The Top Five Misconceptions About the Trump Tax Cuts
Following the landmark passage of historic tax cuts, the Democratic Party appears unified as never before. Their mission: to convince the American public that the Republican Party is out to benefit the usual suspects; corporations and billionaires. They may have an easy task of it, as it appears that the American public remains largely skeptical of the tax reform. A recent Monmouth University poll shows that Americans disapprove of the reform by nearly two to one, with 47% opposed, and just 26% in favor.
That is a serious problem for the GOP brand, which is trailing the Democrats by nearly double digits heading into next year’s midterm elections.
- Read More: GOP Tax Bill a Major Win for Trump and Draining the Swamp
- Read More: If Trump is so Serious About Tax Cuts, Why Doesn’t He Cut Spending?
Why is the bill so unpopular, and what is the truth about the arguments that Nancy Pelosi and Chuck Schumer have been putting forward under the hashtag GOPTaxScam?
The GOP Tax Bill is a Disaster for our National Debt
More than anything, this should send the hypocrisy meter reading off of the charts. While it is true that the GOP tax bill involves a $1.4 trillion increase in the deficit over the course of a decade (in other words $140 billion a year for ten years), the Democrats seem to have an extremely short memory when it comes to the Obama-era fiscal stewardship, during which Obama added nearly $10 trillion to our national debt.
Put another way, he added more to our national debt than the previous 44 presidents combined! So, if you are a Democratic politician, it was fine to add $1.2 trillion to our debt per year, but now that the Republicans are running the show, $140 billion a year is going to send this nation down the path of rampant fiscal irresponsibility.
The Bill “Steals” From the Working Class and Middle Class to “Pay For” Tax Cuts for the Wealthy
Bernie Sanders and Elizabeth Warren could save a lot of time in their speeches and media appearances. This gross mischaracterization is at the heart of their economic ideology; it is the red meat that they feed to their base of hardcore Marxist supporters. And it is as fundamentally warped, twisted, and flawed as anything you will find in mainstream American public discourse today.
The working class and the middle class are not contributing anything to the wealthy in any way, shape, or form. Exactly the opposite is true. The federal government, under the auspices of the IRS, engages in massive redistribution of wealth on an annual basis. If anything, Sanders and Warren should be thanking the wealthy for funding the social welfare state that they so love.
Consider that last fiscal year, the top 1% (that is anyone earning over USD $615,000) paid 45.7% of the taxes. The top 20% (anyone earning over USD $134,300) paid 84% of taxes. Meanwhile, nearly half of Americans pay no federal income tax; 45% in fiscal year 2015 according to the non-partisan Tax Policy Center.
So, to suggest that somehow the rich are stealing from the poor and the middle class under the previous tax regime, or under the new changes, is beyond ludicrous.
45% of Americans are not paying any federal income taxes at all. But a large percentage of that 45% is collecting benefits from the government. Those benefits, of course, are paid for by taxes on the top 1%.
The Bill is an Obscene Giveaway to Already Wealthy Corporations
Yes. The Trump tax bill is an outrageous and obscene gift for greedy corporations. By lowering the corporate tax rate from 35% to 21%, we will put corporations on the same footing as…well, virtually every country in Europe. In fact, America had the third highest corporate tax rate in the world at 35%, placing us only behind the United Arab Emirates at 55%, and Chad at 40%. Wow.
Talk about a challenge for competitiveness. Trump is absolutely right to suggest that our outrageously high corporate tax rate was hurting business in the United States. Corporations will use the tax savings (which puts us on an equal footing with other OECD nations) to invest in new equipment, new plants, hiring more workers, and developing new technologies. Opportunities for the working class and middle class will abound as more and more corporations bring business back from overseas to American soil, where they will now not be at a disadvantage with respect to other developed nations.
Helping Corporations Doesn’t Benefit the Little Guy
This is one of the most pervasive arguments designed to appeal to what Rush Limbaugh deems the “low information voter.”
To the socialist base of the Democratic Party, this is their bread and butter. The reason that you are poor, the reason that you are not earning 100k a year, the reason that you don’t live in a nicer house, is that corporations aren’t paying their fair share in taxes.
Corporations are doing well, which means that you are going to have a tough time of it.
Nothing could be further from the truth. Corporations provide job opportunities and incredible means for socio-economic advancement across the board.
As corporate profits and stock prices climb, that has a direct impact on the little guy: every nurse, teacher, police officer, firefighter, union worker, and state and county employee in America has a real, direct, and vested interest in the vitality of corporations. Their pension and retirement plans are directly tied to the fate of these corporations.
Their life savings, their net worth, their ability to spend their golden years in peace and tranquility, and then pass on a nest egg to their children and grandchildren, is directly tied to the ability of corporations to make profits and increase shareholder value.
So, it is high time that we dispense with the Sanders/Warren horse excrement on corporate profits: corporate profits are good for America. They are good for working men and women; and they are the very foundation of our economy.
Working and Middle Class People Won’t Get a Tax Cut Under the Bill
Remember that nearly half of Americans currently pay no federal income taxes; roughly half because they have no taxable income, and half because they use their standard deductions and exemptions to offset any tax liability they might have.
You can’t give tax breaks to people who do not pay any taxes; that is an impossibility by definition.
This tax cut is good for working people in the sense that it increases what you can earn before you incur any tax liability.
Starting in fiscal year 2018 (paying taxes due on April 15, 2019), you will be able to earn up to USD $12,000 per individual, or up to USD $24,000 per household, without paying any federal income taxes. Where is the downside for working class people?
If I had been writing the bill, I would have been prepared to go even further. If we really want to talk about tax cuts for the working class, why not increase that to $20,000 per individual and $40,000 per household and offset the lost tax income with modest reductions in social welfare spending?
Ultimately, the Trump tax plan includes tax cuts across the board for all brackets. Of course, in dollar amounts, the wealthy are going to receive larger tax cuts, because they pay more taxes. It is simple mathematics. Cutting the tax rate by 1% on someone who earns 100k is going to yield a smaller tax cut than cutting the rate for someone who earns one million.
Trump’s tax reform encapsulates what the conservative movement has been talking about doing for decades: simplifying the tax code, lowering brackets across the board, and putting more money into the hands of people…not the government.