The US Senate tax bill: The financial oligarchy on the rampage
2 December 2017
Republican Senate Majority Leader Mitch McConnell announced Friday afternoon that he had the necessary 50 votes to pass the tax cut for the wealthy and giant corporations through the Senate. Voting on a series of amendments by Democrats, nearly all rejected on 52-48 party-line votes, culminated in final passage of the measure early Saturday morning by a 51-49 margin.
The undemocratic process by which the tax cut bill has been pushed through the House and Senate testifies to its reactionary and socially criminal character. There have been no public hearings, no witness testimony, no submissions from economists or tax experts about the impact of the massive changes proposed in the federal tax code.
As late as 4:15 p.m. Friday, as debate continued on amendments to the bill, the actual text of the legislation was not available to senators preparing to vote on it, let alone the American people. Handwritten pages were being pasted into the bill after they had been reviewed and approved by corporate lobbyists. Entire chapters accounting for hundreds of billions of dollars in revenue were being rewritten behind closed doors to satisfy the demands of the last few Republican holdouts.
For Senator Lisa Murkowski of Alaska, who voted against Obamacare repeal, the price of her vote was incorporating into the tax bill an unrelated provision opening the Arctic National Wildlife Refuge for oil and gas exploration. For Ron Johnson of Wisconsin and Steve Daines of Montana, the price was another $60 billion in tax breaks for “S-corporations,” the mid-sized, multi-million-dollar enterprises that were treated less advantageously in the original bill than giant corporations. The families of both senators own such companies. Senator Susan Collins of Maine extracted a promise from Trump to support increased financial subsidies for big insurance companies participating in Obamacare.
Democratic senators made demagogic statements during the floor debate, denouncing the legislation as a handout to the wealthy and big business. The pretense of concern for the impact on working people is completely bogus, but the outrage on the part of the Democrats is real: they are angry that they have been cut out of the lucrative deal-making. The White House and the Senate Republican leadership decided to push the tax cut through under a procedure known as “reconciliation,” which requires only 50 votes and avoids the threat of a filibuster, depriving the Democrats of any input on the legislation. All previous tax cut bills have been bipartisan affairs, in which the two capitalist parties worked together to deliver the goods to their favored corporate interests.
The Democrats are not seeking to rally popular opposition to a brazen tax giveaway to the super-rich. Rather, they are appealing to the Republicans to let them participate in the grubby legislative horse-trading. At least 15 Democrats appeared at a press conference Tuesday to send a message to the Republican majority: “Why settle for just 50 votes on tax reform when you could get as many as 70?” Senator Joe Manchin of West Virginia, one of the group, said. “If you’ve heard the rhetoric that Democrats don’t want tax reform, that’s false. We want tax reform. The country needs meaningful tax reform.”
Senate Democratic Leader Charles Schumer was not in the group, but he has repeatedly indicated his support for the main goals of the tax bill, which are to slash the corporate income tax rate, now 35 percent, and to allow giant companies holding trillions in cash overseas to “repatriate” the funds and pay only a nominal tax. He closed out the Senate debate with unctuous praise for Republicans, “many of whom I admire,” and an appeal for them to reconsider and reach a bipartisan deal with the Democrats.
The White House and the congressional Republicans are seeking to conceal the brazen class character of the tax bill with an unprecedented barrage of lies. Trump appeared at a campaign-style rally in Missouri where he claimed that the tax bill would hurt billionaires like himself, while helping people of more humble means: “Our focus is on helping the folks who work in the mailrooms and machine shops of America, the plumbers and the carpenters, the cops and the teachers, the truck drivers and the pipe fitters.”
Both the New York Times and the Washington Post published analyses Friday of the impact of the tax cuts on Trump, based on his 2005 tax return, the only one available, showing that under the Trump-backed bill the billionaire president would save $31 million of the $38 million he paid in taxes that year, as well as (in the House version) escaping an estimated $1.1 billion in estate taxes.
The class character of the tax cut legislation must be understood historically. During the heyday of American capitalism, when the ruling elite could afford to extend modest concessions to working people, the income tax rate on the wealthiest families rose as high as 90 percent. Even if this rate could be evaded through tax avoidance schemes, it set a marker that those with the highest incomes were expected to pay significant amounts to underwrite federal social spending.
Over the past 40 years, as a central part of the social counterrevolution waged by the US ruling elite, under both Democratic and Republican administrations, the top income tax rate has dropped sharply: from 90 percent to 70 percent in the 1970s, then from 70 percent to 28 percent under Reagan in the 1980s.
Huge tax cuts for the wealthy combined with a savage attack on working class wages to drive up economic inequality to staggering levels. Today, three American billionaires own more wealth than the bottom half of the population. Real wages have stagnated or declined since 1972.
The current tax bill marks a certain culmination in this process. American capitalism is in deepening crisis. The soaring stock market is not a sign of health, but the fever chart of a system on the brink of collapse. There is a genuine element of desperation in the frenzy in Washington to engineer one more transfusion of financial resources taken from working people and pumped into the sclerotic veins of the Wall Street addicts.
The money-grabbing is so reckless that the tax bill does not provide even a fig leaf of “fairness.” In 2027, for example, according to figures provided by the Joint Committee on Taxation and the Congressional Budget Office (both Republican-controlled), the bill raises the taxes of people making $40,000 to $50,000 a year by $5.3 billion and cuts the taxes of those making $1 million a year or more by $5.8 billion.
The methods employed by the ruling elite to resolve its crisis at the expense of the working class will provoke increasing popular resistance. Under the pay-as-you-go rules enacted as part of a series of bipartisan budget deals between the Obama administration and the Republican Congress, the $1.5 trillion tax cut over ten years must be offset by yearly cuts of $150 billion in spending, unless Congress approves a waiver by a super-majority vote.
This means that the new year will begin with demands from the White House and Congress that the budget deficit—which they have made much worse by cutting taxes on the rich—be financed through across-the-board cuts in domestic programs, particularly the largest programs: Medicare, Medicaid and Social Security.
Wall Street, the biggest beneficiary of the tax cut bonanza, will lead the charge for austerity measures. Goldman Sachs has already sounded the alarm, sending a note to clients Thursday warning that the US national debt was on track to hit unsustainable levels and was already at its highest point, as a percentage of GDP, since 1950.
In its increasingly naked drive to monopolize all the wealth of society, the ruling class is fueling a growing mood of anger and opposition, with revolutionary implications. The coming struggles of the working class will require a complete political break with the two parties of big business, the Democrats and Republicans, and the building of a mass independent political movement based on a socialist program to put an end to the profit system.
https://www.wsws.org/en/articles/2017/1 ... s-d02.html
The Trump Tax Bill: The Financial Oligarchy on the Rampage
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
Senate races to pass Trump tax cut for corporate America
By Barry Grey
1 December 2017
Following procedural votes that won the support of all 52 Republican senators, the US Senate on Thursday raced toward passage of a sweeping tax cut for corporations and the wealthy that will raise taxes on the working class and large sections of the middle class, starve the federal, state and local governments of revenues, and set the stage for the dismantling of basic entitlement programs such as Medicare and Social Security.
In a travesty of democratic procedure, a measure that will further restructure American society to benefit the ruling oligarchy at the expense of the mass of the population is being rushed through Congress without so much as a public hearing. Parliamentary gimmicks and backroom horse-trading are being used to impose the tax overhaul on a public that has been largely kept in the dark about its provisions, but nevertheless expresses mass opposition in opinion polls.
A floor vote is expected on Friday, and Republican leaders of the House of Representatives are calling on their members to reassemble early Monday to begin reconciling the Senate bill with a House version passed earlier this month. The prospect of early passage of a final bill, to be signed into law by President Trump before the end of the year, set off an explosion of euphoria and greed on Wall Street.
All of the major stock indexes soared to new record highs. The Dow Jones Industrial Average jumped 331 points, its biggest one-day gain of the year, to close well beyond the 24,000 mark, ending the session at 24,272.
A party-line vote on Wednesday to bring the Senate bill to the floor triggered a 20-hour debate followed by a so-called “vote-a-rama,” in which hundreds of amendments are submitted and disposed of in a rapid-fire and meaningless parliamentary charade.
Senate Republicans were hoping to hold a floor vote Thursday night, but were delayed when the nonpartisan congressional Joint Committee on Taxation (JCT) reported Thursday afternoon that the Republican plans, even assuming increased federal tax revenues from faster economic growth, would still result in a $1 trillion deficit by 2027. This analysis, broadly confirming a host of previous reports by economic think tanks and organizations, shattered one of the Big Lies being used to ram through the tax overhaul—the claim that the loss of $1.5 trillion in federal revenues due to tax breaks, going overwhelmingly to corporations and the rich, would be offset by a massive growth in tax income resulting from a more rapid rate of economic expansion.
Three Republican senators who had expressed reservations about the tax bill, including retiring senators Bob Corker and Jeff Flake, responded to the JTC report by demanding changes in the bill to add $500 billion in additional tax revenues. This sent Republican leaders and the White House scrambling to come up with band-aid fixes that would satisfy the Republican holdouts. With a narrow margin of 52 Republicans to 46 Democrats and two nominal independents who vote with the Democrats, the Republicans can afford to lose only two votes from their caucus to obtain a majority, including, if necessary, a tie-breaking vote by Vice President Mike Pence.
Nevertheless, Corker and Flake indicated they were prepared to vote in favor of the bill in its final form.
The ruthless and antidemocratic class character of the bill is reflected in the absurd lies being marshaled on its behalf. The cynically misnamed “Tax Cut and Jobs Act” is being promoted as a “middle-class” tax cut designed to create jobs and increase wages for “hard-working” taxpayers.
Leading the charge in this exercise in mass deceit is the billionaire con man-turned-president, Donald Trump. At a campaign-style event in Missouri on Wednesday, Trump declared, “Our focus is on helping the folks who work in the mailrooms and machine shops of America, the plumbers and the carpenters, the cops and the teachers, the truck drivers and the pipe fitters.”
He added, “This is going to cost me a fortune, this thing, believe me.” In fact, it is estimated that the Trump family will personally benefit from the tax overhaul to the tune of $1.1 billion.
The basic outlines of the House and Senate bills make a mockery of claims that they are geared to the needs of working people. The heart of both bills is a drastic cut in corporate taxes from 35 percent to 20 percent, which will save corporations $2 trillion over the next decade and increase their revenues by $6.7 trillion by 2037.
The official line that this will make US corporations more internationally competitive, leading to a surge in productive investment and the creation of good-paying, secure jobs, is belied by the fact that US corporations already pay an effective (i.e., real) tax rate of 19.4 percent, less than that of their global competitors. Corporate tax revenue in the US has fallen from 4 percent of the gross domestic product in 1967 to just 1.6 percent in 2016.
Moreover, US corporations are already making record profits, but instead of investing in new plants and equipment and hiring workers at decent wage rates, they are hoarding some $2 trillion and plowing most of the rest into stock buybacks and other forms of parasitical activities designed to drive up the personal wealth of CEOs and big investors.
Other provisions in both the House and Senate bills include drastic cuts or outright elimination of the estate tax, a measure that will benefit the richest 0.2 percent of the population and establish a de facto aristocracy of inherited wealth. The tax plans eliminate the alternative minimum tax, which is paid by the wealthiest households, and lower the top individual tax rate or raise the threshold for its application.
The Senate bill repeals the Obamacare individual mandate requiring people not covered by their employer or the government to purchase private health insurance, a change that will result in 13 million fewer people with health insurance by 2027 and a 10 percent per year increase in premiums for those who continue to purchase insurance on government-managed exchanges, according to the Congressional Budget Office.
The bill also eliminates all income tax deductions on state and local taxes. This provision, which will jack up federal taxes for millions of working people, is designed to achieve two goals: first, to rob ordinary taxpayers to help defray the cost of massive tax cuts for corporations and the rich; and, second, to make it politically impossible for state and local governments to raise taxes and force them to slash social services.
The House version eliminates most state and local tax deductions and, in addition, repeals tax deductions for medical expenses and nursing home care, limits tax deductions for home mortgage interest, and attacks college students by ending tax deductions for student loan interest and taxing tuition waivers for graduate students. Both versions impose taxes on university endowments. It is estimated that the House bill will cost college students $65 billion over the next ten years.
Both bills adopt the so-called “chained” Consumer Price Index for adjusting tax brackets and other tax provisions for inflation. Since the chained CPI underestimates inflation, more low- and middle-income families will be pushed into higher tax brackets and receive fewer benefits such as the earned income tax credit. Over the next decade, this change will cost families $134 billion, and the impact will worsen in future years. In 2027 alone, according to Congress’s Joint Committee on Taxation, families will lose $31.5 billion.
As a result, households earning less than $30,000 will begin to pay higher taxes as early as 2019. By 2021, all income groups making less than $40,000 a year will be net losers, according to the Congressional Budget Office (CBO). As of 2027, everyone making less than $75,000 will be paying higher taxes.
The rich, and especially the very rich, will, on the other hand, make huge gains. According to the Center on Budget and Policy Priorities, half of all tax cuts will go to the top 1 percent, those making more than $700,000 a year. The top 0.1 percent will receive up to 30 percent of total tax cuts.
Moreover, the tax plan is designed to provide the biggest percentage tax savings to the richest Americans, assuring that America, already the world’s most unequal developed economy, will become far more unequal.
There are other reactionary provisions, completely unrelated to tax policy. These include the repeal of a 1954 law banning churches from partisan political activity and the opening up of the Arctic National Wildlife Refuge to oil drilling.
In a Wall Street Journal column on Thursday, Republican operative Karl Rove spelled out the agenda for using the sharp increase in the federal deficit as justification for gutting basic social programs. Noting that the Congressional Budget Office predicts that the public debt will rise from 75.5 percent of GDP in fiscal year 2017 to 85.6 percent in 2026, he says, “This will require congressional Republicans to tackle mandatory spending, which is made up mostly of Social Security and Medicare.”
The CBO has warned that the tax bills could trigger automatic cuts in Medicare totaling $25 billion a year.
In the face of this unprecedented plundering of society for the benefit of a criminal financial elite, the Democrats are carrying out a token and two-faced show of opposition. They fully support a massive tax cut for corporations, quibbling only over the scale of the windfall for the rich. At the same time, they are pleading for Trump and the Republicans to enter into negotiations on a bipartisan tax cut plan.
They are far more focused on their witch hunts over alleged Russian meddling and alleged sexual improprieties by male entertainers and politicians, reactionary diversions that facilitate the assault on the social and democratic rights of the working class.
https://www.wsws.org/en/articles/2017/1 ... s-j01.html
By Barry Grey
1 December 2017
Following procedural votes that won the support of all 52 Republican senators, the US Senate on Thursday raced toward passage of a sweeping tax cut for corporations and the wealthy that will raise taxes on the working class and large sections of the middle class, starve the federal, state and local governments of revenues, and set the stage for the dismantling of basic entitlement programs such as Medicare and Social Security.
In a travesty of democratic procedure, a measure that will further restructure American society to benefit the ruling oligarchy at the expense of the mass of the population is being rushed through Congress without so much as a public hearing. Parliamentary gimmicks and backroom horse-trading are being used to impose the tax overhaul on a public that has been largely kept in the dark about its provisions, but nevertheless expresses mass opposition in opinion polls.
A floor vote is expected on Friday, and Republican leaders of the House of Representatives are calling on their members to reassemble early Monday to begin reconciling the Senate bill with a House version passed earlier this month. The prospect of early passage of a final bill, to be signed into law by President Trump before the end of the year, set off an explosion of euphoria and greed on Wall Street.
All of the major stock indexes soared to new record highs. The Dow Jones Industrial Average jumped 331 points, its biggest one-day gain of the year, to close well beyond the 24,000 mark, ending the session at 24,272.
A party-line vote on Wednesday to bring the Senate bill to the floor triggered a 20-hour debate followed by a so-called “vote-a-rama,” in which hundreds of amendments are submitted and disposed of in a rapid-fire and meaningless parliamentary charade.
Senate Republicans were hoping to hold a floor vote Thursday night, but were delayed when the nonpartisan congressional Joint Committee on Taxation (JCT) reported Thursday afternoon that the Republican plans, even assuming increased federal tax revenues from faster economic growth, would still result in a $1 trillion deficit by 2027. This analysis, broadly confirming a host of previous reports by economic think tanks and organizations, shattered one of the Big Lies being used to ram through the tax overhaul—the claim that the loss of $1.5 trillion in federal revenues due to tax breaks, going overwhelmingly to corporations and the rich, would be offset by a massive growth in tax income resulting from a more rapid rate of economic expansion.
Three Republican senators who had expressed reservations about the tax bill, including retiring senators Bob Corker and Jeff Flake, responded to the JTC report by demanding changes in the bill to add $500 billion in additional tax revenues. This sent Republican leaders and the White House scrambling to come up with band-aid fixes that would satisfy the Republican holdouts. With a narrow margin of 52 Republicans to 46 Democrats and two nominal independents who vote with the Democrats, the Republicans can afford to lose only two votes from their caucus to obtain a majority, including, if necessary, a tie-breaking vote by Vice President Mike Pence.
Nevertheless, Corker and Flake indicated they were prepared to vote in favor of the bill in its final form.
The ruthless and antidemocratic class character of the bill is reflected in the absurd lies being marshaled on its behalf. The cynically misnamed “Tax Cut and Jobs Act” is being promoted as a “middle-class” tax cut designed to create jobs and increase wages for “hard-working” taxpayers.
Leading the charge in this exercise in mass deceit is the billionaire con man-turned-president, Donald Trump. At a campaign-style event in Missouri on Wednesday, Trump declared, “Our focus is on helping the folks who work in the mailrooms and machine shops of America, the plumbers and the carpenters, the cops and the teachers, the truck drivers and the pipe fitters.”
He added, “This is going to cost me a fortune, this thing, believe me.” In fact, it is estimated that the Trump family will personally benefit from the tax overhaul to the tune of $1.1 billion.
The basic outlines of the House and Senate bills make a mockery of claims that they are geared to the needs of working people. The heart of both bills is a drastic cut in corporate taxes from 35 percent to 20 percent, which will save corporations $2 trillion over the next decade and increase their revenues by $6.7 trillion by 2037.
The official line that this will make US corporations more internationally competitive, leading to a surge in productive investment and the creation of good-paying, secure jobs, is belied by the fact that US corporations already pay an effective (i.e., real) tax rate of 19.4 percent, less than that of their global competitors. Corporate tax revenue in the US has fallen from 4 percent of the gross domestic product in 1967 to just 1.6 percent in 2016.
Moreover, US corporations are already making record profits, but instead of investing in new plants and equipment and hiring workers at decent wage rates, they are hoarding some $2 trillion and plowing most of the rest into stock buybacks and other forms of parasitical activities designed to drive up the personal wealth of CEOs and big investors.
Other provisions in both the House and Senate bills include drastic cuts or outright elimination of the estate tax, a measure that will benefit the richest 0.2 percent of the population and establish a de facto aristocracy of inherited wealth. The tax plans eliminate the alternative minimum tax, which is paid by the wealthiest households, and lower the top individual tax rate or raise the threshold for its application.
The Senate bill repeals the Obamacare individual mandate requiring people not covered by their employer or the government to purchase private health insurance, a change that will result in 13 million fewer people with health insurance by 2027 and a 10 percent per year increase in premiums for those who continue to purchase insurance on government-managed exchanges, according to the Congressional Budget Office.
The bill also eliminates all income tax deductions on state and local taxes. This provision, which will jack up federal taxes for millions of working people, is designed to achieve two goals: first, to rob ordinary taxpayers to help defray the cost of massive tax cuts for corporations and the rich; and, second, to make it politically impossible for state and local governments to raise taxes and force them to slash social services.
The House version eliminates most state and local tax deductions and, in addition, repeals tax deductions for medical expenses and nursing home care, limits tax deductions for home mortgage interest, and attacks college students by ending tax deductions for student loan interest and taxing tuition waivers for graduate students. Both versions impose taxes on university endowments. It is estimated that the House bill will cost college students $65 billion over the next ten years.
Both bills adopt the so-called “chained” Consumer Price Index for adjusting tax brackets and other tax provisions for inflation. Since the chained CPI underestimates inflation, more low- and middle-income families will be pushed into higher tax brackets and receive fewer benefits such as the earned income tax credit. Over the next decade, this change will cost families $134 billion, and the impact will worsen in future years. In 2027 alone, according to Congress’s Joint Committee on Taxation, families will lose $31.5 billion.
As a result, households earning less than $30,000 will begin to pay higher taxes as early as 2019. By 2021, all income groups making less than $40,000 a year will be net losers, according to the Congressional Budget Office (CBO). As of 2027, everyone making less than $75,000 will be paying higher taxes.
The rich, and especially the very rich, will, on the other hand, make huge gains. According to the Center on Budget and Policy Priorities, half of all tax cuts will go to the top 1 percent, those making more than $700,000 a year. The top 0.1 percent will receive up to 30 percent of total tax cuts.
Moreover, the tax plan is designed to provide the biggest percentage tax savings to the richest Americans, assuring that America, already the world’s most unequal developed economy, will become far more unequal.
There are other reactionary provisions, completely unrelated to tax policy. These include the repeal of a 1954 law banning churches from partisan political activity and the opening up of the Arctic National Wildlife Refuge to oil drilling.
In a Wall Street Journal column on Thursday, Republican operative Karl Rove spelled out the agenda for using the sharp increase in the federal deficit as justification for gutting basic social programs. Noting that the Congressional Budget Office predicts that the public debt will rise from 75.5 percent of GDP in fiscal year 2017 to 85.6 percent in 2026, he says, “This will require congressional Republicans to tackle mandatory spending, which is made up mostly of Social Security and Medicare.”
The CBO has warned that the tax bills could trigger automatic cuts in Medicare totaling $25 billion a year.
In the face of this unprecedented plundering of society for the benefit of a criminal financial elite, the Democrats are carrying out a token and two-faced show of opposition. They fully support a massive tax cut for corporations, quibbling only over the scale of the windfall for the rich. At the same time, they are pleading for Trump and the Republicans to enter into negotiations on a bipartisan tax cut plan.
They are far more focused on their witch hunts over alleged Russian meddling and alleged sexual improprieties by male entertainers and politicians, reactionary diversions that facilitate the assault on the social and democratic rights of the working class.
https://www.wsws.org/en/articles/2017/1 ... s-j01.html
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
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Senate OKs Tax Bill as Trump, GOP Near Big Legislative Win
WASHINGTON—Republicans pushed a nearly $1.5 trillion tax bill through the Senate early Saturday after a burst of eleventh-hour horse trading, as a party starved all year for a major legislative triumph took a giant step toward giving President Donald Trump one of his top priorities by Christmas.
“Big bills are rarely popular. You remember how unpopular ‘Obamacare’ was when it passed?” Senate Majority Leader Mitch McConnell, R-Ky., said in an interview, shrugging off polls showing scant public enthusiasm for the measure. He said the legislation would prove to be “just what the country needs to get growing again.”
Trump hailed the bill’s passage on Twitter, thanking McConnell and Senate Finance Committee Chairman Orrin Hatch, R-Utah. “Look forward to signing a final bill before Christmas!” the president wrote.
Presiding over the Senate, Vice President Mike Pence announced the 51-49 vote to applause from Republicans. Sen. Bob Corker, R-Tenn., was the only lawmaker to cross party lines, joining the Democrats in opposition. The measure focuses its tax reductions on businesses and higher-earning individuals, gives more modest breaks to others and offers the boldest rewrite of the nation’s tax system since 1986.
Republicans touted the package as one that would benefit people of all incomes and ignite the economy. Even an official projection of a $1 trillion, 10-year flood of deeper budget deficits couldn’t dissuade GOP senators from rallying behind the bill.
“Obviously I’m kind of a dinosaur on the fiscal issues,” said Corker, who battled to keep the bill from worsening the government’s accumulated $20 trillion in IOUs.
The Republican-led House approved a similar bill last month in what has been a stunningly swift trip through Congress for complex legislation that impacts the breadth of American society. The two chambers will now try crafting a final compromise to send Trump.
After spending the year’s first nine months futilely trying to repeal President Barack Obama’s health care law, GOP leaders were determined to move the measure rapidly before opposition Democrats and lobbying groups that could blow it up. The party views passage as crucial to retaining its House and Senate majorities in next year’s elections.
Democrats derided the bill as a GOP gift to its wealthy and business backers at the expense of lower-earning people. They contrasted the bill’s permanent reduction in corporate income tax rates from 35 percent to 20 percent to smaller individual tax breaks that would end in 2026.
Congress’ nonpartisan Joint Committee on Taxation has said the bill’s reductions for many families would be modest and said by 2027, families earning under $75,000 would on average face higher, not lower, taxes.
The bill is “removed from the reality of what the American people need,” said Senate Minority Leader Chuck Schumer, D-N.Y. He criticized Republicans for releasing a revised, 479-page bill that no one can absorb shortly before the final vote, saying, “The Senate is descending to a new low of chicanery.”
“You really don’t read this kind of legislation,” Sen. Ron Johnson, R-Wis., told home-state reporters, who asked why the Senate was approving a bill some senators hadn’t read. He said lawmakers needed to study it and get feedback from affected groups.
Democrats took to the Senate floor and social media to mock one page that included changes scrawled in barely legible handwriting. Later, they won enough GOP support to kill a provision by Sen. Pat Toomey, R-Pa., that would have bestowed a tax break on conservative Hillsdale College in Michigan.
The bill hit rough waters after the Joint Taxation panel concluded it would worsen federal shortfalls by $1 trillion over a decade, even when factoring in economic growth that lower taxes would stimulate. Trump administration officials and many Republicans have insisted the bill would pay for itself by stimulating the economy. But the sour projections stiffened resistance from some deficit-averse Republicans.
But after bargaining that stretched into Friday, GOP leaders nailed down the support they needed in a chamber they control 52-48. Facing unyielding Democratic opposition, Republicans could lose no more than two GOP senators and prevail with a tie-breaking vote from Vice President Mike Pence, but ended up not needing it.
Leaders’ changes included helping millions of companies whose owners pay individual, not corporate, taxes on their profits by allowing deductions of 23 percent, up from 17.4 percent. That helped win over Wisconsin’s Johnson and Steve Daines of Montana.
People would be allowed to deduct up to $10,000 in property taxes, a demand of Sen. Susan Collins of Maine. That matched a House provision that chamber’s leaders included to keep some GOP votes from high-tax states like New York, New Jersey and California.
The changes added nearly $300 billion to the tax bill’s costs. To pay for that, leaders reduced the number of high-earners who must pay the alternative minimum tax, rather than completely erasing it. They also increased a one-time tax on profits U.S.-based corporations are holding overseas and would require firms to keep paying the business version of the alternative minimum tax.
Sen. Jeff Flake, R-Ariz.—who like Corker had been a holdout and has sharply attacked Trump’s capabilities as president—voted for the bill. He said he’d received commitments from party leaders and the administration “to work with me” to restore protections, dismantled by Trump, for young immigrants who arrived in the U.S. illegally as children. That seemed short of a pledge to actually revive the safeguards.
The Senate bill would drop the highest personal income tax rate from 39.6 percent to 38.5 percent. The estate tax levied on a few thousand of the nation’s largest inheritances would be narrowed to affect even fewer.
Deductions for state and local income taxes, moving expenses and other items would vanish, the standard deduction—used by most Americans—would nearly double to $12,000 for individuals and $24,000 for couples, and the per-child tax credit would grow.
The bill would abolish the “Obamacare” requirement that most people buy health coverage or face tax penalties. Industry experts say that would weaken the law by easing pressure on healthier people to buy coverage, and the nonpartisan Congressional Budget Office has said the move would push premiums higher and leave 13 million additional people uninsured.
Drilling would be allowed in the Arctic National Wildlife Refuge. Another provision, knocked out because it violated Senate budget rules, would have explicitly let parents buy tax-advantaged 529 college savings accounts for fetuses, a step they can already take but which anti-abortion forces wanted to inscribe into law. There were also breaks for the wine, beer and spirits industries, Alaska Natives and aircraft management firms.
https://www.truthdig.com/articles/senat ... ative-win/
Senate OKs Tax Bill as Trump, GOP Near Big Legislative Win
WASHINGTON—Republicans pushed a nearly $1.5 trillion tax bill through the Senate early Saturday after a burst of eleventh-hour horse trading, as a party starved all year for a major legislative triumph took a giant step toward giving President Donald Trump one of his top priorities by Christmas.
“Big bills are rarely popular. You remember how unpopular ‘Obamacare’ was when it passed?” Senate Majority Leader Mitch McConnell, R-Ky., said in an interview, shrugging off polls showing scant public enthusiasm for the measure. He said the legislation would prove to be “just what the country needs to get growing again.”
Trump hailed the bill’s passage on Twitter, thanking McConnell and Senate Finance Committee Chairman Orrin Hatch, R-Utah. “Look forward to signing a final bill before Christmas!” the president wrote.
Presiding over the Senate, Vice President Mike Pence announced the 51-49 vote to applause from Republicans. Sen. Bob Corker, R-Tenn., was the only lawmaker to cross party lines, joining the Democrats in opposition. The measure focuses its tax reductions on businesses and higher-earning individuals, gives more modest breaks to others and offers the boldest rewrite of the nation’s tax system since 1986.
Republicans touted the package as one that would benefit people of all incomes and ignite the economy. Even an official projection of a $1 trillion, 10-year flood of deeper budget deficits couldn’t dissuade GOP senators from rallying behind the bill.
“Obviously I’m kind of a dinosaur on the fiscal issues,” said Corker, who battled to keep the bill from worsening the government’s accumulated $20 trillion in IOUs.
The Republican-led House approved a similar bill last month in what has been a stunningly swift trip through Congress for complex legislation that impacts the breadth of American society. The two chambers will now try crafting a final compromise to send Trump.
After spending the year’s first nine months futilely trying to repeal President Barack Obama’s health care law, GOP leaders were determined to move the measure rapidly before opposition Democrats and lobbying groups that could blow it up. The party views passage as crucial to retaining its House and Senate majorities in next year’s elections.
Democrats derided the bill as a GOP gift to its wealthy and business backers at the expense of lower-earning people. They contrasted the bill’s permanent reduction in corporate income tax rates from 35 percent to 20 percent to smaller individual tax breaks that would end in 2026.
Congress’ nonpartisan Joint Committee on Taxation has said the bill’s reductions for many families would be modest and said by 2027, families earning under $75,000 would on average face higher, not lower, taxes.
The bill is “removed from the reality of what the American people need,” said Senate Minority Leader Chuck Schumer, D-N.Y. He criticized Republicans for releasing a revised, 479-page bill that no one can absorb shortly before the final vote, saying, “The Senate is descending to a new low of chicanery.”
“You really don’t read this kind of legislation,” Sen. Ron Johnson, R-Wis., told home-state reporters, who asked why the Senate was approving a bill some senators hadn’t read. He said lawmakers needed to study it and get feedback from affected groups.
Democrats took to the Senate floor and social media to mock one page that included changes scrawled in barely legible handwriting. Later, they won enough GOP support to kill a provision by Sen. Pat Toomey, R-Pa., that would have bestowed a tax break on conservative Hillsdale College in Michigan.
The bill hit rough waters after the Joint Taxation panel concluded it would worsen federal shortfalls by $1 trillion over a decade, even when factoring in economic growth that lower taxes would stimulate. Trump administration officials and many Republicans have insisted the bill would pay for itself by stimulating the economy. But the sour projections stiffened resistance from some deficit-averse Republicans.
But after bargaining that stretched into Friday, GOP leaders nailed down the support they needed in a chamber they control 52-48. Facing unyielding Democratic opposition, Republicans could lose no more than two GOP senators and prevail with a tie-breaking vote from Vice President Mike Pence, but ended up not needing it.
Leaders’ changes included helping millions of companies whose owners pay individual, not corporate, taxes on their profits by allowing deductions of 23 percent, up from 17.4 percent. That helped win over Wisconsin’s Johnson and Steve Daines of Montana.
People would be allowed to deduct up to $10,000 in property taxes, a demand of Sen. Susan Collins of Maine. That matched a House provision that chamber’s leaders included to keep some GOP votes from high-tax states like New York, New Jersey and California.
The changes added nearly $300 billion to the tax bill’s costs. To pay for that, leaders reduced the number of high-earners who must pay the alternative minimum tax, rather than completely erasing it. They also increased a one-time tax on profits U.S.-based corporations are holding overseas and would require firms to keep paying the business version of the alternative minimum tax.
Sen. Jeff Flake, R-Ariz.—who like Corker had been a holdout and has sharply attacked Trump’s capabilities as president—voted for the bill. He said he’d received commitments from party leaders and the administration “to work with me” to restore protections, dismantled by Trump, for young immigrants who arrived in the U.S. illegally as children. That seemed short of a pledge to actually revive the safeguards.
The Senate bill would drop the highest personal income tax rate from 39.6 percent to 38.5 percent. The estate tax levied on a few thousand of the nation’s largest inheritances would be narrowed to affect even fewer.
Deductions for state and local income taxes, moving expenses and other items would vanish, the standard deduction—used by most Americans—would nearly double to $12,000 for individuals and $24,000 for couples, and the per-child tax credit would grow.
The bill would abolish the “Obamacare” requirement that most people buy health coverage or face tax penalties. Industry experts say that would weaken the law by easing pressure on healthier people to buy coverage, and the nonpartisan Congressional Budget Office has said the move would push premiums higher and leave 13 million additional people uninsured.
Drilling would be allowed in the Arctic National Wildlife Refuge. Another provision, knocked out because it violated Senate budget rules, would have explicitly let parents buy tax-advantaged 529 college savings accounts for fetuses, a step they can already take but which anti-abortion forces wanted to inscribe into law. There were also breaks for the wine, beer and spirits industries, Alaska Natives and aircraft management firms.
https://www.truthdig.com/articles/senat ... ative-win/
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
Trump’s tax plan provides massive windfall to the rich
By Trévon Austin
28 September 2017
President Donald Trump revealed his tax cut plan Wednesday, calling it “a revolutionary change.” The plan consists of an array of cuts which would provide a historic windfall for large corporations and the rich. If passed by Congress it would represent the most expansive change to the tax code since the New Deal reforms of President Franklin Delano Roosevelt.
The proposal was produced after months of secret talks between the so-called “Big-Six,” Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, both multi-millionaire former employees of Wall Street firm Goldman Sachs, and leading Republicans from the House and Senate.
Trump sought to give the plan a populist touch during a speech announcing the plan in Indianapolis, framing his proposals as a boon for the middle class, American workers and American manufacturing.
“I’ve been waiting for this for a long time. We're going to cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans. And we are going to bring back the jobs and wealth that have left our country and most people thought left our country for good,” Trump claimed.
However, an analysis by the Center on Budget and Policy Priorities (CBPP) estimates approximately half of the tax cuts would go to the top 1 percent of households, those making more than $700,000 per year, for an average cut of $150,000 per year. Within in this group, the richest of the rich, the top 0.1 percent, would receive 30 percent of the tax cuts, for an average cut of $800,000 per year.
Meanwhile there would be “little discernable” benefit for working class families under Trump’s plan, according to the CBPP. A married couple with one child that earns less than $24,850 a year will receive no tax cut under the plan, while a similar family earning $48,700 will see a cut of just $180.
For individuals, the tax plan would ditch the current system of seven tax brackets and collapse them into three brackets, with 12 percent, 25 percent, and 35 percent tax rates. This would constitute a tax cut for the wealthiest individuals, who currently have a top tax rate of 39.6 percent, and an increase for the poorest individuals, with a current tax rate of 10 percent.
The proposal contains a suggestion that Congress consider creating a fourth tax rate above 35 percent, which Trump touted as a measure to ensure that the wealthiest are paying their fair share.
However, the plan does not specify what income level the new tax bracket would be associated with, nor does it explicitly tell Congress to create the fourth bracket. This was obviously placed in the plan to ensure that the president can claim he did not rescind his promise that the rich would not benefit from his tax reforms. One can expect the two big business parties to ignore this section of the proposal as a tax bill makes its way through Congress.
Significantly, the plan also calls for the abolition of the estate tax, a tax on inherited wealth. Opponents of the estate tax argue family-owned small farms are endangered by the tax. However, an analysis of data from the Tax Policy Center shows that only 50 small farms are affected by the estate tax in the United States. The overwhelming beneficiaries of this cut will be the heirs and heiresses of wealthy estates such as Trump’s own children.
Furthermore, corporations would save billions under Trump’s plan, as it calls for a reduction in the corporate tax rate from 35 percent to 20 percent. A proposed transition from an international tax system to a territorial tax system means that corporations would not be taxed on their overseas earnings. This includes a one-time “repatriation tax” aimed at encouraging corporations to bring offshore profits and jobs back to the United States. The level of this tax is left for Congress to decide.
A new tax rate for “pass-through businesses” would be implemented as well. These include businesses and corporations whose profits “pass through” to their owners. The businesses would be taxed at a rate of 25 percent instead of the individual rate that their owners are currently taxed at.
Approximately 95 percent of businesses in the United States are structured as “pass-throughs.” Again, this new tax rate would constitute a reduction in the amount of taxes the wealthiest corporation owners would be required to pay.
Trump administration officials have not commented on the cost of the proposed plan. One estimate from the Committee for a Responsible Federal Budget found that the policies in the plan would cost about $2.2 trillion over ten years.
Beyond reducing deficit spending, top Republicans claim that the resulting economic growth would compensate for the loss in revenue. During the 2016 presidential campaign Trump claimed that his tax plan would raise the economic growth rate to 4 percent.
While leading Democrats, including Senate minority leader Chuck Schumer, have postured publicly against Trump’s proposals they are eager to work behind closed doors with the president to slash the taxes for the rich.
Democratic members of the House Ways and Means Committee received an advance briefing Tuesday on the president’s proposal at the White House. On Wednesday, Democratic Senator Joe Donnelly from Indiana accompanied Trump on Air Force One to the rally in Indianapolis.
https://www.wsws.org/en/articles/2017/0 ... n-s28.html
By Trévon Austin
28 September 2017
President Donald Trump revealed his tax cut plan Wednesday, calling it “a revolutionary change.” The plan consists of an array of cuts which would provide a historic windfall for large corporations and the rich. If passed by Congress it would represent the most expansive change to the tax code since the New Deal reforms of President Franklin Delano Roosevelt.
The proposal was produced after months of secret talks between the so-called “Big-Six,” Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, both multi-millionaire former employees of Wall Street firm Goldman Sachs, and leading Republicans from the House and Senate.
Trump sought to give the plan a populist touch during a speech announcing the plan in Indianapolis, framing his proposals as a boon for the middle class, American workers and American manufacturing.
“I’ve been waiting for this for a long time. We're going to cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans. And we are going to bring back the jobs and wealth that have left our country and most people thought left our country for good,” Trump claimed.
However, an analysis by the Center on Budget and Policy Priorities (CBPP) estimates approximately half of the tax cuts would go to the top 1 percent of households, those making more than $700,000 per year, for an average cut of $150,000 per year. Within in this group, the richest of the rich, the top 0.1 percent, would receive 30 percent of the tax cuts, for an average cut of $800,000 per year.
Meanwhile there would be “little discernable” benefit for working class families under Trump’s plan, according to the CBPP. A married couple with one child that earns less than $24,850 a year will receive no tax cut under the plan, while a similar family earning $48,700 will see a cut of just $180.
For individuals, the tax plan would ditch the current system of seven tax brackets and collapse them into three brackets, with 12 percent, 25 percent, and 35 percent tax rates. This would constitute a tax cut for the wealthiest individuals, who currently have a top tax rate of 39.6 percent, and an increase for the poorest individuals, with a current tax rate of 10 percent.
The proposal contains a suggestion that Congress consider creating a fourth tax rate above 35 percent, which Trump touted as a measure to ensure that the wealthiest are paying their fair share.
However, the plan does not specify what income level the new tax bracket would be associated with, nor does it explicitly tell Congress to create the fourth bracket. This was obviously placed in the plan to ensure that the president can claim he did not rescind his promise that the rich would not benefit from his tax reforms. One can expect the two big business parties to ignore this section of the proposal as a tax bill makes its way through Congress.
Significantly, the plan also calls for the abolition of the estate tax, a tax on inherited wealth. Opponents of the estate tax argue family-owned small farms are endangered by the tax. However, an analysis of data from the Tax Policy Center shows that only 50 small farms are affected by the estate tax in the United States. The overwhelming beneficiaries of this cut will be the heirs and heiresses of wealthy estates such as Trump’s own children.
Furthermore, corporations would save billions under Trump’s plan, as it calls for a reduction in the corporate tax rate from 35 percent to 20 percent. A proposed transition from an international tax system to a territorial tax system means that corporations would not be taxed on their overseas earnings. This includes a one-time “repatriation tax” aimed at encouraging corporations to bring offshore profits and jobs back to the United States. The level of this tax is left for Congress to decide.
A new tax rate for “pass-through businesses” would be implemented as well. These include businesses and corporations whose profits “pass through” to their owners. The businesses would be taxed at a rate of 25 percent instead of the individual rate that their owners are currently taxed at.
Approximately 95 percent of businesses in the United States are structured as “pass-throughs.” Again, this new tax rate would constitute a reduction in the amount of taxes the wealthiest corporation owners would be required to pay.
Trump administration officials have not commented on the cost of the proposed plan. One estimate from the Committee for a Responsible Federal Budget found that the policies in the plan would cost about $2.2 trillion over ten years.
Beyond reducing deficit spending, top Republicans claim that the resulting economic growth would compensate for the loss in revenue. During the 2016 presidential campaign Trump claimed that his tax plan would raise the economic growth rate to 4 percent.
While leading Democrats, including Senate minority leader Chuck Schumer, have postured publicly against Trump’s proposals they are eager to work behind closed doors with the president to slash the taxes for the rich.
Democratic members of the House Ways and Means Committee received an advance briefing Tuesday on the president’s proposal at the White House. On Wednesday, Democratic Senator Joe Donnelly from Indiana accompanied Trump on Air Force One to the rally in Indianapolis.
https://www.wsws.org/en/articles/2017/0 ... n-s28.html
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
THE TRUMP/GOP TAX PLAN – ROBIN HOOD IN REVERSE
To hear Donald Trump and the GOP leadership talk, you would think the biggest corporations in the U.S. along with the wealthiest families, are cash strapped and in need of a massive shot in the arm – in the form of a multi-trillion dollar tax cut. Trump promised this tax cut “will be the biggest in the history of our country!” at a price tag of $2.4 trillion. According to tax policy expert David Cay Johnston, up to two-thirds of the cuts will go to the top 1% – the wealthiest families and corporations.
The plan will reduce the corporate tax rate from 35% to 20%. Given how low the effective rate is, this would make them pay next to nothing in federal income taxes. It would eliminate the estate tax, which only applies to the richest households (on estates worth $5.5 million for individuals and $11 million for couples). Further, according to DCReport.org “the top tax rate on partnerships and limited liability companies [also known as pass-through entities] would fall from 39.6% to 25%. Trump has more than 500 such businesses.”
Another major piece of the goodies for the wealthiest corporations is a massive reduction in the repatriation tax. This will see the rate at which capital previously sheltered overseas is taxed when brought back into the U.S. drop from 35% to 12%. This is nothing but a gift to parasitic overseas tax havens. A look at how much money is hidden in these tax havens, based on the expose of the “Paradise Papers,” shows you how much of a theft from the working class and poor it really is. All this profit, this hidden wealth that the rich feel they can sequester, is created by the blood, sweat and tears of working people.
The drastic reduction in the tax on repatriation is also likely to set off a global tax war. Countries where this capital is currently parked will be intensely pressured to reduce their own tax rate steeply: a win-win for multinational corporations and a lose-lose for the workers and poor of the world.
Tax Reform Is Class Warfare
The tax plan is also billed as “tax reform,” a simplification of the tax code, a long-time talking point of conservative tax policy. It involves collapsing the personal income tax brackets into just 4 levels from 7, which includes raising the bottom rate from 10 to 12%, reducing the top rate from 39% to 35% as well as raising the income threshold at which the top rate would begin to apply. So it’s actually raising taxes on the poor while reducing taxes on the rich. CNBC reports that, by 2019, 9 percent of taxpayers would pay higher taxes, which would expand to 50 percent by 2027. And that’s not even counting the cuts to vital social services that will be used to fund the tax cuts.
There is no way to interpret what the GOP and Trump are proposing other than naked, arrogant and shameless class warfare from the top. It’s another massive transfer of wealth from the poor and working people to the wealthiest, especially the few hundred families that will gain the lion’s share of loot from this tax bill. It seems nothing will ever be enough for them. Nothing will ever satisfy their voracious parasitic leeching of the lifeblood of all of society.
We’re in a time where U.S. corporate profits are at historic highs. CNBC reported on May 12 this year that “about 72 percent [of S&P 500 firms] have topped Wall Street estimates” in profits earnings. Moreover, some 20 top U.S. companies made $3.2 trillion in total revenue in 2016 and only paid $108 billion in federal taxes – just a little over 3% (Source: Forbes’ America’s Largest Companies List). So why do they need more?
Further, some $1.5 trillion of the GOP tax plan will be deficit financed. What rank hypocrisy! The rightwing are deficit hawks only when it comes to spending and social services for poor and working class people, often using coded racialized language to sell their austerity plans. Yet when it comes to facilitating a historic heist of the treasury in favor of the donor class, concern about deficits are tossed out the window. They also have no problem with the idea of making the bloated military budget even bigger.
Medicaid Under Attack Again
But it is precisely through deep cuts to social spending that the GOP plan to plug the budget hole in the future – The Intercept reports the plan would “lead to a $1 trillion cut to Medicaid and $473 billion cut to Medicare over the next decade, along with slashing other programs low-income individuals rely on, according to a new report prepared by the Senate Budget Committee minority staff.
The fate of the Tax bill is far from certain. There is intense pressure to pass it as Republicans are in desperate need to pass major legislation going into 2018 midterms, having failed to do so for nine months despite controlling both houses of Congress and the presidency. However, there is a segment of GOP politicians worried about the optics of this bill as Robin Hood in reverse. There are also the GOP Senators and house Republicans from higher tax blue states where the tax plan’s elimination of the deduction for state and local income taxes presents a problem. Then there’s the billionaire donor class. The Koch brothers represent a wing that wants a historic tax cut victory and is willing to compromise to make it more palatable. On the other hand, the Mercers, a Trump backing New York billionaire family leads a group of particularly rapacious capitalists that want to absolutely slash and burn the social safety net and make a killing on tax savings along the way.
On November 16, the tax plan went through the House, but it’s less certain that it will make it through the Senate. An article in Newsweek points to seven Senate Republicans who could possibly derail the tax plan. But we can’t be complacent. Despite this uncertainty, as during the Trumpcare fight, it is too dangerous to rely on a GOP civil war for this to fail. There needs to be mass public fightback led by labor and community groups fighting to not just reject the Trump/GOP Tax Plan, but to demand a massive increase in taxes on the super rich and corporations.
How About Taxing The Rich?
The grand justification for all of this of course is the tired old “trickle-down economics” dating back to the Reagan era. We are told businesses and capital rich individuals aren’t investing in the economy because of high taxes. However the Bush tax cuts of the early 2000’s didn’t lead to a big increase in investment. In fact this was a few short years before the Great Recession of 2008. The Tax Policy Center’s Howard Gleckman has said, “while the Framework’s tax rate cuts would generate new economic activity at first, those growth effects would be washed out in a few years by the effects of higher budget deficits. Because the federal government would have to borrow more to finance the tax cuts, less money would be available for private investment.”
The fact that corporate profits are at historic highs and the income of the top 1%, especially the top .01%, have risen to stratospheric levels while paying among the lowest effective tax rates in the world, makes this jobs and investment justification laughable. The reason these capitalists aren’t investing is because they’ve spent decades decimating the spending power of the working class in the form of wages and benefits. Now they can’t get people to buy up all their products.
In fact there should be massive increases in taxes on the super rich, the banks, and the Fortune 500 companies. We’ve spent years bailing them out for no real return on investment for the vast majority of ordinary people. We can use the increased revenue for a massive new green jobs program, plugging up all the state and local deficits currently causing deep cuts to social programs and to pay for free high quality public higher education and childcare services.
Any party worth its salt as defender of the 99% would be fighting loud and clear for these demands. Yet all the corporate controlled Democratic Party leadership can manage to do is say how bad the GOP tax plan is and commit to voting against it. That’s not enough. This tax plan is deeply unpopular. They could mobilize mass public opinion against it as a sharp warning for the political future of the GOP. But they refuse to do that because those mobilized will likely go beyond the program the Democratic leadership will accept and it would also bite the hand of the donor class that feeds the Democratic Party establishment as well.
The role of the Democratic Party was revealed earlier in the budget discussions, which saw a $696.5 billion defense bill supported by 60% of House Democrats, and all but four Democratic Senators. Forbes reports that this defense spending is in excess of what Trump himself proposed. Meanwhile The Intercept reports that the money spent on this plan alone could could fund free public college, a campaign proposal of Bernie Sanders that the Democratic Party establishment notoriously dismissed as “pie in the sky.”
While taxing the rich is a first step it is not enough. As long as the wealth is controlled by the top 1% and capitalist class, they will find ways to horde as much of their wealth as possible and their system will be a source of interminable economic and social crises. We need to fight for a socialist society in which the top banks and corporations are taken into public ownership under direct democratic control of workers, consumers and broader public. Only then can we guarantee that these massive profits currently shielded from the treasuries of capitalist governments, are used for full public investment in jobs and social services.
https://www.socialistalternative.org/20 ... d-reverse/
To hear Donald Trump and the GOP leadership talk, you would think the biggest corporations in the U.S. along with the wealthiest families, are cash strapped and in need of a massive shot in the arm – in the form of a multi-trillion dollar tax cut. Trump promised this tax cut “will be the biggest in the history of our country!” at a price tag of $2.4 trillion. According to tax policy expert David Cay Johnston, up to two-thirds of the cuts will go to the top 1% – the wealthiest families and corporations.
The plan will reduce the corporate tax rate from 35% to 20%. Given how low the effective rate is, this would make them pay next to nothing in federal income taxes. It would eliminate the estate tax, which only applies to the richest households (on estates worth $5.5 million for individuals and $11 million for couples). Further, according to DCReport.org “the top tax rate on partnerships and limited liability companies [also known as pass-through entities] would fall from 39.6% to 25%. Trump has more than 500 such businesses.”
Another major piece of the goodies for the wealthiest corporations is a massive reduction in the repatriation tax. This will see the rate at which capital previously sheltered overseas is taxed when brought back into the U.S. drop from 35% to 12%. This is nothing but a gift to parasitic overseas tax havens. A look at how much money is hidden in these tax havens, based on the expose of the “Paradise Papers,” shows you how much of a theft from the working class and poor it really is. All this profit, this hidden wealth that the rich feel they can sequester, is created by the blood, sweat and tears of working people.
The drastic reduction in the tax on repatriation is also likely to set off a global tax war. Countries where this capital is currently parked will be intensely pressured to reduce their own tax rate steeply: a win-win for multinational corporations and a lose-lose for the workers and poor of the world.
Tax Reform Is Class Warfare
The tax plan is also billed as “tax reform,” a simplification of the tax code, a long-time talking point of conservative tax policy. It involves collapsing the personal income tax brackets into just 4 levels from 7, which includes raising the bottom rate from 10 to 12%, reducing the top rate from 39% to 35% as well as raising the income threshold at which the top rate would begin to apply. So it’s actually raising taxes on the poor while reducing taxes on the rich. CNBC reports that, by 2019, 9 percent of taxpayers would pay higher taxes, which would expand to 50 percent by 2027. And that’s not even counting the cuts to vital social services that will be used to fund the tax cuts.
There is no way to interpret what the GOP and Trump are proposing other than naked, arrogant and shameless class warfare from the top. It’s another massive transfer of wealth from the poor and working people to the wealthiest, especially the few hundred families that will gain the lion’s share of loot from this tax bill. It seems nothing will ever be enough for them. Nothing will ever satisfy their voracious parasitic leeching of the lifeblood of all of society.
We’re in a time where U.S. corporate profits are at historic highs. CNBC reported on May 12 this year that “about 72 percent [of S&P 500 firms] have topped Wall Street estimates” in profits earnings. Moreover, some 20 top U.S. companies made $3.2 trillion in total revenue in 2016 and only paid $108 billion in federal taxes – just a little over 3% (Source: Forbes’ America’s Largest Companies List). So why do they need more?
Further, some $1.5 trillion of the GOP tax plan will be deficit financed. What rank hypocrisy! The rightwing are deficit hawks only when it comes to spending and social services for poor and working class people, often using coded racialized language to sell their austerity plans. Yet when it comes to facilitating a historic heist of the treasury in favor of the donor class, concern about deficits are tossed out the window. They also have no problem with the idea of making the bloated military budget even bigger.
Medicaid Under Attack Again
But it is precisely through deep cuts to social spending that the GOP plan to plug the budget hole in the future – The Intercept reports the plan would “lead to a $1 trillion cut to Medicaid and $473 billion cut to Medicare over the next decade, along with slashing other programs low-income individuals rely on, according to a new report prepared by the Senate Budget Committee minority staff.
The fate of the Tax bill is far from certain. There is intense pressure to pass it as Republicans are in desperate need to pass major legislation going into 2018 midterms, having failed to do so for nine months despite controlling both houses of Congress and the presidency. However, there is a segment of GOP politicians worried about the optics of this bill as Robin Hood in reverse. There are also the GOP Senators and house Republicans from higher tax blue states where the tax plan’s elimination of the deduction for state and local income taxes presents a problem. Then there’s the billionaire donor class. The Koch brothers represent a wing that wants a historic tax cut victory and is willing to compromise to make it more palatable. On the other hand, the Mercers, a Trump backing New York billionaire family leads a group of particularly rapacious capitalists that want to absolutely slash and burn the social safety net and make a killing on tax savings along the way.
On November 16, the tax plan went through the House, but it’s less certain that it will make it through the Senate. An article in Newsweek points to seven Senate Republicans who could possibly derail the tax plan. But we can’t be complacent. Despite this uncertainty, as during the Trumpcare fight, it is too dangerous to rely on a GOP civil war for this to fail. There needs to be mass public fightback led by labor and community groups fighting to not just reject the Trump/GOP Tax Plan, but to demand a massive increase in taxes on the super rich and corporations.
How About Taxing The Rich?
The grand justification for all of this of course is the tired old “trickle-down economics” dating back to the Reagan era. We are told businesses and capital rich individuals aren’t investing in the economy because of high taxes. However the Bush tax cuts of the early 2000’s didn’t lead to a big increase in investment. In fact this was a few short years before the Great Recession of 2008. The Tax Policy Center’s Howard Gleckman has said, “while the Framework’s tax rate cuts would generate new economic activity at first, those growth effects would be washed out in a few years by the effects of higher budget deficits. Because the federal government would have to borrow more to finance the tax cuts, less money would be available for private investment.”
The fact that corporate profits are at historic highs and the income of the top 1%, especially the top .01%, have risen to stratospheric levels while paying among the lowest effective tax rates in the world, makes this jobs and investment justification laughable. The reason these capitalists aren’t investing is because they’ve spent decades decimating the spending power of the working class in the form of wages and benefits. Now they can’t get people to buy up all their products.
In fact there should be massive increases in taxes on the super rich, the banks, and the Fortune 500 companies. We’ve spent years bailing them out for no real return on investment for the vast majority of ordinary people. We can use the increased revenue for a massive new green jobs program, plugging up all the state and local deficits currently causing deep cuts to social programs and to pay for free high quality public higher education and childcare services.
Any party worth its salt as defender of the 99% would be fighting loud and clear for these demands. Yet all the corporate controlled Democratic Party leadership can manage to do is say how bad the GOP tax plan is and commit to voting against it. That’s not enough. This tax plan is deeply unpopular. They could mobilize mass public opinion against it as a sharp warning for the political future of the GOP. But they refuse to do that because those mobilized will likely go beyond the program the Democratic leadership will accept and it would also bite the hand of the donor class that feeds the Democratic Party establishment as well.
The role of the Democratic Party was revealed earlier in the budget discussions, which saw a $696.5 billion defense bill supported by 60% of House Democrats, and all but four Democratic Senators. Forbes reports that this defense spending is in excess of what Trump himself proposed. Meanwhile The Intercept reports that the money spent on this plan alone could could fund free public college, a campaign proposal of Bernie Sanders that the Democratic Party establishment notoriously dismissed as “pie in the sky.”
While taxing the rich is a first step it is not enough. As long as the wealth is controlled by the top 1% and capitalist class, they will find ways to horde as much of their wealth as possible and their system will be a source of interminable economic and social crises. We need to fight for a socialist society in which the top banks and corporations are taken into public ownership under direct democratic control of workers, consumers and broader public. Only then can we guarantee that these massive profits currently shielded from the treasuries of capitalist governments, are used for full public investment in jobs and social services.
https://www.socialistalternative.org/20 ... d-reverse/
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
I take issue with calling this a 'Trump' tax bill. It is a Republican tax bill addressing virtually their entire bucket list of the past half century. What is not addressed directly will be as they balance the 1T deficit they create by taking the knife to so-called entitlements. They will receive Democratic help in that as the Dems piss in the vat to set the Republican dye. As usual. Trump really got little to do with it though of course he'll take the credit and tell his base that it's raining as he pisses on their boots.
"There is great chaos under heaven; the situation is excellent."
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
Trump tax cut plan will devastate public education
By Patrick Martin
6 December 2017
The tax cut legislation backed by the Trump White House is more than just a trillion-dollar windfall for the super-rich. The bills passed by the House and Senate in different forms will now be reconciled in a special conference, but both versions contain provisions that will devastate public education while promoting the growth of private and religious schools.
The largest single impact will come from drastically reducing the deduction for state and local income taxes, as proposed by the House, or eliminating the deduction altogether, as proposed by the Senate. Both versions put a $10,000 cap on the deduction for state and local property taxes. These two forms of taxation supply the bulk of the funds for public education.
School districts across the country have warned that without the federal deductions to cushion the impact, it will be much harder to maintain existing state and local taxes to support public schools, let alone win the approval of millage increases. If state and local taxes are lowered to offset the loss of the federal deduction (or simply frozen at present levels, which means a reduction over time in real terms), the result would be a sharp fall in funding for public schools.
According to the National Education Association (NEA), the largest US teachers’ union, the House bill would threaten $250 billion in funding over 10 years, the Senate bill would threaten $370 billion in funding over the same period. At an average cost of $100,000 per employee, counting wages, health care, taxes and pension contributions, that means 250,000 to 370,000 school jobs would be at risk.
In other words, the Trump tax cut could have as devastating an impact on education as the 2008 Wall Street crash. The deep recession that followed the crash led to huge spending cuts by state and local government, resulting in the elimination of 366,000 school jobs during the ensuing six years. The Obama administration’s “stimulus” program did little or nothing to offset these drastic cuts.
The NEA released last month a state-by-state analysis of the prospective cuts in school spending, which would see the biggest impact in a handful of states with higher local and state tax rates: California ($63 billion), Georgia ($12.5 billion), Illinois ($14.3 billion), New Jersey ($22.2 billion), New York ($34.4 billion), Pennsylvania ($12.6 billion), Texas ($22.1 billion) and Virginia ($13.5 billion).
The tax bill also prohibits a form of local school funding: tax-free “advance refund bonds,” which allow school districts to refinance debt when interest rates are low, as they are now. This is simply a handout to bondholders, most of whom are wealthy investors, at the expense of the public schools.
The political goal of undermining and ultimately destroying public education was reflected in the passage of an amendment to the Senate bill, sponsored by ultra-right Texas Republican Ted Cruz, which allows holders of tax-free 529 accounts, originally set up to provide for college education, to use the money for private and religious elementary and secondary schools.
This is both a boon to the wealthy and a blow to public education: those who can afford to contribute up to $10,000 a year to 529 accounts will be able to use the money tax-free for private and religious school tuition. At the same time, working people who pay state and local taxes to support public schools will not be able to take a tax deduction on those payments.
In a statement to the press, Sasha Pudelski, assistant director for policy and advocacy at the American Association of School Administrators, said, “It’s crazy that we’re eliminating the ability of people to deduct their state and local taxes that go directly to local services, including schools... while at the same time providing a $10,000 incentive for folks to send their kids to private schools.”
What seems obviously crazy to school professionals, however, is perfectly logical to millionaire senators who represent the interests of the financial aristocracy. In the wake of the passage of the tax bill through the Senate, there have been a number of statements of open class hatred spewing from the mouths of top Republican leaders.
Charles Grassley, chairman of the Senate Judiciary Committee, defended the sharp reduction—or outright elimination—of the estate tax on inherited wealth. “I think not having the estate tax recognizes the people that are investing,” he told the Des Moines Register. “As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
Orrin Hatch, chairman of the Senate Finance Committee, who played a central role in drafting the tax legislation, made similar comments defending the Senate’s failure to reauthorize the Children’s Health Insurance Program, which extends Medicaid coverage to 9 million children in low-income families. “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything,” he said, referring to poor children, not the idle rich.
The attack on public education is veiled and not explicit in the language of both the House and Senate versions of the tax legislation. But the next round of congressional action will include public and open attacks on critical domestic social programs, justified, according to Trump and the congressional Republicans, by the very deficits they have aggravated through tax cuts for the wealthy.
As the Wall Street Journal noted, in a headline Tuesday, “After Push on Taxes, Republicans Line Up Welfare Revamp Next.” Trump signaled this shift in his appearance last week in Missouri at a campaign-style rally for the tax bill, which included a vicious denunciation of those who need social programs to survive in an attempt to pit low-paid workers against low-income welfare recipients in a race to the bottom.
“I know people that work three jobs and they live next to somebody who doesn’t work at all,” he declared. “And the person who is not working at all and has no intention of working at all is making more money and doing better than the person that’s working his and her ass off… So we’re going to go into welfare reform.”
The Democratic Party offers no alternative to this reactionary, ultra-right populism, because, like the Republicans, it is a political servant of the financial elite. The Democrats will offer different political rhetoric, with appeals to identity politics and even, in the form of Bernie Sanders, a claim to defend working people against the “millionaires and billionaires.”
But the Democratic Party also supports a major reduction in the corporate tax rate, the centerpiece of the Trump-Republican plan. Democratic-controlled state governments, as in California and New York, have pursued austerity policies just as ruthlessly as their Republican counterparts. And the Obama administration, in eight years in office, presided over the greatest transfer of wealth from the working class to the financial aristocracy in history. It is that experience that disillusioned millions of working people with the Democrats and created the conditions for the victory of Trump in 2016.
It is up to the working class to carry out an independent political struggle to defend public education and all basic social services, jobs, decent living standards and democratic rights. This requires a political break with the capitalist two-party system and the building of an independent party of the working class, based on a socialist program.
https://www.wsws.org/en/articles/2017/1 ... c-d06.html
By Patrick Martin
6 December 2017
The tax cut legislation backed by the Trump White House is more than just a trillion-dollar windfall for the super-rich. The bills passed by the House and Senate in different forms will now be reconciled in a special conference, but both versions contain provisions that will devastate public education while promoting the growth of private and religious schools.
The largest single impact will come from drastically reducing the deduction for state and local income taxes, as proposed by the House, or eliminating the deduction altogether, as proposed by the Senate. Both versions put a $10,000 cap on the deduction for state and local property taxes. These two forms of taxation supply the bulk of the funds for public education.
School districts across the country have warned that without the federal deductions to cushion the impact, it will be much harder to maintain existing state and local taxes to support public schools, let alone win the approval of millage increases. If state and local taxes are lowered to offset the loss of the federal deduction (or simply frozen at present levels, which means a reduction over time in real terms), the result would be a sharp fall in funding for public schools.
According to the National Education Association (NEA), the largest US teachers’ union, the House bill would threaten $250 billion in funding over 10 years, the Senate bill would threaten $370 billion in funding over the same period. At an average cost of $100,000 per employee, counting wages, health care, taxes and pension contributions, that means 250,000 to 370,000 school jobs would be at risk.
In other words, the Trump tax cut could have as devastating an impact on education as the 2008 Wall Street crash. The deep recession that followed the crash led to huge spending cuts by state and local government, resulting in the elimination of 366,000 school jobs during the ensuing six years. The Obama administration’s “stimulus” program did little or nothing to offset these drastic cuts.
The NEA released last month a state-by-state analysis of the prospective cuts in school spending, which would see the biggest impact in a handful of states with higher local and state tax rates: California ($63 billion), Georgia ($12.5 billion), Illinois ($14.3 billion), New Jersey ($22.2 billion), New York ($34.4 billion), Pennsylvania ($12.6 billion), Texas ($22.1 billion) and Virginia ($13.5 billion).
The tax bill also prohibits a form of local school funding: tax-free “advance refund bonds,” which allow school districts to refinance debt when interest rates are low, as they are now. This is simply a handout to bondholders, most of whom are wealthy investors, at the expense of the public schools.
The political goal of undermining and ultimately destroying public education was reflected in the passage of an amendment to the Senate bill, sponsored by ultra-right Texas Republican Ted Cruz, which allows holders of tax-free 529 accounts, originally set up to provide for college education, to use the money for private and religious elementary and secondary schools.
This is both a boon to the wealthy and a blow to public education: those who can afford to contribute up to $10,000 a year to 529 accounts will be able to use the money tax-free for private and religious school tuition. At the same time, working people who pay state and local taxes to support public schools will not be able to take a tax deduction on those payments.
In a statement to the press, Sasha Pudelski, assistant director for policy and advocacy at the American Association of School Administrators, said, “It’s crazy that we’re eliminating the ability of people to deduct their state and local taxes that go directly to local services, including schools... while at the same time providing a $10,000 incentive for folks to send their kids to private schools.”
What seems obviously crazy to school professionals, however, is perfectly logical to millionaire senators who represent the interests of the financial aristocracy. In the wake of the passage of the tax bill through the Senate, there have been a number of statements of open class hatred spewing from the mouths of top Republican leaders.
Charles Grassley, chairman of the Senate Judiciary Committee, defended the sharp reduction—or outright elimination—of the estate tax on inherited wealth. “I think not having the estate tax recognizes the people that are investing,” he told the Des Moines Register. “As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
Orrin Hatch, chairman of the Senate Finance Committee, who played a central role in drafting the tax legislation, made similar comments defending the Senate’s failure to reauthorize the Children’s Health Insurance Program, which extends Medicaid coverage to 9 million children in low-income families. “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything,” he said, referring to poor children, not the idle rich.
The attack on public education is veiled and not explicit in the language of both the House and Senate versions of the tax legislation. But the next round of congressional action will include public and open attacks on critical domestic social programs, justified, according to Trump and the congressional Republicans, by the very deficits they have aggravated through tax cuts for the wealthy.
As the Wall Street Journal noted, in a headline Tuesday, “After Push on Taxes, Republicans Line Up Welfare Revamp Next.” Trump signaled this shift in his appearance last week in Missouri at a campaign-style rally for the tax bill, which included a vicious denunciation of those who need social programs to survive in an attempt to pit low-paid workers against low-income welfare recipients in a race to the bottom.
“I know people that work three jobs and they live next to somebody who doesn’t work at all,” he declared. “And the person who is not working at all and has no intention of working at all is making more money and doing better than the person that’s working his and her ass off… So we’re going to go into welfare reform.”
The Democratic Party offers no alternative to this reactionary, ultra-right populism, because, like the Republicans, it is a political servant of the financial elite. The Democrats will offer different political rhetoric, with appeals to identity politics and even, in the form of Bernie Sanders, a claim to defend working people against the “millionaires and billionaires.”
But the Democratic Party also supports a major reduction in the corporate tax rate, the centerpiece of the Trump-Republican plan. Democratic-controlled state governments, as in California and New York, have pursued austerity policies just as ruthlessly as their Republican counterparts. And the Obama administration, in eight years in office, presided over the greatest transfer of wealth from the working class to the financial aristocracy in history. It is that experience that disillusioned millions of working people with the Democrats and created the conditions for the victory of Trump in 2016.
It is up to the working class to carry out an independent political struggle to defend public education and all basic social services, jobs, decent living standards and democratic rights. This requires a political break with the capitalist two-party system and the building of an independent party of the working class, based on a socialist program.
https://www.wsws.org/en/articles/2017/1 ... c-d06.html
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
The Real Causes of Deficits and the US Debt (Next Phases in Trump Fiscal Strategy)
December 4, 2017 by jackrasmus
With the Senate and House all but assured to pass the US$4.5 trillion in tax cuts for businesses, investors, and the wealthiest 1 percent households by the end of this week, phases two and three of the Trump-Republican fiscal strategy have begun quickly to take shape.
Phase two is to maneuver the inept Democrats in Congress into passing a temporary budget deficit-debt extension in order to allow the tax cuts to be implemented quickly. That’s already a ‘done deal’.
Phase three is the drumbeat growing to attack social security, Medicare, food stamps, Medicaid, and other ‘safety net’ laws, in order to pay for the deficit created by cutting taxes on the rich. To justify the attack, a whole new set of lies are resurrected and being peddled by the media and pro-business pundits and politicians.
Deficits and Debt: Resurrecting Old Lies and Misrepresentations
Nonsense like social security and Medicare will be insolvent by 2030. When in fact social security retirement fund has created a multi-trillion dollar surplus since 1986, which the U.S. government has annually ‘borrowed’, exchanging the real money in the fund created by the payroll tax and its indexed threshold, for Treasury bonds deposited in the fund. The government then uses the social security surplus to pay for decades of tax cuts for the rich and corporations and to fund endless war in the middle east.
As for Medicare, the real culprit undermining the Medicare part A and B funds has been the decades-long escalating of prices charged by insurance companies, for-profit hospital chains (financed by Wall St.), medical devices companies, and doctor partnerships investing in real estate and other speculative markets and raising their prices to pay for it.
As for Part D, prescription drugs for Medicare, the big Pharma price gouging is even more rampant, driving up the cost of the Part D fund. By the way, the prescription drug provision, Part D, passed in 2005, was intentionally never funded by Congress and George Bush. It became law without any dedicated tax, payroll or other, to fund it. Its US$50 billion plus a year costs were thus designed from the outset to be paid by means of the deficit and not funded with any tax.
Social Security Disability, SSI, has risen in costs, as a million more have joined its numbers since the 2008 crisis. That rise coincides with Congress and Obama cutting unemployment insurance benefits. A million workers today, who would otherwise be unemployed (and raising the unemployment rate by a million) went on SSI instead of risking cuts in unemployment benefits. So Congress’s reducing the cost of unemployment benefits in effect raised the cost of SSI. And now conservatives like Congressman Paul Ryan, the would be social security ‘hatchet man’ for the rich, want to slash SSI as well as social security retirement, Medicare benefits for grandma and grandpa, Medicaid for single moms and the disabled (the largest group by far on Medicaid), as well as for food stamps.
Food stamp costs have also risen sharply since 2008. But that’s because real wages have stagnated or fallen for tens of millions of workers, making them eligible under Congress’s own rules for food stamp distribution. Now Ryan and his friends want to literally take food out of the mouths of the poorest by changing eligibility rules.
They want to cut and end benefits and take an already shredded social safety net completely apart–while giving US$4.5 trillion to their rich friends (who are their election campaign contributors). The rich and their businesses are getting $4.5 trillion in tax cuts in Trump’s tax proposal—not the $1.4 trillion referenced in the corporate press. The $1.4 trillion is after they raise $3 trillion in tax hikes on the middle class.
Whatever financing issues exist for Social Security retirement, Medicare, Medicaid, disability insurance, food stamps, etc., they can be simply and easily adjusted, and without cutting any benefits and making average households pay for the tax cuts for the rich in Trump’s tax cut bill.
Social security retirement, still in surplus, can be kept in surplus by simply one measure: raise the ‘cap’ on social security to cover all earned wage income. Today the ‘cap’, at roughly US$118,000 a year, exempts almost 20 percent of the highest paid wage earners. Once their annual salary exceeds that amount, they no longer pay any payroll tax. They get a nice tax cut of 6.2 percent for the rest of the year. (Businesses also get to keep 6.2% more). Furthermore, if capital income earners (interest, rent, dividends, etc.) were to pay the same 6.2% it would permit social security retirement benefits to be paid at two thirds one’s prior earned wages, and starting with age 62. The retirement age could thus be lowered by five years, instead of raised as Ryan and others propose.
As for Medicare Parts A and B, raising the ridiculously low 1.45 percent tax just another 0.25 percent would end all financial stress in the A & B Medicare funds for decades to come.
For SSI, if Congress would restore the real value of unemployment benefits back to what it was in the 1960s, maybe millions more would return to work. (It’s also one of the reasons why the labor force participation rate in the U.S. has collapsed the past decade). But then Congress would have to admit the real unemployment rate is not 4.2 percent but several percentages higher. (Actually, it’s still over 10 percent, once other forms of ‘hidden unemployment’ and underemployment are accurately accounted for).
As for food stamps’ rising costs, if there were a decent minimum wage (at least US$15 an hour), then millions would no longer be eligible for food stamps and those on it would significantly decline.
In other words, the U.S. Congress and Republican-Democrat administrations have caused the Medicare, Part D, SSI, and food stamp cost problems. They also permitted Wall St. to get its claws into the health insurance, prescription drugs, and hospital industries–financing mergers and acquisitions activity and demanding in exchange for lending to companies in those industries that the companies raise their prices to generate excess profits to repay Wall St. for the loans for the M&A activity.
The Real Causes of Deficits and the Debt
So if social security, Medicare-Medicaid, SSI, food stamps, and other social safety net programs are not the cause of the deficits, what then are the causes?
In the year 2000, the U.S. federal government debt was about US$4 trillion. By 2008 under George Bush it had risen to nearly US$9 trillion. The rise was due to the US$3.4 trillion in Bush tax cuts, 80 percent of which went to investors and businesses, plus another US$300 billion to U.S. multinational corporations due to Bush’s offshore repatriation tax cut. Multinationals were allowed to bring US$320 billion of their US$750 billion offshore cash hoard back to the U.S. and pay only a 5.25 percent tax rate instead of the normal 35 percent. (By the way, they accumulated the US$750 billion hoard was a result of Bill Clinton in 1997 allowing them to keep profits offshore untaxed if not brought back to the U.S. Thus the Democrats originally created the problem of refusing to pay taxes on offshore profits, and then George Bush, Obama, and now Trump simply used it as an excuse to propose lower tax rates for repatriated the offshore profits cash hoard of US multinational companies. From $750 billion in 2004, it’s now $2.8 trillion).
So the Bush tax cuts whacked the U.S. deficit and debt. The Bush wars in the middle east did as well. By 2008 an additional US$2 to US$3 trillion was spent on the wars. Then Bush policies of financial deregulation precipitated the 2007-09 crash and recession. That reduced federal tax revenue collection due to collapse economic growth further. Then there was Bush’s 2008 futile $180 billion tax cut to stem the crisis, which it didn’t. And let’s not forget Bush’s 2005 prescription drug plan–a boondoggle for big pharmaceutical companies–that added US$50 billion a year more. As did a new Homeland Security $50 billion a year and rising budget costs.
There’s your additional US$5 trillion added by Bush to the budget deficit and U.S. debt–from largely wars, defense spending, tax cuts, and windfalls for various sectors of the healthcare industry.
Obama would go beyond Bush. First, there was the US$300 billion tax cuts in his 2009 so-called ‘recovery act’, mostly again to businesses and investors. (The Democrat Congress in 2009 wanted an additional US$120 billion in consumer tax cuts but Obama, on advice of Larry Summers, rejected that). What followed 2009 was the weakest recovery from recession in the post-1945 period, as Obama policies failed to implement a serious fiscal stimulus. Slow recovery meant lower federal tax revenues for years thereafter.
Studies show that at least 60 percent of the deficit and debt since 2000 is attributable to insufficient taxation, due both to tax cutting and slow economic growth below historical rates.
Obama then extended the Bush-era tax cuts another US$803 billion at year-end 2010 and then agreed to extend them another decade in January 2013, at a cost of US$5 trillion. The middle east war spending continued as well to the tune of another $3 trillion at minimum. Continuing the prescription drug subsidy to big Pharma and Homeland Security costs added another $500 billion.
In short, Bush added US$5 trillion to the US debt and Obama another US$10 trillion. That’s how we get from US$4 trillion in 2000 to US$19 trillion at the end of 2016. (US$20 trillion today, about to rise another US$10 trillion by 2027 once again with the Trump tax cuts fast-tracking through Congress today).
To sum up, the problem with chronic U.S. federal deficits and escalating Debt is not social security, Medicare, or any of the other social programs. The causes of the deficits and debt are directly the consequence of financing wars in the middle east without raising taxes to pay for them (the first time in U.S. history of war financing), rising homeland security and other non-war defense costs, massive tax cuts for businesses and investors since 2001, economic growth at two thirds of normal the past decade (generating less tax revenues), government health program costs escalation due to healthcare sector price gouging, and no real wage growth for the 80 percent of the labor force resulting in rising costs for food stamps, SSI, and other benefits.
Notwithstanding all these facts, what we’ll hear increasingly from the Paul Ryans and other paid-for politicians of the rich is that the victims (retirees, single moms, disabled, underemployed, jobless, etc.) are the cause of the deficits and debt. Therefore they must pay for it.
But what they’re really paying for will be more tax cuts for the wealthy, more war spending (in various forms), and more subsidization of price-gouging big pharmaceuticals, health insurance companies, and for-profit hospitals which now front for, and are indirectly run by, Wall St.
Jack Rasmus is the author of the recently published book, “Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression.” He blogs at jackrasmus.com and his twitter handle is @drjackrasmus.
http://houstoncommunistparty.com/the-re ... -strategy/
December 4, 2017 by jackrasmus
With the Senate and House all but assured to pass the US$4.5 trillion in tax cuts for businesses, investors, and the wealthiest 1 percent households by the end of this week, phases two and three of the Trump-Republican fiscal strategy have begun quickly to take shape.
Phase two is to maneuver the inept Democrats in Congress into passing a temporary budget deficit-debt extension in order to allow the tax cuts to be implemented quickly. That’s already a ‘done deal’.
Phase three is the drumbeat growing to attack social security, Medicare, food stamps, Medicaid, and other ‘safety net’ laws, in order to pay for the deficit created by cutting taxes on the rich. To justify the attack, a whole new set of lies are resurrected and being peddled by the media and pro-business pundits and politicians.
Deficits and Debt: Resurrecting Old Lies and Misrepresentations
Nonsense like social security and Medicare will be insolvent by 2030. When in fact social security retirement fund has created a multi-trillion dollar surplus since 1986, which the U.S. government has annually ‘borrowed’, exchanging the real money in the fund created by the payroll tax and its indexed threshold, for Treasury bonds deposited in the fund. The government then uses the social security surplus to pay for decades of tax cuts for the rich and corporations and to fund endless war in the middle east.
As for Medicare, the real culprit undermining the Medicare part A and B funds has been the decades-long escalating of prices charged by insurance companies, for-profit hospital chains (financed by Wall St.), medical devices companies, and doctor partnerships investing in real estate and other speculative markets and raising their prices to pay for it.
As for Part D, prescription drugs for Medicare, the big Pharma price gouging is even more rampant, driving up the cost of the Part D fund. By the way, the prescription drug provision, Part D, passed in 2005, was intentionally never funded by Congress and George Bush. It became law without any dedicated tax, payroll or other, to fund it. Its US$50 billion plus a year costs were thus designed from the outset to be paid by means of the deficit and not funded with any tax.
Social Security Disability, SSI, has risen in costs, as a million more have joined its numbers since the 2008 crisis. That rise coincides with Congress and Obama cutting unemployment insurance benefits. A million workers today, who would otherwise be unemployed (and raising the unemployment rate by a million) went on SSI instead of risking cuts in unemployment benefits. So Congress’s reducing the cost of unemployment benefits in effect raised the cost of SSI. And now conservatives like Congressman Paul Ryan, the would be social security ‘hatchet man’ for the rich, want to slash SSI as well as social security retirement, Medicare benefits for grandma and grandpa, Medicaid for single moms and the disabled (the largest group by far on Medicaid), as well as for food stamps.
Food stamp costs have also risen sharply since 2008. But that’s because real wages have stagnated or fallen for tens of millions of workers, making them eligible under Congress’s own rules for food stamp distribution. Now Ryan and his friends want to literally take food out of the mouths of the poorest by changing eligibility rules.
They want to cut and end benefits and take an already shredded social safety net completely apart–while giving US$4.5 trillion to their rich friends (who are their election campaign contributors). The rich and their businesses are getting $4.5 trillion in tax cuts in Trump’s tax proposal—not the $1.4 trillion referenced in the corporate press. The $1.4 trillion is after they raise $3 trillion in tax hikes on the middle class.
Whatever financing issues exist for Social Security retirement, Medicare, Medicaid, disability insurance, food stamps, etc., they can be simply and easily adjusted, and without cutting any benefits and making average households pay for the tax cuts for the rich in Trump’s tax cut bill.
Social security retirement, still in surplus, can be kept in surplus by simply one measure: raise the ‘cap’ on social security to cover all earned wage income. Today the ‘cap’, at roughly US$118,000 a year, exempts almost 20 percent of the highest paid wage earners. Once their annual salary exceeds that amount, they no longer pay any payroll tax. They get a nice tax cut of 6.2 percent for the rest of the year. (Businesses also get to keep 6.2% more). Furthermore, if capital income earners (interest, rent, dividends, etc.) were to pay the same 6.2% it would permit social security retirement benefits to be paid at two thirds one’s prior earned wages, and starting with age 62. The retirement age could thus be lowered by five years, instead of raised as Ryan and others propose.
As for Medicare Parts A and B, raising the ridiculously low 1.45 percent tax just another 0.25 percent would end all financial stress in the A & B Medicare funds for decades to come.
For SSI, if Congress would restore the real value of unemployment benefits back to what it was in the 1960s, maybe millions more would return to work. (It’s also one of the reasons why the labor force participation rate in the U.S. has collapsed the past decade). But then Congress would have to admit the real unemployment rate is not 4.2 percent but several percentages higher. (Actually, it’s still over 10 percent, once other forms of ‘hidden unemployment’ and underemployment are accurately accounted for).
As for food stamps’ rising costs, if there were a decent minimum wage (at least US$15 an hour), then millions would no longer be eligible for food stamps and those on it would significantly decline.
In other words, the U.S. Congress and Republican-Democrat administrations have caused the Medicare, Part D, SSI, and food stamp cost problems. They also permitted Wall St. to get its claws into the health insurance, prescription drugs, and hospital industries–financing mergers and acquisitions activity and demanding in exchange for lending to companies in those industries that the companies raise their prices to generate excess profits to repay Wall St. for the loans for the M&A activity.
The Real Causes of Deficits and the Debt
So if social security, Medicare-Medicaid, SSI, food stamps, and other social safety net programs are not the cause of the deficits, what then are the causes?
In the year 2000, the U.S. federal government debt was about US$4 trillion. By 2008 under George Bush it had risen to nearly US$9 trillion. The rise was due to the US$3.4 trillion in Bush tax cuts, 80 percent of which went to investors and businesses, plus another US$300 billion to U.S. multinational corporations due to Bush’s offshore repatriation tax cut. Multinationals were allowed to bring US$320 billion of their US$750 billion offshore cash hoard back to the U.S. and pay only a 5.25 percent tax rate instead of the normal 35 percent. (By the way, they accumulated the US$750 billion hoard was a result of Bill Clinton in 1997 allowing them to keep profits offshore untaxed if not brought back to the U.S. Thus the Democrats originally created the problem of refusing to pay taxes on offshore profits, and then George Bush, Obama, and now Trump simply used it as an excuse to propose lower tax rates for repatriated the offshore profits cash hoard of US multinational companies. From $750 billion in 2004, it’s now $2.8 trillion).
So the Bush tax cuts whacked the U.S. deficit and debt. The Bush wars in the middle east did as well. By 2008 an additional US$2 to US$3 trillion was spent on the wars. Then Bush policies of financial deregulation precipitated the 2007-09 crash and recession. That reduced federal tax revenue collection due to collapse economic growth further. Then there was Bush’s 2008 futile $180 billion tax cut to stem the crisis, which it didn’t. And let’s not forget Bush’s 2005 prescription drug plan–a boondoggle for big pharmaceutical companies–that added US$50 billion a year more. As did a new Homeland Security $50 billion a year and rising budget costs.
There’s your additional US$5 trillion added by Bush to the budget deficit and U.S. debt–from largely wars, defense spending, tax cuts, and windfalls for various sectors of the healthcare industry.
Obama would go beyond Bush. First, there was the US$300 billion tax cuts in his 2009 so-called ‘recovery act’, mostly again to businesses and investors. (The Democrat Congress in 2009 wanted an additional US$120 billion in consumer tax cuts but Obama, on advice of Larry Summers, rejected that). What followed 2009 was the weakest recovery from recession in the post-1945 period, as Obama policies failed to implement a serious fiscal stimulus. Slow recovery meant lower federal tax revenues for years thereafter.
Studies show that at least 60 percent of the deficit and debt since 2000 is attributable to insufficient taxation, due both to tax cutting and slow economic growth below historical rates.
Obama then extended the Bush-era tax cuts another US$803 billion at year-end 2010 and then agreed to extend them another decade in January 2013, at a cost of US$5 trillion. The middle east war spending continued as well to the tune of another $3 trillion at minimum. Continuing the prescription drug subsidy to big Pharma and Homeland Security costs added another $500 billion.
In short, Bush added US$5 trillion to the US debt and Obama another US$10 trillion. That’s how we get from US$4 trillion in 2000 to US$19 trillion at the end of 2016. (US$20 trillion today, about to rise another US$10 trillion by 2027 once again with the Trump tax cuts fast-tracking through Congress today).
To sum up, the problem with chronic U.S. federal deficits and escalating Debt is not social security, Medicare, or any of the other social programs. The causes of the deficits and debt are directly the consequence of financing wars in the middle east without raising taxes to pay for them (the first time in U.S. history of war financing), rising homeland security and other non-war defense costs, massive tax cuts for businesses and investors since 2001, economic growth at two thirds of normal the past decade (generating less tax revenues), government health program costs escalation due to healthcare sector price gouging, and no real wage growth for the 80 percent of the labor force resulting in rising costs for food stamps, SSI, and other benefits.
Notwithstanding all these facts, what we’ll hear increasingly from the Paul Ryans and other paid-for politicians of the rich is that the victims (retirees, single moms, disabled, underemployed, jobless, etc.) are the cause of the deficits and debt. Therefore they must pay for it.
But what they’re really paying for will be more tax cuts for the wealthy, more war spending (in various forms), and more subsidization of price-gouging big pharmaceuticals, health insurance companies, and for-profit hospitals which now front for, and are indirectly run by, Wall St.
Jack Rasmus is the author of the recently published book, “Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression.” He blogs at jackrasmus.com and his twitter handle is @drjackrasmus.
http://houstoncommunistparty.com/the-re ... -strategy/
"There is great chaos under heaven; the situation is excellent."
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
US Congress passes tax windfall for corporations and the rich
By Barry Grey
21 December 2017
Congress’ passage of the Trump administration’s $1.5 trillion tax cut for corporations and the rich marks a new stage in the decades-long social counterrevolution in the United States. It will make America, already the most unequal advanced economy in the world, far more unequal, entrenching the rule of an unaccountable financial oligarchy.
The Senate passed the bill on a strict party-line 51 to 48 vote in the early morning hours of Wednesday following a truncated and perfunctory debate. The House followed suit later on Wednesday, passing the bill 224 to 203, with 12 Republicans joining all 191 voting Democrats to oppose the measure. Most of the Republican “no” votes came from the high-tax states of California, New York and New Jersey, which will be hard hit by provisions limiting federal income tax deductions for state and local taxes.
The legislation is designed to massively transfer wealth from the working class to the ruling elite. At the same time, it will sharply increase budget deficits and the national debt, providing the pretext for an attack on domestic programs, with particular emphasis on the basic entitlement programs: Medicare, Medicaid and Social Security.
Congressional Republicans rushed to pass the legislation in the face of multiple opinion polls showing that a majority of the American people oppose the bill and that popular opposition has grown over the past month. A series of non-partisan analyses of the measure, including by congressional agencies, have concluded that the tax cuts will go overwhelmingly to the wealthiest 10 percent, and that by the end of the decade, the majority of Americans will see their taxes increase.
The centerpiece of the bill is a permanent cut in the corporate tax rate from 35 percent to 21 percent. It is estimated that this will raise corporate revenues by more than $6 trillion over the next decade.
Other pro-business provisions include the elimination of the corporate alternative minimum tax and a 20 percent tax reduction for owners of “pass-through” companies, such as partnerships and S corporations. At the last minute, commercial real estate developers were added to the list of covered “pass-through” firms, greatly benefiting Trump personally.
On the individual side, the bill slashes the top federal income tax rate from 39.6 percent to 37 percent, reduces the individual alternative minimum tax, and doubles the exemption for estate taxes to $22 million for married couples.
It includes two provisions to modestly reduce taxes for many middle-income households: a doubling of both the standard deduction and the child tax credit. However, these are largely offset by other provisions that eliminate or reduce current tax deductions, such as on mortgage interest and state and local taxes.
It replaces the Consumer Price Index with the so-called “chained” CPI, which underestimates the inflation rate. As a result, taxpayers will move more quickly into higher tax brackets, and many low-income households will become ineligible for the earned income tax credit.
The bill also ends the Obamacare requirement that individuals not otherwise covered buy health insurance from private providers, in many cases with the help of government subsidies. According to the Congressional Budget Office, this will result in 13 million more people without health insurance by 2027 and a 10 percent yearly increase in premiums for policies bought on the individual market.
All of the individual tax breaks included in the bill expire at the end of 2025, meaning that millions will suddenly face increased taxes beginning in 2026.
In the first year of the tax “reform,” middle-income taxpayers will see an average cut of less than $1,000, while the average member of the top 1 percent will receive $51,140.
According to various non-partisan analyses, by 2027, 83 percent of the tax benefits will go to the top 1 percent of earners, while 53 percent of the population, including all those making less than $75,000, will pay higher taxes.
This far-reaching legislation, which will impact every section of American society, has been rammed through Congress in little more than seven weeks, without a single congressional hearing. Trump and the Republicans have sought to sell it to a skeptical public on the basis of brazen lies, insisting that they are cutting taxes for corporations in order to help the “hard-working middle class.”
The Democrats, for their part, have done nothing to seriously oppose this naked piece of class legislation. They themselves advocate a deep tax cut for corporations and spent most of their efforts pleading with the Republicans to be included in talks on the plan.
The entire process has been a travesty of democratic procedures, exposing the fraud of American democracy and underscoring the basic fact that the United States is ruled by an oligarchy that controls the political system and both major parties. It wanted the money and was prepared to do whatever was necessary to get it.
Trump is expected to sign the bill into law in the coming days, although there are reports he may hold off until after the New Year. Following its passage, he told reporters at the White House, “This bill means more take home pay. It will be an incredible Christmas gift for hardworking Americans.”
Later, in a celebratory demonstration with Republican lawmakers outside the White House, he declared that the bill “means jobs, jobs, jobs!”
It will, in fact, no more provide decent-paying jobs and improved wages than the previous tax “reforms” carried out over the past three-and-a-half decades. The Reagan tax cuts of 1981 and 1986, Bill Clinton’s capital gains tax cut in 1997 and George W. Bush’s tax “reform” of 2001 were all part of a ruling class offensive against the working class, which included sweeping attacks on wages, jobs, pensions, education, health care, housing and other social benefits.
Regressive tax changes have played a major role in engineering a redistribution of wealth from the bottom to the top that has brought social inequality in America to its highest level since the 1920s. The World Inequality Report published last week by a team of economists headed by Thomas Piketty, Emmanuel Saez and Gabriel Zucman noted that since 1980, the top 1 percent and the bottom half of income earners in the US have essentially flipped positions. While the bottom 50 percent received 20 percent of national income in 1980, that figure declined to just 13 percent by 2016. Conversely, the top 1 percent steadily increased their share of national income from 10 percent to 20 percent.
The report warned that the Republican tax cut plan would “turbocharge” a further growth of inequality in America.
The Democratic Party has been no less complicit in this social counterrevolution than the Republicans. The Reagan tax cuts were carried out on a bipartisan basis, and the Bush tax cut of 2001 won the support of a significant section of Democratic lawmakers.
Now the Democrats are using verbal denunciations of the tax bill and party-line votes in opposition to obscure their tacit support for tax changes that benefit the corporations and the wealthy. They are largely attacking the Republican bill from the right, on the basis of fiscal responsibility and economic nationalism.
House Minority Leader Nancy Pelosi, while warning of “plutocracy” (despite personal wealth estimated at nearly $200 million), has denounced the bill for “exploding the deficit.” New York Times columnist Frank Bruni published an op-ed piece Wednesday promoting the Democrats as the “new Republicans,” i.e., the true party of “fiscal responsibility,” along with family values, patriotism, law-and-order, national security and decency.
Bernie Sanders, interviewed Wednesday on CNN, denounced the bill for encouraging US companies to invest abroad and ship “American” jobs to Mexico and China.
The Democrats and their allies in the trade union leadership have not called a single protest against the tax bill, despite broad popular opposition. Their priorities are elsewhere: fomenting anti-democratic campaigns such as the hysteria over alleged sexual misconduct, the war-mongering against Russia and the linked crusade against “fake news.” All of these are designed to mobilize the Democrats’ upper-middle class base around a program to prepare for war, criminalize political opposition and censor the internet.
While they want nothing to do with a mobilization of popular anger over the tax windfall for the rich, the threat to the CHIP children’s health insurance program or the impending mass roundup of young immigrants currently protected under the DACA program, it is reported that the Democrats are preparing for nationwide protests against any move by Trump to fire Special Counsel Robert Mueller.
They are the staunchest defenders of the American secret police and the military, which are being prepared to violently suppress working class opposition to the capitalist system and all of its depredations.
https://www.wsws.org/en/articles/2017/1 ... s-d21.html
By Barry Grey
21 December 2017
Congress’ passage of the Trump administration’s $1.5 trillion tax cut for corporations and the rich marks a new stage in the decades-long social counterrevolution in the United States. It will make America, already the most unequal advanced economy in the world, far more unequal, entrenching the rule of an unaccountable financial oligarchy.
The Senate passed the bill on a strict party-line 51 to 48 vote in the early morning hours of Wednesday following a truncated and perfunctory debate. The House followed suit later on Wednesday, passing the bill 224 to 203, with 12 Republicans joining all 191 voting Democrats to oppose the measure. Most of the Republican “no” votes came from the high-tax states of California, New York and New Jersey, which will be hard hit by provisions limiting federal income tax deductions for state and local taxes.
The legislation is designed to massively transfer wealth from the working class to the ruling elite. At the same time, it will sharply increase budget deficits and the national debt, providing the pretext for an attack on domestic programs, with particular emphasis on the basic entitlement programs: Medicare, Medicaid and Social Security.
Congressional Republicans rushed to pass the legislation in the face of multiple opinion polls showing that a majority of the American people oppose the bill and that popular opposition has grown over the past month. A series of non-partisan analyses of the measure, including by congressional agencies, have concluded that the tax cuts will go overwhelmingly to the wealthiest 10 percent, and that by the end of the decade, the majority of Americans will see their taxes increase.
The centerpiece of the bill is a permanent cut in the corporate tax rate from 35 percent to 21 percent. It is estimated that this will raise corporate revenues by more than $6 trillion over the next decade.
Other pro-business provisions include the elimination of the corporate alternative minimum tax and a 20 percent tax reduction for owners of “pass-through” companies, such as partnerships and S corporations. At the last minute, commercial real estate developers were added to the list of covered “pass-through” firms, greatly benefiting Trump personally.
On the individual side, the bill slashes the top federal income tax rate from 39.6 percent to 37 percent, reduces the individual alternative minimum tax, and doubles the exemption for estate taxes to $22 million for married couples.
It includes two provisions to modestly reduce taxes for many middle-income households: a doubling of both the standard deduction and the child tax credit. However, these are largely offset by other provisions that eliminate or reduce current tax deductions, such as on mortgage interest and state and local taxes.
It replaces the Consumer Price Index with the so-called “chained” CPI, which underestimates the inflation rate. As a result, taxpayers will move more quickly into higher tax brackets, and many low-income households will become ineligible for the earned income tax credit.
The bill also ends the Obamacare requirement that individuals not otherwise covered buy health insurance from private providers, in many cases with the help of government subsidies. According to the Congressional Budget Office, this will result in 13 million more people without health insurance by 2027 and a 10 percent yearly increase in premiums for policies bought on the individual market.
All of the individual tax breaks included in the bill expire at the end of 2025, meaning that millions will suddenly face increased taxes beginning in 2026.
In the first year of the tax “reform,” middle-income taxpayers will see an average cut of less than $1,000, while the average member of the top 1 percent will receive $51,140.
According to various non-partisan analyses, by 2027, 83 percent of the tax benefits will go to the top 1 percent of earners, while 53 percent of the population, including all those making less than $75,000, will pay higher taxes.
This far-reaching legislation, which will impact every section of American society, has been rammed through Congress in little more than seven weeks, without a single congressional hearing. Trump and the Republicans have sought to sell it to a skeptical public on the basis of brazen lies, insisting that they are cutting taxes for corporations in order to help the “hard-working middle class.”
The Democrats, for their part, have done nothing to seriously oppose this naked piece of class legislation. They themselves advocate a deep tax cut for corporations and spent most of their efforts pleading with the Republicans to be included in talks on the plan.
The entire process has been a travesty of democratic procedures, exposing the fraud of American democracy and underscoring the basic fact that the United States is ruled by an oligarchy that controls the political system and both major parties. It wanted the money and was prepared to do whatever was necessary to get it.
Trump is expected to sign the bill into law in the coming days, although there are reports he may hold off until after the New Year. Following its passage, he told reporters at the White House, “This bill means more take home pay. It will be an incredible Christmas gift for hardworking Americans.”
Later, in a celebratory demonstration with Republican lawmakers outside the White House, he declared that the bill “means jobs, jobs, jobs!”
It will, in fact, no more provide decent-paying jobs and improved wages than the previous tax “reforms” carried out over the past three-and-a-half decades. The Reagan tax cuts of 1981 and 1986, Bill Clinton’s capital gains tax cut in 1997 and George W. Bush’s tax “reform” of 2001 were all part of a ruling class offensive against the working class, which included sweeping attacks on wages, jobs, pensions, education, health care, housing and other social benefits.
Regressive tax changes have played a major role in engineering a redistribution of wealth from the bottom to the top that has brought social inequality in America to its highest level since the 1920s. The World Inequality Report published last week by a team of economists headed by Thomas Piketty, Emmanuel Saez and Gabriel Zucman noted that since 1980, the top 1 percent and the bottom half of income earners in the US have essentially flipped positions. While the bottom 50 percent received 20 percent of national income in 1980, that figure declined to just 13 percent by 2016. Conversely, the top 1 percent steadily increased their share of national income from 10 percent to 20 percent.
The report warned that the Republican tax cut plan would “turbocharge” a further growth of inequality in America.
The Democratic Party has been no less complicit in this social counterrevolution than the Republicans. The Reagan tax cuts were carried out on a bipartisan basis, and the Bush tax cut of 2001 won the support of a significant section of Democratic lawmakers.
Now the Democrats are using verbal denunciations of the tax bill and party-line votes in opposition to obscure their tacit support for tax changes that benefit the corporations and the wealthy. They are largely attacking the Republican bill from the right, on the basis of fiscal responsibility and economic nationalism.
House Minority Leader Nancy Pelosi, while warning of “plutocracy” (despite personal wealth estimated at nearly $200 million), has denounced the bill for “exploding the deficit.” New York Times columnist Frank Bruni published an op-ed piece Wednesday promoting the Democrats as the “new Republicans,” i.e., the true party of “fiscal responsibility,” along with family values, patriotism, law-and-order, national security and decency.
Bernie Sanders, interviewed Wednesday on CNN, denounced the bill for encouraging US companies to invest abroad and ship “American” jobs to Mexico and China.
The Democrats and their allies in the trade union leadership have not called a single protest against the tax bill, despite broad popular opposition. Their priorities are elsewhere: fomenting anti-democratic campaigns such as the hysteria over alleged sexual misconduct, the war-mongering against Russia and the linked crusade against “fake news.” All of these are designed to mobilize the Democrats’ upper-middle class base around a program to prepare for war, criminalize political opposition and censor the internet.
While they want nothing to do with a mobilization of popular anger over the tax windfall for the rich, the threat to the CHIP children’s health insurance program or the impending mass roundup of young immigrants currently protected under the DACA program, it is reported that the Democrats are preparing for nationwide protests against any move by Trump to fire Special Counsel Robert Mueller.
They are the staunchest defenders of the American secret police and the military, which are being prepared to violently suppress working class opposition to the capitalist system and all of its depredations.
https://www.wsws.org/en/articles/2017/1 ... s-d21.html
Re: The Trump Tax Bill: The Financial Oligarchy on the Rampage
As AT&T announces holiday layoff of hundreds of workers
Corporate America begins campaign to sell Trump tax bonanza
By Patrick Martin
23 December 2017
The enactment of the largest tax cut for the rich in modern history has triggered a series of announcements by major corporations that they are going to “do more for their employees” by using a small portion of the windfall to increase wages and pay bonuses.
These actions are cynical in the extreme, as the companies involved are passing on only a fraction of the bonanza they will receive from the slashing of the corporate tax rate from 35 percent to 21 percent. AT&T, for example, is expected to rake in $1.6 billion in additional income next year just from the lower tax rate—not counting other favorable provisions, whose impact is still unreported—of which it is setting aside $200 million, one-eighth of the total, to pay $1,000 bonuses to its 200,000 corporate employees.
Meanwhile, the telecom giant is going ahead with the holiday layoff of an estimated 600 workers in five states it announced on December 16. The workers, both indoor and outdoor technicians in Illinois, Wisconsin, Missouri, Michigan, Indiana and Ohio, will be out of a job as of January 4.
In February of 2016, the New York Times, citing “senior executives” at AT&T, reported that the company was planning to slash its workforce by up to 30 percent, or 60,000 jobs, over the next five years. The article quoted CEO Randall Stephenson as advising AT&T workers to “learn new skills or find your career choices are very limited”—a threat to carry out mass firings.
The actual cost of AT&T’s “generosity” will be considerably less than $200 million, since the company will write off the cost of the bonuses as a business expense, reducing its net income and cutting its tax liability accordingly. Meanwhile, workers will pay taxes on the bonuses, slicing the value by $150-$350, depending on their salary level.
AT&T has an additional motive for becoming the first and most prominent corporate endorser of the Trump tax cut. Its proposed $85 billion merger with Time Warner is currently being held up by the Justice Department on anti-trust grounds, amid reports that Trump has demanded that the company sell off CNN as a condition for approval in order to punish the network for what he deems to be overly critical news coverage.
Comcast CEO Brian Roberts announced a similar $1,000 bonus for 100,000 employees. His company owns, among other properties, the NBC television network and its cable affiliates MSNBC and CNBC. While the nominal cost of the bonuses is $100 million, Comcast’s haul from the tax legislation could be as much as $1.22 billion from the rate cut alone, besides other benefits.
The four other corporations announcing bonuses, new investments or “corporate giving” linked explicitly to the passage of the tax cut include Boeing, Nexus Services, Wells Fargo and Fifth Third Bancorp. Boeing is a huge government contractor, while Wells Fargo, after a series of corporate scandals, needs to generate favorable publicity and curry favor with the federal regulators and prosecutors.
The two banks said they would increase their minimum wages to $15 an hour, a token gesture given that low-wage jobs such as cleaning and security are already outsourced to contractors. Fifth Third will spend $3 million on employee bonuses, while it stands to net more than $200 million in tax savings from the Trump bill.
Trump celebrated the corporate bonus announcements as vindication of his claims that the tax cut legislation was designed to benefit workers by creating jobs and raising wages. He tweeted Friday morning: “Our big and very popular Tax Cut and Reform Bill has taken on an unexpected new source of ‘love’—that is, big companies and corporations showering their workers with bonuses.”
Later in the day, Trump signed the $1.5 trillion bill into law before heading off for Christmas to his private estate and luxury resort in Mar-a-Lago, Florida.
The political strategist for the US Chamber of Commerce was more straightforward about the motivations of these companies. “It’s an extremely clever way to get the president’s attention,” Scott Reed told the Washington Post. “It reinforces his signature legislative success, and it probably gets them some good points inside the White House.”
Trump’s media apologists at Fox News and the editorial page of the Wall Street Journal celebrated the corporate bonus announcements as though they refuted charges that the tax bill is a handout to the wealthy. But even these media outlets were compelled, in their news coverage, to acknowledge the completely one-sided, pro-corporate character of the tax bill.
A detailed, sector-by-sector analysis of the impact of the tax bill on selected industries published by the Journal found, among other things, that Home Depot will boost its profits by around $1.6 billion, that health insurers will gain as much as 20 percent each in profits, that Verizon will see a $1.2 billion profit increase, and that the oil refining industry will receive more than $150 billion in tax savings next year alone. Delta Airlines will save $800 million a year.
Fox Business channel examined how hedge funds prevailed with key Republican congressmen, who drafted the tax legislation to retain the “carried interest” loophole, which Trump condemned during the 2016 election campaign as an undeserved privilege for Wall Street speculators. The loophole allows investor profits to be taxed at the lower capital gains rate rather than at the income tax rate.
Blackstone Group, Carlyle Group and KKR & Co., which together control $2.5 trillion in private equity, “funneled massive amounts of campaign cash into the coffers of Republican leaders in the House and the Senate as these same lawmakers voted for a tax bill that preserves the so-called carried interest loophole,” Fox Business reported.
Blackstone alone gave $217,000 to Senate Majority Leader Mitch McConnell’s re-election campaign in 2014. Blackstone executives gave $68,000 to House Speaker Paul Ryan’s re-election campaign this year, while Carlyle Group chipped in $36,000. These were highly profitable investments, producing legislative results worth billions to these financial parasites.
Despite the massive publicity given to the handful of announcements of worker bonuses, corporations will distribute the bulk of the tax windfall to wealthy shareholders in the form of stock buybacks and dividends, or use the money for mergers and acquisitions, which bid up the price of all stocks, thus rewarding the financial elite as a whole.
While supporters of a cut in corporate taxes, which includes the Democratic Party, claim that slashing the tax rate will generate a flood of productive investment, major US corporations are already sitting on a mountain of cash which they refuse to invest in hiring and production—an estimated $1.63 trillion, according to Standard & Poor’s.
According to S&P Dow Jones Indices, cited by the Associated Press, in the 12-month period ending in September, companies in the S&P 500 index spent $517.7 billion on stock buybacks, $414.1 billion on cash dividends, and $1.48 trillion on mergers and acquisitions. These sums dwarf their combined capital investment.
Distributions to shareholders overwhelmingly favor the wealthy. The top 1 percent of the US population owns 40 percent of all shares of stock, while the bottom 80 percent own only 7 percent of shares, mostly in small retirement accounts.
Trump himself admitted, referring to the windfall to US corporations, cutting their tax rate from 35 percent to 21 percent, “That’s probably the biggest factor in our plan.”
Among the biggest beneficiaries of the bonanza for the wealthy are the president and his family, whose fortunes are based on the real estate industry. They came in for special treatment in a variety of provisions, many of them tucked into the bill at the conference committee, without any public notice or discussion.
Among the provisions tailored to favor Trump, his children, and the family of his son-in-law Jared Kushner, themselves real estate billionaires, were: a 20 percent deduction for pass-through income, initially limited to companies with large payrolls, later expanded to include shell companies like those operated by the Trump Organization; a tax loophole called a “like-kind exchange,” which exempts certain exchanges of property from taxation, which was abolished for other kinds of property but retained only for real estate; and a cap on the amount of interest expenses corporations can deduct, except for real estate and hotel companies.
And of course, the reduction in the estate tax helps both the Trump and Kushner families preserve their fortunes, allowing each heir to receive up to $22 million in assets without paying taxes. The tax bill also limits the alternative minimum tax, which accounted for most of Trump’s tax liability in 2005, the only recent year for which even limited information is available, and abolishes the AMT altogether for businesses.
Dozens of congressmen will receive direct personal windfalls from the tax cut legislation, a fact which helps explain the undisguised glee of the senators and representatives who assembled at the White House to celebrate its passage with Trump. Three senators in particular—Bob Corker of Tennessee, Ron Johnson of Wisconsin and Steve Daines of Montana—stand to collect additional income of between six and seven figures from the real
estate and pass-through provisions alone.
According to an analysis by the Center for Responsive Politics, made public by CNBC, roughly four dozen House and Senate members had combined assets of nearly $400 million in 2015 that will benefit from the real estate and pass-through provisions of the new tax legislation. Only two of them voted against final passage of the bill.
Another big beneficiary of the bill is the House Democratic Leader Nancy Pelosi, whose family real estate fortune is estimated at over $200 million. While Pelosi and other Democrats denounced the tax legislation with full-throated populist demagogy, it is a fact that the Obama administration proposed a cut in the corporate tax rate from 35 percent to 25 percent, and that Senate Democrats sought a deal with Trump along those lines, only to have the president hold out for the lower rate provided in the bill.
While the super-rich rake in billions, the average working taxpayer will net $100 a year in the first years covered by the bill, only to see it all taken away in 2026, when individual rates revert to 2016 levels. Over the full 10-year course of the legislation, 53 percent of US taxpayers will see an increase, not a decrease, in their federal income tax, and these will be overwhelmingly from the working class and lower sections of the middle class.
https://www.wsws.org/en/articles/2017/1 ... x-d23.html
Corporate America begins campaign to sell Trump tax bonanza
By Patrick Martin
23 December 2017
The enactment of the largest tax cut for the rich in modern history has triggered a series of announcements by major corporations that they are going to “do more for their employees” by using a small portion of the windfall to increase wages and pay bonuses.
These actions are cynical in the extreme, as the companies involved are passing on only a fraction of the bonanza they will receive from the slashing of the corporate tax rate from 35 percent to 21 percent. AT&T, for example, is expected to rake in $1.6 billion in additional income next year just from the lower tax rate—not counting other favorable provisions, whose impact is still unreported—of which it is setting aside $200 million, one-eighth of the total, to pay $1,000 bonuses to its 200,000 corporate employees.
Meanwhile, the telecom giant is going ahead with the holiday layoff of an estimated 600 workers in five states it announced on December 16. The workers, both indoor and outdoor technicians in Illinois, Wisconsin, Missouri, Michigan, Indiana and Ohio, will be out of a job as of January 4.
In February of 2016, the New York Times, citing “senior executives” at AT&T, reported that the company was planning to slash its workforce by up to 30 percent, or 60,000 jobs, over the next five years. The article quoted CEO Randall Stephenson as advising AT&T workers to “learn new skills or find your career choices are very limited”—a threat to carry out mass firings.
The actual cost of AT&T’s “generosity” will be considerably less than $200 million, since the company will write off the cost of the bonuses as a business expense, reducing its net income and cutting its tax liability accordingly. Meanwhile, workers will pay taxes on the bonuses, slicing the value by $150-$350, depending on their salary level.
AT&T has an additional motive for becoming the first and most prominent corporate endorser of the Trump tax cut. Its proposed $85 billion merger with Time Warner is currently being held up by the Justice Department on anti-trust grounds, amid reports that Trump has demanded that the company sell off CNN as a condition for approval in order to punish the network for what he deems to be overly critical news coverage.
Comcast CEO Brian Roberts announced a similar $1,000 bonus for 100,000 employees. His company owns, among other properties, the NBC television network and its cable affiliates MSNBC and CNBC. While the nominal cost of the bonuses is $100 million, Comcast’s haul from the tax legislation could be as much as $1.22 billion from the rate cut alone, besides other benefits.
The four other corporations announcing bonuses, new investments or “corporate giving” linked explicitly to the passage of the tax cut include Boeing, Nexus Services, Wells Fargo and Fifth Third Bancorp. Boeing is a huge government contractor, while Wells Fargo, after a series of corporate scandals, needs to generate favorable publicity and curry favor with the federal regulators and prosecutors.
The two banks said they would increase their minimum wages to $15 an hour, a token gesture given that low-wage jobs such as cleaning and security are already outsourced to contractors. Fifth Third will spend $3 million on employee bonuses, while it stands to net more than $200 million in tax savings from the Trump bill.
Trump celebrated the corporate bonus announcements as vindication of his claims that the tax cut legislation was designed to benefit workers by creating jobs and raising wages. He tweeted Friday morning: “Our big and very popular Tax Cut and Reform Bill has taken on an unexpected new source of ‘love’—that is, big companies and corporations showering their workers with bonuses.”
Later in the day, Trump signed the $1.5 trillion bill into law before heading off for Christmas to his private estate and luxury resort in Mar-a-Lago, Florida.
The political strategist for the US Chamber of Commerce was more straightforward about the motivations of these companies. “It’s an extremely clever way to get the president’s attention,” Scott Reed told the Washington Post. “It reinforces his signature legislative success, and it probably gets them some good points inside the White House.”
Trump’s media apologists at Fox News and the editorial page of the Wall Street Journal celebrated the corporate bonus announcements as though they refuted charges that the tax bill is a handout to the wealthy. But even these media outlets were compelled, in their news coverage, to acknowledge the completely one-sided, pro-corporate character of the tax bill.
A detailed, sector-by-sector analysis of the impact of the tax bill on selected industries published by the Journal found, among other things, that Home Depot will boost its profits by around $1.6 billion, that health insurers will gain as much as 20 percent each in profits, that Verizon will see a $1.2 billion profit increase, and that the oil refining industry will receive more than $150 billion in tax savings next year alone. Delta Airlines will save $800 million a year.
Fox Business channel examined how hedge funds prevailed with key Republican congressmen, who drafted the tax legislation to retain the “carried interest” loophole, which Trump condemned during the 2016 election campaign as an undeserved privilege for Wall Street speculators. The loophole allows investor profits to be taxed at the lower capital gains rate rather than at the income tax rate.
Blackstone Group, Carlyle Group and KKR & Co., which together control $2.5 trillion in private equity, “funneled massive amounts of campaign cash into the coffers of Republican leaders in the House and the Senate as these same lawmakers voted for a tax bill that preserves the so-called carried interest loophole,” Fox Business reported.
Blackstone alone gave $217,000 to Senate Majority Leader Mitch McConnell’s re-election campaign in 2014. Blackstone executives gave $68,000 to House Speaker Paul Ryan’s re-election campaign this year, while Carlyle Group chipped in $36,000. These were highly profitable investments, producing legislative results worth billions to these financial parasites.
Despite the massive publicity given to the handful of announcements of worker bonuses, corporations will distribute the bulk of the tax windfall to wealthy shareholders in the form of stock buybacks and dividends, or use the money for mergers and acquisitions, which bid up the price of all stocks, thus rewarding the financial elite as a whole.
While supporters of a cut in corporate taxes, which includes the Democratic Party, claim that slashing the tax rate will generate a flood of productive investment, major US corporations are already sitting on a mountain of cash which they refuse to invest in hiring and production—an estimated $1.63 trillion, according to Standard & Poor’s.
According to S&P Dow Jones Indices, cited by the Associated Press, in the 12-month period ending in September, companies in the S&P 500 index spent $517.7 billion on stock buybacks, $414.1 billion on cash dividends, and $1.48 trillion on mergers and acquisitions. These sums dwarf their combined capital investment.
Distributions to shareholders overwhelmingly favor the wealthy. The top 1 percent of the US population owns 40 percent of all shares of stock, while the bottom 80 percent own only 7 percent of shares, mostly in small retirement accounts.
Trump himself admitted, referring to the windfall to US corporations, cutting their tax rate from 35 percent to 21 percent, “That’s probably the biggest factor in our plan.”
Among the biggest beneficiaries of the bonanza for the wealthy are the president and his family, whose fortunes are based on the real estate industry. They came in for special treatment in a variety of provisions, many of them tucked into the bill at the conference committee, without any public notice or discussion.
Among the provisions tailored to favor Trump, his children, and the family of his son-in-law Jared Kushner, themselves real estate billionaires, were: a 20 percent deduction for pass-through income, initially limited to companies with large payrolls, later expanded to include shell companies like those operated by the Trump Organization; a tax loophole called a “like-kind exchange,” which exempts certain exchanges of property from taxation, which was abolished for other kinds of property but retained only for real estate; and a cap on the amount of interest expenses corporations can deduct, except for real estate and hotel companies.
And of course, the reduction in the estate tax helps both the Trump and Kushner families preserve their fortunes, allowing each heir to receive up to $22 million in assets without paying taxes. The tax bill also limits the alternative minimum tax, which accounted for most of Trump’s tax liability in 2005, the only recent year for which even limited information is available, and abolishes the AMT altogether for businesses.
Dozens of congressmen will receive direct personal windfalls from the tax cut legislation, a fact which helps explain the undisguised glee of the senators and representatives who assembled at the White House to celebrate its passage with Trump. Three senators in particular—Bob Corker of Tennessee, Ron Johnson of Wisconsin and Steve Daines of Montana—stand to collect additional income of between six and seven figures from the real
estate and pass-through provisions alone.
According to an analysis by the Center for Responsive Politics, made public by CNBC, roughly four dozen House and Senate members had combined assets of nearly $400 million in 2015 that will benefit from the real estate and pass-through provisions of the new tax legislation. Only two of them voted against final passage of the bill.
Another big beneficiary of the bill is the House Democratic Leader Nancy Pelosi, whose family real estate fortune is estimated at over $200 million. While Pelosi and other Democrats denounced the tax legislation with full-throated populist demagogy, it is a fact that the Obama administration proposed a cut in the corporate tax rate from 35 percent to 25 percent, and that Senate Democrats sought a deal with Trump along those lines, only to have the president hold out for the lower rate provided in the bill.
While the super-rich rake in billions, the average working taxpayer will net $100 a year in the first years covered by the bill, only to see it all taken away in 2026, when individual rates revert to 2016 levels. Over the full 10-year course of the legislation, 53 percent of US taxpayers will see an increase, not a decrease, in their federal income tax, and these will be overwhelmingly from the working class and lower sections of the middle class.
https://www.wsws.org/en/articles/2017/1 ... x-d23.html