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Trump celebrates his (very expensive) tax cuts for himself and his rich golfing buddies

Trump celebrates his (very expensive) tax cuts for himself and his rich golfing buddies

Remember how Trump sold the Republicans’ $1.5 trillion-deficit-creating tax cut plan as a boon for the middle class that was going to create jobs and raise wages?  That was in September, when he told congressional lawmakers at the White House that “The rich will not be gaining at all with this plan.”  See Washington Examiner (Sept. 13, 2017).

Let me repeat that:  Trump said “The rich will not be gaining at all with this plan.” (emphasis added)

No tax lawyer or professor believed that statement.  Nobody that knew anything about the early drafts of the bill believed that statement.  But quite a few Trump supporters have believed that statement.

It wasn’t true.  It was a bald-faced lie, and Trump knew it was a bald-faced lie.  He has no trouble making such lies and does it multiple times a day.  But this one was both manipulative and deceptive.  Manipulative, because it helped to prevent any outcry from his core supporters that might have caused a Senate vote loss.  Deceptive, because it was intended to mislead, as so much of what this man does in the office of the President.

Trump made absolutely clear what he really is proud of at his holiday golfing retreat at Mar-a-Lago, where memberships now cost $200,000 (were $100,000 before they counted as access to the Presidency) and members are part of the oligarchic ultra rich set that Trump so adores.  Here’s what he told them just before Christmas:  “you all just got a lot richer” from the passage of the Republican tax cut legislation.  See Bobic, Trump Told Friends ‘You All Just Got a Lot Richer” From Tax Bill: Report, HuffPost (Dec. 24, 2017).

So September, Trump is claiming that the rich won’t gain a thing from the tax cut but come December, Trump is boasting about how much richer the rich got from the tax cut.

Next up?   The Republicans who didn’t care if they created a $1.5 trillion deficit with their tax cuts for the rich now whine about the dreadful deficit (that they created) and the oh so shocking necessity, now, of cutting back on

  • Social Security (they want to privatize it so the rich can get rich off of passing risk onto the vulnerable elderly but this is less likely since they can’t do it by reconciliation with just GOP votes) and
  • Medicare (they want to decimate it- and can do that with reconciliation-GOP apparently doesn’t want us to have the kind of universal and cheaper health care that the rest of the developed world enjoys because there’s no money in that for them) and
  • Medicaid (GOP can’t make money off it and they don’t care about the poor kids and families and old people that depend on that anyway).

See, e.g., Jeff Stein, Ryan says Republicans to target welfare, Medicare, Medicaid spending in 2018, Washington Post (Dec. 6, 2017) (“Republicans will aim next year to reduce spending on both federal health care and anti-poverty programs, citing the need to reduce America’s deficit”);  Republicans are headed for a collision in 2018, Business INsider (defunding Social Security or funding infrastructure).

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What is the GOP goal? A return to the “gilded age” (or worse)

What is the GOP goal? A return to the “gilded age” (or worse)

When right-wing Roy Moore said that the time when America was great was during slavery, he revealed something key to the current GOP members of Congress and state legislatures–their primary goal is to return to a time when owners of property held all the keys to the kingdom and workers were just serfs expected to do as told and whose lives didn’t really matter much to the boss capitalists.

Historian Nancy MacLean suggests that this is the reason for the tax bill’s largesse to corporatists and the wealthy, the reason the GOP wants to undo Medicaid, Medicare, Social Security and essentially all the progressive programs introduced in the twentieth century to form the basis for a thriving middle class and surging democratic union.  See Cahuncey DeVega, Historian Nancy MacLean on the right’s ultimate goal: rolling back the 20th century, Salon.com (Dec. 13, 2017).

Here are some key points from the article.

1) “[T]he Democratic Party is terrible at translating complex questions of public policy into simple narratives that evoke emotion and, in turn, action from the American people.” Id.

Indeed, having an able, sympathetic messenger who can translate the issues that truly matter into terms that make sense to ordinary people is something the Democratic Party lacked in the last election.  The tone deafness of Debbie Wasserman Schultz and, much of the time, Hillary Clinton, meant that ordinary people didn’t understand that Trump is merely a blowhard capitalist who doesn’t care if he cheats or lies or exploits other people so long as he gets notoriety and money, while the Democrats have been the party working for a decent sustainable economy, environmental protection and preservation, protection from pollution and diseases, and working wages for ordinary folk.

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GOP Congress: my (wealthy) donors made me do it

GOP Congress: my (wealthy) donors made me do it

The GOP’s tax-complicating, deficit-increasing, wealthy-subsidizing, Arctic destroying, Health Care damaging, $1.5 trillion tax “reform” package is unpopular with most Americans, destructive to the government’s ability to fund needed programs from disease prevention to FEMA to basic research to needed infrastructure improvements, and wildly popular with the wealthy GOP donors like the (oil-rich) Koch Brothers, the Mercers, the Wal-Mart heirs, etc.

So why did GOP representatives and senators vote for this bill that most of them hadn’t read and didn’t understand? Back in early November, one Republican in the House was surprisingly honest about his reason: his wealthy GOP donors told him to get the tax bill (that favors the wealthy) passed or don’t ask for campaign assistance. See Bob Bryan, Top GOP Congressman: my donors told me to get the tax bill passed or ‘don’t ever call me again’, Business Insider (Nov. 7, 2017).

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Do GOP House and Senate reps even know what they voted for?

Do GOP House and Senate reps even know what they voted for?

The House passed the awful “tax complication bill of 2017” on Tuesday.  The Senate had to make a few changes because it didn’t comply with the Byrd rules, and then will presumably pass it today. It’ll go back to the House where the HOuse will then take the final vote on the Senate changes and send it to Mr. Trump for signature.

The GOP will claim that they have singlehandedly put together a marvelous tax cut package for the middle class.  That is a pack of lies.

The tax cut package redistributes upwards–it is a marvelous cut for the wealthy (the estate tax reductions costing about $200 billion over ten years, the corporate tax reductions (including increased incentives for offshoring while lowering the top corporate tax statutory rate (higher than most corporations ever paid) to 21% from 35%, the lowering of the top individual rate from 39.6% to 37%, and a 20% “deduction” from taxable income for “qualified business income” for owners of businesses (whereas workers with the same earned income don’t get that nice little subsidy, based, it appears, on Mitt Romney’s keen disregard for the large group of American workers and working poor that he labelled “takers” compared to the regard he had for the wealthy capitalists, who he labelled “makers”, etc.).  It is a piddling cut for most non-wealthy individual Americans, especially those who live in “blue” states and already contribute more tax money to the federal government that is transferred to “red” states.  And the corporate tax cuts are permanent while the individual tax cuts go away at various times over the next decade.

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The GOP Tax Bill Disses the Working Class

The GOP Tax Bill Disses the Working Class

Here’s something about the GOP House and the GOP Senate:  they each passed tax bills (supposed to come out in a “conference” agreement sometime today) that diss the United States’ working class taxpayers.  White or black, Christian or Jew or other, citizen by birth or naturalized citizen–workers are treated as an inferior “taker” class and owners are treated as a superior “maker” class–the same old GOP class warfare that has been evidenced in Republican-driven tax legislation for decades.  That shows in the provisions that have been discussed quite a bit already, even though there is no official distributional analysis and even though the Treasury Department put out a one-pager claiming to provide an analysis showing huge economic growth would eliminate any deficits (based on both the tax “reform” legislation and promised cost-cutting “reforms” to Medicare and Social Security):

  • the  significant reduction in impact of the estate tax,
  • the huge reduction in the statutory corporate tax rate of most benefit to officers/shareholders (it was 35%, it will be 21% under the conference agreement, apparently, even though the “effective” corporate tax rate ranged from negative to around 24-25%–essentially more favorable than many of our fellow advanced economies’ corporate tax rates);
  • the territoriality of the corporate tax (generally, zero tax on foreign earnings of U.S. companies);
  • immediate expensing of company investments (a five year provision that allows companies huge tax benefits for those five years);
  • the elimination of the corporate alternative minimum tax (AMT), at a cost of about $250 billion in revenues.
  • the reduction in the top rate for wealthy individuals (from 39.6% to 37%),
  • the substantial reduction in the  State and Local Tax Deduction for workers (thus changing entirely the economics of paying for a house already purchased, while allowing sole proprietors, partnerships and other “owners” of equity in businesses the ability to deduct such State and Local Taxes in full);
  • a larger standard deduction but the elimination of personal exemptions;
  • a larger child tax credit that only becomes refundable over time (limiting how much it helps the poor) but is available to wealthy households (starting to phase out at half-a-million of income!);
  • the only slight reduction in the ability of wealthy individuals to take advantage of the mortgage interest deduction (reducing the debt limit to $750,000 instead of $1,100,000)
  • the elimination of the corporate AMT (which cuts taxes for wealthy shareholders/owners/managers) but the retention of the individual AMT (which primarily affects the upper middle class and not the wealthiest taxpayers under the current rate bracket system);
  • the elimination of the Affordable Care Act mandate and penalty (which reduces the amount of Medicaid and insurance subsidy funds for poor and middle-income taxpayers, as well as guaranteeing the deconstruction of the health care system for 13 million or more Americans by 2027 and  increasing insurance premiums for upper-middle-class taxpayers); and
  • the opening of the Arctic National Wildlife Refuge to rape by fossil fuel oligarchies (a piddling amount of revenue, but sufficient to buy off the principle-less Sen. Lisa Murkowski from Alaska );
  • making the corporate tax changes permanent (and effective without any transition period) while making the individual tax cuts other than benefits for the wealthy like the estate tax changes temporary.
  • (just to name a few).

When the health care mandate removal is combined with the other provisions,  “On net, the poor would actually lose out in all years once this effect is taken into account.”  Dylan Matthews, The Republican tax bill that could actually become law, explained, Vox.com (Dec. 14, 2017).  The following Tax Policy Center graph from the Vox article (using the Urban-Brookings Microsimulation Model) shows that by 2027 the top 0.1% end up doing much better (average tax cut for the top 0.1 percent is $221,550 a year).  The bottom 20% do worse while the middle–the second and third quintiles–have a very insignificant plus (average tax cut of the third quintile is $490).   Within the third or middle quintile, more than 62% of taxpayers that earn between $54,700 and $93,200 would see their taxes go up, “[b]ut only about 0.1% of the very richest one-thousandth of Americans would see a tax hike.”  Id.  Early gains–though small, intended perhaps to benefit the GOP in earlier votes–don’t last because the individual cuts aren’t permanent.  A change to chained CPI for indexing brackets amounts to a tax increase on individuals, while the permanent corporate tax cuts mean rich and very rich do well while middle and upper-middle lose out.

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The text of the GOP tax complication legislation

The text of the GOP tax complication legislation

The Republicans, after holding one sham “public hearing” on their conference bill (without any text released) have on late Friday released the text of their (Republicans only) agreed-upon final bill that will be put to a House and Senate vote as early as Tuesday, December 19, even though there is no score from the Congressional Budget Office or analysis from the Joint Committee on Taxation.

Here’s the link to the 1097 pages of the tax bill:

http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf

Here’s the link to the 570 pages of the Joint Conference explanation:

http://docs.house.gov/billsthisweek/20171218/Joint%20Explanatory%20Statement.pdf

(Hat tip to Ellen Aprill for sharing the links with tax professors as soon as they became available.)

As a Vox article announcing the release notes, “the bill is a far cry from the simplified tax code that Republicans have long been promising, but it is a substantial reshaping of the nation’s tax base.”   Tara Golshan, Full Text: Republicans unveil their final tax bill (Dec. 15, 2017 6:05 pm EST).

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The Republican Party’s Heartlessness–the Casualty Loss Provision of the purported “tax reform” legislation

The Republican Party’s Heartlessness–the Casualty Loss Provision of the purported “tax reform” legislation

The GOP is cruising towards passage of its class warfare tax legislation that continues the long trend of Republican tax policy to redistribute upwards to the very rich.  The legislation, however, is supported by a small minority of the American public (latest polls put support for the tax legislation at less than 30%). See, e.g., Allan Smith, Polls show key Republicans could get whacked by the tax bill, Business Insider.com (Dec. 4, 2017). That’s astonishing when you consider that one provision in both the House and Senate bills that is used as a “revenue raiser” to pay for the huge tax subsidies to corporations and wealthy taxpayers will be especially hard hitting to lots of middle class and lower-income people, including many who voted for Trump.

The legislation will gut the “casualty loss” provision that currently allows taxpayers to deduct losses from hurricanes and fires and other accidents and forces of nature, to the extent those losses aren’t covered by insurance (after a $100 per loss limitation).  Thus, people who were flooded by Harvey can claim casualty losses on their 2017 tax returns for amounts not covered by insurance.  People who lost their homes in the fires that raged earlier this fall in northern California can claim casualty losses on their 2017 tax returns for amounts not covered by insurance.  But, as Bob Cesca notes for Salon.com, As L.A. Burns, Republicans Vote for a Tax Hike on the Victims (Dec. 8, 2017).  See also Thomson Reuters Tax & Accounting News, 2017 Tax Reform: proposed individual tax changes in the ‘Tax Cuts & Jobs Act’ (Nov. 3, 2017) and Sally Schreiber et al, Details of Tax Reform Legislation Revealed, Journal of Accountancy (Nov. 2, 2017) (noting that the personal casualty loss is repealed, except, in the House version, for such losses associated with special disaster relief legislation–which requires congressional action for each one); Tony Nitti, Senate Releases Tax Bill: Here’s How It Compares to Current Law & the House Plan, Forbes.com (Nov. 10, 2017).

You have to wonder just how the Republican Party and Trump administration became so completely heartless.  And why they think that Americans won’t notice that they only care about multimillionaires in the “one percent”.

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Hope Lives: Pressing Collins and Corker and Flake on Tax Bill

Hope Lives: Pressing Collins and Corker and Flake on Tax Bill

The Republicans’ proposed tax legislation–whether the House or Senate version–is despicable.  It will exacerbate the already devastating income and wealth inequality in this country, leave the federal government without adequate funds for real infrastructure and social safety net needs, and place in almost inviolable power the wealthiest oligarchs of the country (and even the good ones exert a power that no one should possess in a democracy).

My previous posts on this so-called “tax reform” “simplification” package (it is neither) have outlined a number of pernicious provisions in the bills.  There are a few I haven’t mentioned, such as the likely inclusion of taxation of tuition benefits to undergraduate and graduate students.  That will have an immediate impact on education and on basic scientific research.  Not surprising, given Paul Ryan, Donald Trump, and Mitch McConnell’s aversion to fact-based science and intellectuals, but nonetheless devastatingly harmful to the country in loss of prestige for our universities, loss of the top minds to other countries, and loss of entrepreneurial and innovational thinking that will hamstring commerce and productivity.  Another is the “new” talk in the House of lowering the tax rate on the weathiest bracket by as much as two and a half percentage points–adding to the largesse for the wealthy otherwise larding the legislation and making it even more obvious that the only Americans the Republican Party sees itself as serving are those with at least millions and probably billions of net worth.  The Republican charade of right-wing “alternative facts” (shown most clearly by the Treasury Secretary’s inability to provide a supported rationale for the absurd corporate and oligarch-favoring tax cuts) would have a destructive impact on the entire U.S. economy.  And it is not simplification–it is a huge complication that is ripe for tax abusers to abuse the complicated categories of differently taxed income.

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The Utterly Terrible GOP Tax “Reform” Scam

The Utterly Terrible GOP Tax “Reform” Scam

The Republicans in the House and Senate continue on their downhill rush to pass their so-called “tax reform” plan before the holiday break.  It’s a mad rush to nowhere, a corrupt process of “please the oligarch” that will cause a huge deficit increase (on the scale of $1 to $1.5 TRILLION over ten years) and be used by the Ryan, McConnell and Trump cadre of liars to justify a domino effect of Medicare, Medicaid, and Social Security cuts.  It is class warfare of the one percent against everyone else.  And it is being sold to the American people with a litany of falsehoods.

Almost all the provisions in the bill are designed to be generous to the ultra wealthy and stingy to the middle class and poor.

Corporations and their owners and managers–among the wealthiest people in the country–get the only permanent tax breaks.  It’s done in the name of competitiveness, but that’s bunk.  It essentially encourages corporations to continue to move profits out of the US because foreign profits are taxed at zero while US profits are taxed at 20%.  It pretends that the multiple tax breaks for big corporations are necessary (under disproven trickle-down and supply-side theories) to lead to more investment in business in the US and to more jobs and higher pay for workers.  But in fact corporations are enjoying record profits under current law and they aren’t using those record profits to pay their workers more or to create more jobs or even necessarily to invest in the US.  Mostly they are just doing share buybacks for shareholders (ie, owners/managers and other

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Treasury Secretary Mnuchin’s Forked Tongue on Tax Cuts for the Wealthy

Treasury Secretary Mnuchin’s Forked Tongue on Tax Cuts for the Wealthy

Shortly before the inauguration, Steve Mnuchin discussed the incoming administration’s tax plans and announced the Mnuchin Rule–that “[a]ny reductions we have in upper-income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class.”   EXCLUSIVE: Steve Mnuchin says there will be ‘no absolute tax cut for the upper class’, CNBC Squawk Box (Nov. 30, 2016).  At the same time, he argued that those who foresaw a tax cut for the rich accompanied by a tax increase for many in the middle class were wrong:  “When we work with Congress and go through this, it will be very clear.  This is a middle-income tax cut.” Id.

Contrast that with the so-called “tax reform” “framework” that the Trump administration has put out with the GOP establishment in Congress and for which both the House and Senate have made provisions in their budget document by including a (likely significantly underestimated) tax-cut-caused federal deficit of 1.5 trillion dollars.

As this blog and many tax and economic experts have noted (see, e.g., Nunns et al, An Analysis of Donald Trump’s Revised Tax Plan, Tax Policy Center (Oct. 18, 2016), Trump’s tax plan has always favored the wealthy.  In fact, the recently released “tax reform” “framework” is heavily tilted in favor of the wealthy, because the corporate statutory rate cut from 35% to 20%, the elimination of the AMT, the elimination of the estate tax, and the 25% pass-through rate for taxpayers all represent huge tax cuts for wealthy taxpayers who are the ones most likely to have been impacted by those tax provisions.  Meanwhile, there is actually an increase in rate for the lowest-income taxpayers from 10% to 12%, and the elimination of personal exemptions (and possibly other provisions) which may or may not be entirely offset by the proposed doubling of the standard deduction and possibly some increase in the child tax credit.  Thus, some poor families who can afford it least may pay more in taxes, middle income families may get a small tax cut, and wealthy families who don’t need the money at all will get a huge tax cut.  See, e.g.,  earlier A Taxing Matter posts on this issue here and here.

And these “massive” tax cuts for the wealthy, combined with massive increases in the deficit (and borrowing) to fund the tax cuts, likely won’t even trickle down as more jobs for working Americans.  There’s very little support from past tax cuts for businesses and for the wealthy for any kind of economic stimulus, either in terms of more jobs or higher wages.  See, e.g., White House math on corporate tax cuts is ‘absolutely crazy’, Mother Jones (Oct. 17, 2017).   In fact, there is much more support for tax increases on the wealthy resulting in more jobs than vice versa.

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