Tax cuts: Rich get richer, rest of us get a dollar a day
This is the time of year for final report cards, so it's a good time to grade President Trump and Congressional Republicans on their massive tax cuts mostly benefiting the wealthy and corporations. Six months after enactment, their new tax law is seriously underperforming, failing to achieve passing marks in one important subject after another.
Tax Fairness: Once the law is fully phased in, 83 percent of the benefits will go to the wealthiest 1 percent. Those one-percenters will get an average tax cut of over $50,000 this year. Folks making under $86,000 — the bottom three-fifths of the income scale — will get only about a dollar a day.
Increasing Worker Pay: Trump and other Republicans claimed that giving corporations huge tax breaks would help workers, going so far as to guarantee them a $4,000 pay raise. Unfortunately, only 4 percent of American workers are getting any kind of payout tied to the corporate tax cuts.
Most of those are one-time bonuses, not permanent wage hikes, and few are anywhere close to $4,000. Moreover, the government reported last week that average real hourly wages for four out of five workers in the private sector have actually gone down over the past year.
Sharing the Wealth: Only 402 of the nation's six million employers have announced any plans to share their tax cuts with employees through bonuses or wage hikes. The total is estimated at $7 billion so far. But that pales in comparison to the $77 billion in tax cuts that just 156 corporations we have estimates for are getting this year.
Meanwhile, since the tax law was enacted, corporations have announced nearly $500 billion in stock buybacks that principally enrich their CEOs and other wealthy shareholders. So, corporations are spending 69 times more benefitting speculators on Wall Street than they are on bonuses and wage hikes boosting workers on Main Street.
The High Cost: When the tax cuts were signed into law, budget experts figured they would cost $1.5 trillion over 10 years. That price tag has since ballooned to $1.9 trillion. That big bill pushes up the deficit, which Trump and congressional Republicans aim to reduce by cutting Medicare, Medicaid, Social Security, education, nutrition and other public services vital to working families. What a cruel exchange: cut taxes mostly for the rich and Wall Street, then pay for those tax cuts by cutting health care and retirement for working families.
Protecting Health Care: The Trump-GOP tax plan weakens a key part of Affordable Care Act and uses the savings to pay for tax cuts that mostly benefit the wealthy and corporations. The result: 13 million Americans will lose health care coverage by 2025, and insurance premiums for ACA health plans will spike by 10 percent, on average, most years for the next decade.
Drug companies, on the other hand, make out like bandits, as they always do. Five pharmaceutical giants will together get an estimated $6 billion tax cut this year. The industry will save tens of billions more in the future from a hefty U.S. tax discount on their accumulated offshore profits. Big Pharma received this tax handout after recently jacking up the prices to consumers of some of their most widely-prescribed drugs by as much as 14 times the rate of inflation.
Learning from Mistakes: Despite these disastrous results, Trump and his GOP allies want to repeat their mistakes by passing a second round of tax cuts, which would once again highly favor the rich. The most frequently suggested form of this "Round 2" tax cut would give over 40 percent of the benefits to the richest 5 percent of families, those making over $290,000 a year. It would cost another $650 billion, further imperiling important public services.
To get passing marks on how well they address the needs of the American people, Trump and his Republican allies need to repeal their tax cuts for the wealthy and corporations. Then we could use that money to fix roads and repair bridges, build schools and make college more affordable, expand broadband and ensure cleaner water, and expand quality health care to all and ensure secure retirements.
But if Republicans refuse to improve their failing grades on this most basic test of good governance, the American people may decide to expel them from office.
(Frank Clemente is executive director of Americans for Tax Fairness)