The House just passed “The Tax Cuts and Jobs Act” as a first step toward a $1.5 trillion tax cut.
Even the name of the House bill is a hoax. Tax cuts will benefit mostly the rich and will not create jobs.
Of course our Congressmen, Simpson and Labrador, both voted the party line today. I suspect Senators Crapo and Risch will do likewise with the Senate bill.
We can only hope there is enough courage and intelligence in the Senate to stop this train wreck. There are many reasons to vote against tax cuts. Here are at least two:
- With the vast wealth now accumulated in the hands of a few Americans, why do rich people need a tax cut?
- With the national debt at record levels, why a tax cut at all?
Huge tax cuts at this point in our history makes as much sense as the ancient medical practice of bleeding, instead of feeding, a sick patient.
Cutting Taxes Increases Wealth Inequality
Wealth inequality in the United States is now the highest in the world and, other than during the 1920s, the highest in our history.
The increasing rate of US wealth inequality is illustrated with this chart:
Cutting Taxes Increases the Deficit and the National Debt
United States deficit spending and national debt have reached levels unmatched since World War II.
You can see it in the following graph, which shows US national debt as a percentage of GDP since 1790:
In summary, the tax cuts will create more wealth inequality, will increase the deficit and balloon the national debt.
The Middle-Class Will Suffer
The House and Senate forms of “tax reform” are being sold as tax breaks for the middle-class. This is wildly misleading.
The legislation benefits the already rich more than anyone, hurts the poor and, for many in the middle-class, actually increases taxes. This is particularly worrisome in light of the Senate bill’s sleight-of-hand elimination of the Affordable Care Act individual mandate and subsidies.
This backdoor repeal of the the essential mechanism of Affordable Care Act will lead to tens of millions losing health insurance and making health insurance premiums rise for everyone else.
Meanwhile, the rich, directly and indirectly, will receive billions in “tax relief,” with, among other things, repeal of estate taxes, elimination of the Alternative Minimum Tax and slashing of the corporate tax rate.
Remember who ultimately owns corporations: mainly rich people, who are always hungry for dividends. Cash from corporate tax savings will first be used to satisfy shareholders.
The Trickle Never Trickles Down
Tax cuts are being rationalized with a re-hash of the economic myth of “trickle down” economics, which has been used to justify every tax cut since Reagan. It has never worked.
Sure, the middle-class might be lucky enough to get a small tax break (even after losing the mortgage and other deductions). Maybe some will end up with a few hundred dollars to help pay down credit cards–or ease the pain of increased healthcare costs.
The poor and the uninsured? I am sure they will be calling their brokers and trying to get into the stock market.