By Frank Clemente, executive director, Americans for Tax Fairness
Working families are, as usual, getting the short end of the stick from the new Trump-GOP tax law. Huge tax cuts that mostly go to the wealthy and corporations are exploding the national debt, and threaten deep cuts to essential public services like Social Security, Medicare, Medicaid and education.
Not only are the tax cuts unwise, they’re unfair. Corporations saw their tax rate slashed from 35% to 21% — a cut of 40%. Their wealthy CEOs, who are members of the top 1%, are getting a tax cut that averages more than $51,000 a year. The bottom three-fifths of the population, people making under $86,000 a year, will get a tax cut of about $1 a day on average.
It’s no accident. The priorities of President Trump and Congressional Republicans in crafting their tax overhaul were clear from the start: reward their wealthy political backers, and in many cases, themselves.
The biggest winners from the new tax law are often the least deserving. The pharmaceutical companies that keep jacking up prescription drug prices. Health insurance companies will make out well, too, even as they keep raising premiums on American families.
The wealthy Koch brothers and their company could save over a billion dollars a year. So it’s not surprising they’re planning to spend up to $400 hundred million in the upcoming Congressional elections to protect their windfall. It’s a profitable political investment.
Maybe you’ve heard companies are sharing their tax cuts with workers through bonuses and pay hikes. That’s certainly what corporations would like you to think; but think again. Trickle down is not working today, and it did not work in the past.
According to a comprehensive tracking website by Americans for Tax Fairness, only 385 out of America’s 26 million businesses have provided any bonuses or wage hikes due to the Trump tax cuts. Most of those are one-time bonuses, not permanent wage increases. Just 6.3 million out of 148 million workers, or 4%, of American workers have gotten one-time bonuses or wage hikes from their employers tied to the tax cuts.
Already, it is estimated that 126 corporations will get $61 billion in tax breaks this year from the Trump tax law. That’s 9 times more than the $6.5 billion that corporations have pledged to hand out to workers in one-time bonuses and wage hikes.
Where are most of the tax cuts going? Not surprisingly, to wealthy investors and CEOs. Companies have committed to spend 39 times more on stock buybacks, which overwhelmingly benefit the rich, than they have on employee bonuses and wages—$253 billion vs. $6.5 billion.
Far from closing loopholes for special interests, the law creates new ones. Wealthy business owners like President Trump were given extra carve-outs in the tax code—benefits regular workers can’t use.
Someone must pay the bill for all these tax giveaways to the wealthy—and that someone is you. President Trump’s proposed budget for next year cuts $1.7 trillion from health care funding, Social Security disability programs, college tuition aid, and food aid, and many other services working families rely on to get by.
As soon as the GOP tax bill seemed on track to passage, House Speaker Paul Ryan announced it was time to turn to “entitlement reform”—which is just a fancy term for cutting Social Security, Medicare and Medicaid.
The system is already rigged enough against working families. Tax reform should level the playing field, not tilt it further in favor of the wealthy and well-connected.
We need to repeal the Trump-GOP tax cuts for the rich and corporations. Then we can use that money to strengthen Social Security, Medicare, Medicaid, education and other vital public investments, such as infrastructure.
Senate Democrats have a $1 trillion plan to build roads, improve water quality, unclog airports, expand broadband and attend to many other long-neglected needs. They would pay for it by rolling back some of the Trump tax cuts for the wealthy and big corporations.
Last year’s rushed tax bill was principally a payoff to wealthy political donors. By repealing the tax giveaways to wealthy individuals and profitable corporations, and investing that money in American communities, we can make the system work better for working families.