The last time Congress passed tax reform was more than 30 years ago. Back then, a Democratic Congress and Republican president spent two years crafting a plan that would give virtually everyone a significant tax cut and fix an outdated system. The plan passed with bipartisan support.
This year, Republicans are trying to jam through a plan that will raise taxes on the poorest Americans while giving massive tax cuts to the wealthiest. The tax cuts for individuals will expire in the middle of the next decade while the cuts for corporations stay permanent. So, if you make your money from wages, it’s not a very good deal. If you make your money from stock dividends, you’ll do great.
In North Carolina, about 1.2 million people will see their taxes increase, according to the Institute on Taxation and Economic Policy. For these people, the higher taxes would likely wipe out any of the meager savings they may have gained from the tax reform passed by the North Carolina legislature. Those folks can confidently say that Republicans raised their taxes.
North Carolina Republicans claimed their tax reform would help everyone but the bulk of the benefits went to the rich. In North Carolina, under the state current tax plan, a family making $50,000 a year saves about $1,000 more in income tax than they paid before the GOP overhaul. However, much of that is offset by the increased sales tax on services like car repairs. In contrast, a family making $250,000 a year saves about $5,000 and they don’t own cars that need lots of repairs. They do, however, use accountants and lawyers to help them pay less taxes, but those services aren’t taxed.
Likewise, the tax plan that Republicans in Congress are pushing would benefit the wealthiest at the expense of the rest of us. The richest 1%, people making more than $607,000 per year, would see an average tax cut of more than $37,000 in 2019. The middle 20% of earners, those making between $42,000 and $67,000, would see a tax cut of $730, or about $60 a month.
The GOP Congressional tax plans are little more than cuts, not reform. They will disproportionately benefit the wealthy at the expense of the rest of us. They will add $1.5 trillion to the debt, passing the buck to the next generation. Finally, the GOP has long deluded itself into thinking tax cuts will pay themselves with accelerated economic growth. It’s never happened and it won’t this time. If they want real reform, they should start over and look for ways to put money into the pockets of middle class families who will spend the money on goods and services that create economic growth.
Thomas Mills is the founder and publisher of PoliticsNC.com. Before beginning PoliticsNC, Thomas spent twenty years as a political and public affairs consultant. Learn more >
If this tax code is successful I envision large corporations benefiting very much. What are their options for utilizing additional resources. Some say they will expand their businesses by hiring new people and manufacturing more products in the USA. But what is to stop them from just buying other businesses so as to control a larger part of the economic pie. Also what will stop them from continuing the very long trends of increasing multi-million dollar executive salaries while fattening their executive board salaries as well. One must also reflect on where the absent tax funds will come from to pay for these reductions of funds for defense,health care,social security, roads, high speed trains, environmental disasters, etc. One can look at Germany for some hints. Huge private corporations exist like Bosch,Siemens and VW. There most people rent rather than own their own homes. They also pay large Federal value-added taxes built into the price of everything they buy like food, clothes, autos, electronics etc. These consumption taxes are definitely lower and middle income taxes as they make up a larger percentage of a lower/middle income than they do of the top 5%. The small tradesman ie plumber,electrician, small-contractor, dentist, doctor etc most probably gets subsumed into a larger service corporation like the proposed 90,000 employee UNC-CH Charlotte merged health care system. As a small individual service provider they get minimal tax relief with the currently proposed system. Unfortunately the majority of untrained and unskilled workers cannot easily fit into a society that has been revolutionized by computer controlled manufacturing, other technological advances that past and current politicians have neglected and continue to neglect the basic educational needs from pre-elementary to graduate school. Now these problems are compounded by corporate greed in the massive sale of opioids.
“The corporate tax reduction is unnecessary because the largest corporations do not pay very much in corporate income tax. ”
Corporations don’t really pay ANY income tax. Their customers pay it.
Taxes and regulations are expenses to a company just like labor, materials, and overhead. They are part of the cost of a product and help determine the ultimate PRICE of it. Do you think for a minute that Walmart, Exxon, Apple, etc don’t know their ultimate tax cost and have figured it into the price of their products? Good lord.
Corporate tax is one of the most insidious of taxes for the poor. They pay it at the same rate as the wealthy and don’t even realize they’re paying it.
Not true for a host of reasons, but, by definition, under accounting and tax rules, taxes are not a cost of goods sold or a below-the-line cost. Taxes are variable and can be manipulated while labor, materials and fixed costs cannot. These are basic accounting concepts.
If you believe this tax bill will help the economy or middle-income Americans, you will believe that Trump University is the equivalent of Harvard. Cutting taxes on the rich will not create jobs, as it has not done so since we began experimenting with “trickle down” economics since 1981. Savings will increase for those who do not need the money.
The economy is currently at or near full employment when stimulus of this kind, even if ineffective, is unnecessary and inflationary. Stimulating economic activity by piling cash on top of cash where wealth already exists is always ineffective. If stimulus were really important to spurring economic growth, injections to lower and middle-income taxpayers would be vastly more effective.
If spending does increase to some extent as a result of borrowing $ trillions to fund tax breaks for the 1%, it will create inflation without creating additional jobs or pay increases.
Prominent economists have called this tax bill “a scam,” “theft,” and “irresponsible.” It is exactly the wrong thing to do for the people of the United States. Defenders of the plan must stand before the microphones and tell big lies. Blowing more holes in the deficit and piling debt on top of national debt is a gross violation of the GOP’s crocodile tears about concern for the national debt.
The income disparity is at levels unseen since the Gilded Age, a reduction of income taxes on the rich only increases the wealth gap. (See the illustration of the wealth gap at https://www.youtube.com/watch?v=QPKKQnijnsM.)
The corporate tax reduction is unnecessary because the largest corporations do not pay very much in corporate income tax. Many of the most successful corporations, even those that benefit from big government contracts, pay no tax or pay negative tax. (See “We’re Not Broke,” a documentary about how the U. S. government allows corporations to avoid paying taxes)
Corporations move money off-shore to subsidiaries like a three-card Monte game, sending profits through low-tax countries like Ireland and the Bahamas to avoid paying all taxes.
The rationale that wages and jobs will improve as a result of lowering corporate tax rates is a huge lie. Presently, any corporation can lower its before-tax profits by paying workers more money. They don’t want to do that. They will pay CEOs and top executives vast sums, but workers must work for the least amount possible. That is the catechism of business profits: pay the least amount for the costs of production. When polled recently, an audience of CEOs reported that they would not hire more people or increase pay if corporate tax rates were lowered. And why should they? Corporate profits are already at record levels. Corporations presently have the ability to pay workers more, and high corporate income tax rates CREATE the incentive to reduce corporate taxes. Lowering corporate tax rates creates the incentive to pay workers less and retain higher profits.
Elimination of estate taxes is the big prize in this bill. For billionaires, it creates a bonanza. Trump himself stands to gain at least $1 billion from it, his pathological and obvious lies to the contrary notwithstanding.
The Gilded Age of the 1860s – 1890s produced massive fortunes in the hands of a few families whose names we still know – Rockefeller, Vanderbilt, Carnegie, Morgan, Westinghouse, and Edison. The fortunes amassed 150 years ago still exist in 2017. The richest of the rich managed to maintain massive fortunes through all the vicissitudes of tax law changes. Today’s tax bill will cement the fortunes of 1,000 families essentially forever.
Borrowing $ trillions to create massive inequality and to grant billionaires a right to exclude everyone else from the bounty of capitalism comes with a big price tag for the rest of us. Immediately, millions of people will lose health care. Insurance markets are thrown into chaos and premiums will rise precipitously. Americans will die for lack of care.
This bill is an acknowledgment that our government does not work for the people. This bill is an effort to appease the donor class. Having defeated campaign finance reform so that there is no limit to how much influence the richest can exert on our legislature, this tax bill is the tipping point. After it passes, there will be two Americas in perpetuity. A nation of unimaginable, unaccountable wealth for a few, and a nation of increasing hardship and increasing poverty for the rest of us.
The Republican party presided over a collapse of capital markets in 2008, just nine years ago. They did so by ignoring fraud on an unprecedented level from the financial sector. Americans should have put every one of the investment bankers and government officials in jail for a long, long time. Instead, Americans bailed them out, allowed them to reward themselves with large bonuses and gave them permission to keep all their ill-gotten gains. The predators were free to prey upon our financial institutions. This bill is the product of predators: this is a government of predators, by predators and for predators.
Republicans, today, have opened the door to a greater threat to our economic well-being than existed in 2008. It would be criminal if these actions weren’t being taken by lawmakers. The inmates, the child molesters, the rapists, the traitors, and villains most vile are running our world. We are governed by monsters. It will not end well.
Don’t Believe the Democrat Attacks on Tax Reform. Here Are the Facts.
Derek Kreifels / @dkreifels / November 28, 2017 / comments
Portrait of Derek Kreifels
Derek Kreifels is the president of the State Financial Officers Foundation, an organization of state treasurers, state controllers, and state auditors dedicated to free market principles and limited government.
As president of the State Financial Officers Foundation, I have the privilege of working with some of the nation’s sharpest financial officers.
They are not merely treasurers. They are thought leaders, experts, and fighters who, day-in and day-out, serve on the front lines of fiscal policy and intimately understand their state budgets, cash flow, and state pensions.
These leaders—state treasurers, state controllers, and state auditors—know firsthand how policies coming from inside the beltway impact the states.
The rhetoric during this year’s tax reform debate is producing more heat than light. While Democrats portray the tax reform bill as an all-out assault on the American middle class, members of the State Financial Officers Foundation have a different view. We believe tax reform is vital to growing our economy and empowering innovators in our states.
Americans need an alternative to the mainstream media. But this can’t be done alone. Find out more >>
Regarding the middle class, Democrats fail to mention that under the new House plan, the standardized deduction would almost double from $6,350 to over $12,000 for single filers, and $12,700 to $24,000 for married couples filing jointly. That means the number of Americans who claim the standard deduction would likely go from 60 percent of all filers to 90 percent.
Critics also fail to mention that the tax credit per child would increase from $1,000 to $1,600.
Additionally, critics don’t admit that the impact of simplifying the tax code would disproportionately help lower- and middle-income taxpayers, most of whom would be able to file their taxes using a simple postcard.
Democrats are also arguing that higher education will be in shambles because students will no longer be able to deduct student loan interest. The current tax code allows a deduction up to $2,500 if your income is $65,000 or less.
However, this deduction goes away if your adjusted gross income is $80,000 or more. An analysis done by the American Enterprise Institute estimates the average benefit actually received by students is just $202.
The claim that losing the student loan interest deduction would prevent students from applying for new student loans and attending a college or university isn’t supported by facts. And frankly, if that were true, everyone should be pushing to eliminate the deduction, given that the student loan debt crisis in America has ballooned to an astonishing $1.3 trillion.
Democrats continue to argue that states with high taxes will be “destroyed” if state and local tax deductions are eliminated. New York Gov. Andrew Cuomo warned in a tweet earlier this month that “New York will be destroyed, if the deductibility of state and local taxes is included in any final plan that passes the House.”
Some claim eliminating the state and local tax deduction is a “revenue grab” on behalf of the federal government. But the reality is that repealing the deduction would allow $1.3 trillion to be used to reduce tax rates for all individuals and business. The state and local tax deduction is nothing more than an unfair federal subsidy of wealthier states with higher tax rates.
And lastly, Democrats argue that eliminating the mortgage interest deduction on mortgages worth up to $1 million is somehow a tax increase on the middle class.
Aside: It is humorous to most of us that live between the coasts that somehow someone with a $1 million mortgage is still considered to be middle class.
This disingenuous claim only impacts new mortgages. Homeowners who currently own a home would still be able to deduct their mortgage interest. And for new home purchases, one would still be able to deduct the interest up to the first $500,000 of the mortgage.
Given the analysis by the National Low Income Housing Coalition that fewer than 4 percent of mortgages in the United States are over $500,000, the “middle class” statistically has nothing to worry about when it comes to the proposed changes.
State leaders from the State Financial Officers Foundation act as the chief financial officers and chief financial literacy officers for their states. Tax reform is one of the most common issues that constituents bring up to these elected officials.
The complicated tax code has made millions of Americans hate April 15 and has required many to hire accountants and lawyers to help them maneuver through the system.
Americans haven’t seen serious changes to the tax code since the Reagan administration. America is long overdue for sweeping tax reform.
So who exactly is Mr. Derek Kreifels and what qualifies him to render a comprehensive analysis of the Tax bill currently in front of the Senate? Let’s look at the facts:
Kansas State University. Attended but didn’t graduate majoring in Business.
Wichita State University. Graduated with a Bachelor’s in Business and Marketing.
Friends University. Master of Science in Management.
Adjunct Professor teaching American Government, Politics, and Communications.
Campaign Manager. Kansans for Estes. (Ron Estes, Kansas Assistant State Treasurer)
Chief of Staff for the Assistant State Treasurer, Ron Estes.
Secretary. Kansas Republican Party.
President. State Financial Officer’s Association.
So Mr. Kreifels’ claim to fame is that he worked for a politician, ran his campaign, was a Chief of Staff and taught stuff. He has no identifiable background in economics or accounting. He has nothing to quantify his opinions proffered.
Then there is the fact of the organization “State Financial Officer’s Foundation” itself. The Board of Advisors consist of John Ashcroft, former Attorney General for the United States. Tom Coburn, retired United States Senator. Then there is advisor number three; Jonathan Williams, Chief Economist and Vice President for the American Legislative Exchange Council (ALEC).
On that basis alone, who would expect anything but a dogmatic approval of this new tax bill? The facts stipulated by Kreifels are no longer points of contention; they’ve already been hashed out in the initial stages of release of this bill to the public. What is important at this point is the fact that during the last tax overhaul, it took over two years to hash out. It was accentuated by public hearings and enjoyed bi-partisan support. That’s not true with this bill. It’s remained mostly in the dark in order to keep people in the dark about what is about to happen. Well, I know what is about to happen and it isn’t good if this bill passes.
Republicans want a win. Any win on any thing. It doesn’t matter to them that this bill only enjoys a popular support rating of 25% nationwide. It doesn’t matter that the ‘middle class’ may enjoy a modest tax savings for the first four years of this bill becoming law, but then they will start seeing tax hikes and an eventual sunsetting of the cuts altogether after year ten. It doesn’t matter that the cost of this tax break for corporations and the wealthy is an additional 1.5 trillion dollars (est) to the debt. None of those things matter; only a win for Republicans.
You’re a homeowner. You loose your ability to deduct your mortgage interest. Where is the incentive to buy a home? Why not just rent and let someone else be responsible for everything with regard to the home? What if you have chronic illness in your family? Health insurance is already at a premium and when you starting adding up the visits and the drugs (many health plans only pay for certain tiers for medications) you’re going to eat the rest. What if the schmuck running the company is like this man brat that came off Wall Street and jacked up the price on meds simply because he could? And you have little recourse since this administration has also rolled back most of the consumer protections that were once in place. Well, that’s a really tough break. Do you want to eat or do you want to get better? It’s an either/or not both choice to make. Maybe that is the back room, good ‘ol boy club nudge, nudge, wink, wink long term goal. Return the US to a time when only property owners can vote and all the weak and feeble to die off.
This is nothing more than trickle down economics. The rich get the breaks on the feigned belief that some of that benefit will fall off the table into the hands of those who go out and work for wages and make a living in that manner. It has failed to work every time it’s been tried. It will fail this time. Much has been lauded thus far about how the corporate tax rate of 35% needs to be slashed to 20% or lower. 35% is kinda of faux pas since what companies actually end up paying around 19% with the tax breaks they have available. What I don’t get is that corporations like General Electric already pay nothing in taxes after their accountants get through with it and the corporate tax rate is currently 35%. If they fall under zero is the Internal Revenue Service going to owe them a check for gracing us with their presence?
Yes we do need the tax code to be reformed. This isn’t the bill to do it nor is that real piece of work that passed in the House. The final product should be the work of bi-partisanship and reflect those values that Republicans purport to support the most; common sense rules and simple solutions to complex problems. But you can’t do that in six weeks. You can if the only people you are trying to impress are your big buck donors and supporters.
Sorry Eb. Doesn’t pass the smell test.
Stock market up over 330 points today in anticipation of the GOP’s tax bill passing. I suspect the ‘market’ knows what’s good for the economy, but you are free to express your skepticism. Time will tell who is right, but I am betting on the market.
Oh, and BTW, did you notice that third quarter GDP growth was over 3 percent for the 2nd quarter in a row.? How many times do you think that happened during the Obama years?
Wow, eight times in 32 quarters? That’s a batting average of .250. Nothing to brag about. Under GOP control. two out of three quarters, or .666. Not a bad start, and certainly better that most liberal pundits predicted.
I suspect the market knows what’s good for the market. And those gains are only great IF you own stock. I haven’t acquired a diverse stock investment portfolio, I’ve been too busy making ends meet to have spare cash to invest. The market is going to ride the Trump wave until it runs dry.
When Obama was elected, the nation was in the worst economic downturn since the Great Depression. Remember the description “Great Recession”? The product of tax cuts for the wealthy and the funding of two wars that has accomplished nothing except bodies in bags.
George Bush inherited a balanced budget and a surplus when he took over. Trump inherited a growing economy when he took over. So while you grouse over GDP and Wall Street gains…how much have the average wages went up with all this corporate wealth? Which brings me to another point; if they are so flush with cash with their gains, WHY does the corporate tax rate need to be slashed? Other than the fact that is what they paid for financing Donald Trump’s and myriad other Republican campaigns that is.
Since World War II, the highest growth rates were achieved under Democratic leadership. In order, Johnson (5.3%), Kennedy (4.3%), Clinton (3.9%) and Reagan (3.5%). Both Clinton and Reagan inherited recessions. W. presided over the Great Recession at the end of his 8 years. He was the worst since WW II. Obama’s leadership was competent, but inherited a nearly bankrupt economy with the auto industry going under, a recession in every sector, 50 states in deep recessions and millions of home foreclosures, unemployment at historic levels. The GOP opposed all efforts to bring the jobs back for fear that cooperation with Obama would make them look bad by comparison. In spite of the obstruction, he managed to pull the nation out of a deep recession, reduce the deficit and bring employment to nearly full.
Trump has been celebrating Obama’s accomplishments and claiming victories that are not his. His first budget is being debated now. The measure of his success will begin next year.
You calculations are in error. That’s not how you evaluate economic performance.
This one does. and it has been productive.. While it might go against your socialistic proclivities, the market won’t discriminate against its critics. Even dyed-in-the-wool liberals like you and Troy can benefit from market forces..
OMG, D.g,, it must sure be hard for far lefties to read something that doesn’t support their world view. Try not to fret over it, remain in denial and that will help calm your nerves.
Why are liberals so paranoid about the GOP’s tax reform? If it’s as bad as you claim, you should be cheering it on so it will result in Republicans losing credibility on economic issues. Democrats must fear that the success of Republican tax cuts will create an economic boom that will discredit Democratic policies to tax and then spend to buy votes.