich corporate interests that currently control the Republicans in the House, the Senate, the people working for the President, and those in the Supreme Court who provide a backstop for all their activities against the American people.

 

 

 

 

 

 

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