After failing to “repeal and replace” the ACA, Trump and Congressional Republicans are in a hurry to pass tax cuts for corporations and the 1% by the end of the year. Their first order of business was passing a budget bill that allows tax “reform” to pass without any support from Democrats and no possibility of a filibuster. Once again, Republicans intend to bypass what Senator John McCain calls the “regular order” of Senate business. This means there will likely be no hearings, no amendments, and no genuine bipartisanship on a massive piece of legislation.
While Republicans are vague about who wins and who loses – who gets big tax cuts, who pays more and what government services will be eliminated – we do know some aspects of the proposed legislation. First, after decades of overblown outrage at the size of the Federal deficit, both House and Senate Republicans have made it official - increasing the debt is just fine if nearly all the money goes to corporations and the wealthiest Americans. We also know that Medicare and Medicaid are likely to take big hits. These programs provide vital support for the majority of older Americans and are crucial to our most vulnerable fellow citizens. And for what?
Here’s what. Several preliminary analyses of the tax reform legislation show that the biggest beneficiaries of the tax cut will be the very wealthiest Americans and corporations. Corporate tax rates will be slashed. The top 1% of taxpayers – people earning more than $750,000 each year - will get between 50% and 80% of all the tax savings in the plan. Meanwhile, 12 percent of all taxpayers – mostly upper-middle income taxpayers earning $150,000 to $300,000 - will actually end up paying more (an average of $1800 more) under Trump’s plan. Trump, Cohn and Mnuchin are simply lying about who will benefit from this proposal. The latest White House fiction is that the tax cuts will raise the average household income by at least $4000 a year. No one has any clear idea where this number comes from but we agree with the critic who called this notion a “fairy tale” – 99% of taxpayers won’t get any tax relief. On the other hand, the tax breaks for the wealthy are real and substantive.
Finally, because they are aware that their claims are false, Trump and the Republicans are attempting to destroy the credibility of the Joint Committee on Taxation and the Congressional Budget Office. Both these agencies are staffed by non-partisan, professional budget analysts. All previous administrations and Congresses have relied on their reports and analyses for decades.
Call To Action
Call your Members of Congress and tell them you oppose the Trump tax sham!
- Real tax reform should make the tax system more progressive than the current approach– higher tax rates for the wealthiest households and lower tax rates for middle and lower income households.
- Tax cuts for the wealthy and for corporations must be revenue neutral and offset by revenue raising measures. Specific, quantifiable changes in the tax system must be offered instead of wishful thinking about unrealistic economic growth. Remind your Republican representatives that they have always opposed social services because they claimed balancing the budget was their highest priority.
- Any new tax bill should:
- Keep 401k and other middle class retirement benefits,
- Retain the Alternative Minimum Tax – which insures the rich pay some taxes regardless of their use of tax shelters,
- Maintain the Estate Tax which applies to very large inheritances, and
- There must be NO cuts to Medicare or Medicaid
- In evaluating any tax proposal, Congress should rely on the analyses of the Joint Committee on Taxation and the Congressional Budget Office.