EDITORIAL: Death by a Thousand Cuts, Part Two
The tax breaks are even more tilted to the wealthy by the 10th year of the overhaul, when the Tax Policy Center projects nearly 80 percent of the savings would go to the top 1 percent of earners…
— GOP Tax Plan Directly Benefits the Wealthy, on NPR.org
We ended Part One yesterday by sharing the first part of a November 9 press release from Colorado Senator Cory Gardner, promising us that “bipartisan hearings will take place” in the U.S. Senate before the final version of the Republican tax cuts are put up to a legislative vote. We also received, the same day, a press release from Colorado’s other senator, Democrat Michael Bennet.
Here are Cory Gardner’s remaining comments from last week’s press release:
“Washington insiders and those who know how to game the system have had an unfair advantage over hardworking Americans when it comes to our complex, out-of-date tax code. Those with enough money find ways to game the system and use loopholes to their advantage. It’s time for this to end. It’s time to level the playing field and provide tax relief to all Americans. A simpler, fairer tax code will allow individuals and Main Street businesses to save time and money on preparing their taxes. Coloradans should make decisions based on what is good for them, their families, their employees, and their business, not because of the tax code.
“Lowering the corporate tax rate will jumpstart the economy and will allow businesses to hire more workers and reinvest their earnings into their business operations. Without tax relief, I worry about the future of Main Street America. We know American workers bear much of the burden of a high corporate tax rate in the form of lower wages, but now we have the opportunity to fix this. We can lower the corporate tax rate that could result in an additional $4,000 in the pockets of the average American household. This will be good for small businesses and American workers.
“I have already heard from Coloradans around the state and am eager to get more feedback as this process continues. We have a real opportunity to grow our economy and bring relief to hardworking Coloradans and I’m excited to work on tax relief on behalf of all Coloradans.”
Senator Gardner has launched a new web page and is encouraging Coloradans to go to Gardner.Senate.Gov/Taxes to provide input on how we might fix our tax code.
Senator Michael Bennet’s press release, also dated November 9, was considerably more concise (and perhaps less… cunning?)
Washington, D.C. – Colorado U.S. Senator Michael Bennet today issued the following statement in response to the release of the Senate Republican tax plan:
“Senate Republicans are attempting to jam through a tax bill that will affect every American without so much as a hearing. This is a terrible disservice to the people we represent. The rushed product of this closed-door process is likely to be an attempt to lavish tax cuts on the wealthy at the expense of the middle class — leading to higher deficits and deep cuts in Medicare, Social Security, and Medicaid. It’s past time for Republicans to put the brakes on this approach and work with us on meaningful and fiscally-responsible tax reform that invests in our families, our kids, and our future.”
As a result of the 2016 elections, the Republican Party controls both the House and Senate in Washington — if indeed elected bodies as dysfunctional as the U.S. House and Senate can be subject to “control.”
Which is not to imply that Colorado’s two Senators are dysfunctional as individuals, even if they have two very different views of the current tax debate and are seemingly at odds with one another.
Senator Gardner tells us that, by cutting the taxes paid by multi-billion-dollar American corporations and by the billionaires who own those corporations, the American economy will be able to pull itself out of the swamp of inefficiency, corruption, and greed into which it has fallen, partly as a result of corporations paying a 35 percent tax rate on their profits. Thus, we will all benefit, because those corporations will most certainly use their tax windfall to pay the working class higher wages… as opposed to, say, paying their stockholders higher dividends.
The mantle of greed and corruption that infects American corporate culture will thus fall away, to reveal a long-hidden, underlying culture of generosity and altruism, and this will lift America up, once again, into its former position as a “Great” nation.
To make this all happen quickly — while Republicans are still in nominal control of the federal government — they need to pass the tax overhaul pretty darn soon, without looking to closely at the darker side of the tax cuts.
But speaking of darker sides… according to a report from the Congressional Budget Office (CBO), which you can download here, the current GOP tax cut plan (as of last week) would add $1.7 trillion to the federal deficit. Under the plan, our federal debt would rise to 97.1 percent of gross domestic product in 2027, up from 91.2 percent under current CBO projections.
Republicans argue that “growth” sparked by the bill will help to offset, or even cancel out entirely, the budget shortfall caused by broad tax cuts. But they nevertheless face one small problem. Under the budget rules congressional Republicans are using to pass a tax plan, the bill can increase deficits by only $1.5 trillion — per year.
Please note: that rule says “only” $1.5 trillion. Like that’s some kind of limit?
Here’s the future federal debt we are looking at, according to an article discussing the House tax cut proposal on the website CNBC.com. What this chart illustrates is a future federal government debt that nearly equals the total economic activity in the entire U.S.A.
The Republican tax cut plan, called the Tax Cuts and Jobs Act, cuts the corporate tax rate from 35 percent to 20 percent, while moderately reducing household income-tax rates for some. Especially, it seems, for the very wealthy.
The House Republican leadership hopes to pass its bill as early as Thursday. Senate Republicans released their tax cut bill last week, with slight differences from the proposed House bill. (You can download a 253-page summary of the Senate bill here.) The Senate version was scheduled for markup by the Senate Committee on Finance yesterday, November 13.
As we may have noticed in the press releases from our two Colorado Senators, Republicans are not eager to talk about the cuts to social programs that will presumably result from a $1.7 trillion federal deficit — while Democrats are fond of pointing out that under the proposed Republican plan, a middle-class couple with two children will actually be worse off. Their standard deduction would increase by $11,300 (from $12,700 to $24,000)… but their four exemptions totaling $16,200 would disappear, leaving them with more taxable income and a higher tax bill…