The tax bills now careening through Congress are a very bad joke.
What the Republican leadership is calling “tax reform” is nothing but an ideologically driven plan to lower the taxes of wealthy Americans, myself included. To finance the cut, they propose to add a trillion and a half dollars to the national debt and impose higher taxes on an uninformed and largely unsuspecting electorate.
America’s middle class is falling behind. In 1971, the middle class earned 62% of aggregate income; by 2015, that percentage had fallen to 43%. In inflation adjusted terms, real average hourly wages for non-supervisory workers have fallen in the years since 1973. The middle class is hurting, yet the proposed “reform” would raise taxes on many middle-class families immediately and far more as deferred provisions of the “reform” take effect. Having America’ s middle class pay higher taxes so that a retired CEO – like me – can pay less makes no sense.
Meanwhile, the top 1%, which has done incredibly well financially, will benefit enormously from the proposed “reform”. The share of total income earned by the top 1% has reached nearly 20%, up from about 10% in the early 1970’s. Despite this groups prosperity, the Tax Policy Center calculates that this “reform” will generate an average tax cut of $35,000 for the top 1% and $85,000 for the top 0.1% in 2019. And both the 1% and the 0.1% will get larger savings in later years, when middle class taxes would go up rather than down.
Nor do the several arguments advocating lower corporate tax rates hold water. As every CEO worth his or her salt knows, most U. S. corporations pay nothing like the statutory tax rate, and some pay no taxes at all. During recent decades, wages have not kept pace with productivity and as a result, profits have increased as a share of GDP while wage income has decreased. America’s corporations are doing just fine.
“Reform” proponents argue that their proposals will lead to more investment. It’s hard to see why. American is capital rich, and the notion that capital shortages are hampering investment just does not compute.
Proponents also argue that repatriating offshore cash will drive investment. Good luck. America has tried this before, to its sorrow. In 2004, Congress passed legislation allowing corporations to repatriate foreign earnings at a lower tax rate in hopes of stimulating investment. But instead of leading to investment and jobs, repatriated funds were used to buy back shares, thus transforming the program into a windfall for shareholders – and making the already rich still richer.
Albert Einstein is credited with saying “The definition of insanity is doing the same thing over and over and hoping for a different result”. For decades, Republicans have told us that cutting taxes will facilitate solving our problems. In fact, since we began cutting taxes in the mid-80’s, we have denied our government the resources needed to sustain the activities which support middle class life and have fallen steadily behind other countries, who have raised taxes to expand the security network they offer citizens and have improved or sustained their infrastructures.
We need to get America growing again, but to do so, we need to use common sense, not the snake oil of more tax cuts. To make America more competitive, reduce income inequality and revitalize the middle class, we need to invest in the things that made America a world leader from the middle to the end of the 20th Century.
We need to invest in our future by rebuilding our roads, bridges, water systems, sewage system, ports, railroads and airports. We need to be sure every kid gets a great education. We need to rebuild the energy grid and reclaim leadership in the search for non-polluting energy sources. We need to do the research needed to cure cancer and stop Alzheimer’s. And we need to fund these investments with taxes, not with borrowed money.
This tax “reform” is worse than a bad joke – it’s a refutation of the common- sense steps which are clearly needed to reclaim American exceptionalism.
Ronald Reagan called America “A shining city on a hill”, a vision of our country that reflects the opinions and hopes of most Americans. Before committing themselves to embracing this nonsensical “tax reform”, Republican leaders ought to ask themselves whether they believe it will help our country shine as brightly in the future as it has in the past.