Robert B. Reich's Blog, page 68

7 Reasons Why Trump’s Corporate Tax Cut is Completely NutsDonald...

7 Reasons Why Trump’s Corporate Tax Cut is Completely Nuts

Donald Trump wants to cut the corporate income tax rate from 35 percent to 15 percent, in order to “make the United States more competitive.”

This is nonsense, for 7 reasons:

1. Profitable U.S. corporations already pay on average of only 14% according to the Government Accountability Office. That’s less than a lot of middle-class families pay. (And that’s less than half the official 35% corporate tax rate.) What’s more, some giant corporations pay little (if any) U.S. taxes because of loopholes or because they shift their profits offshore to tax havens.

2. Trump’s corporate tax cut will bust the federal budget. The nonpartisan Tax Policy Center projects it will reduce federal revenue by $2.4 trillion over 10 years. This will either require huge cuts in services for all of us, or additional taxes paid by us to pick up the corporate tab.

3. It’s based on supply-side, trickle-down nonsense.

The White House says the tax cuts will create a jump in economic growth that will generate enough new revenue to wipe out any increase in the budget deficit. Rubbish. Ronald Reagan and George W. Bush both cut taxes mostly for the rich, and both ended their presidencies with huge budget deficits.

4. It will create a new special loophole for hedge fund managers, big law firms and real estate moguls like Donald Trump. They could slash the tax rate they pay on their business income from 40 percent to 15 percent. 15 percent is what a middle-class person pays. Do you think people like Trump should pay a tax rate that someone making $60,000 a year pays?

5. It creates an international race-to-the-bottom on corporate tax rates that the U.S. cannot possibly win. One of its supposed attractions is it makes U.S. corporate taxes more “competitive” internationally. But we can’t match the rates in tax havens, which are often ZERO. And other countries will just lower their taxes in response. That’s what happened after 1986, the last time the U.S. cut corporate tax rates.

6. American corporations don’t need a tax cut to be competitive. They’re already hugely competitive as measured by their profits – which are near record highs– while the share of taxes they pay are at record lows. Corporations should be doing more to pay their fair share, not getting a giant tax cut!

7. Corporations won’t use the extra profits they get from the tax cut to invest in more capacity and jobs. That’s the White House line, but it’s baloney. Corporations are now using a large portion of their profits to pay their CEOs’ hefty pay packages and to buy other companies in order to raise their stock prices. There’s no reason to suppose they’ll do any different even with more profits.

So don’t fall for Trump’s corporate tax plan. It will be a huge windfall for corporations and billionaires – like many of Trump’s own cabinet members, family members, and likely even Trump himself (although because he won’t release his taxes, we can’t tell how much he’ll enrich himself from his own tax plan).

We do know who will lose out: The rest of us.

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Published on May 31, 2017 13:22

Trump’s Rollback of Civil Rights

Trump’s budget isn’t just about massive tax cuts for rich and major
cuts in assistance...

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Published on May 30, 2017 16:22

How Not to Balance the Budget on the Backs of the Poor
Donald...

How Not to Balance the Budget on the Backs of the Poor

Donald Trump wants to slash Medicaid, Social Security disability, and food stamps in order to expand the military and give the rich and corporations big tax cuts.

There’s a far better way to help balance the federal budget – cap tax expenditures.

The federal government is diverting hundreds of billions of tax dollars every year to help the wealthiest Americans become even wealthier through tax expenditures that are the equivalent of government handouts – allowing the wealthy to deduct or exclude from their taxable incomes large amounts of employer-provided health care, retirement savings, and mortgage interest.

These tax expenditures demand reform for three big reasons:

1. First, they are unfair. Middle and low-income workers don’t get from their employers nearly as much health insurance and retirement income as do corporate executives. Many get none at all. And their mortgages– if they have any– are usually much smaller, because they live in homes that don’t cost as much.

2. Second. these deductions and exclusions are nonsensical. Originally, they were put into the tax code to give people financial incentives to get health insurance, to save for retirement, and to buy a home. But the rich don’t need financial incentives to do these things because they’re … rich.

3. Finally these deductions and exclusions are hugely expensive. They cost hundreds of billions of dollars a year– $348 billion in 2015 alone– the lion’s share going to high income families.

Instead of wasting these billions on making the wealthy even wealthier, we should be using these resources to provide better healthcare, retirement security and affordable housing to low and middle-income households, including households of color, who are currently losing out.

There’s no reason why America’s wealthy should be able to deduct or exclude from their taxable incomes more than, say, $25,000 a year for employer-provided health care, retirement, and mortgage interest.

Limiting those deductions and exclusions would be rational, fiscally responsible, and fair. Unlike Trump and Republican budgets that want to slash Medicaid, Social Security disability, and food stamps.

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Published on May 30, 2017 12:56