Taking from Our Children and Giving to the Top 0.1%
To Help You Understand the so-called Republican “tax cut”, we’ve provided answers to these FREQUENTLY ASKED QUESTIONS:
- Does this thing really favor the rich and hurt the poor and working class that badly?
Republicans claim that the rich get a bigger tax-cut because they pay the most taxes. But this is four pinnochios wide of the truth. The rich are also get the biggest cut on a percentage basis.
2. So how do the Republicans get away with calling it middle class tax cut?
A few crumbs do land with the middle class, but here is what is missing from most analyses:
The middle class tax cuts are also offest by cuts in benefits. If you cut someone’s taxes by $2,000 and then they spend $3,000 more on medical costs, technically yeah, they still got a tax cut. But at the end of the day, they have less money. The cuts in benefits are meaningless to the very rich, but critical to elderly middle class people.
And while the tax cuts for the wealthy accrue on into eternity, many of the cuts for the middle class decline over time.
3. The tax brackets don’t change much. So how is this helping the rich?
- Removal of the estate tax
- Removal of the alternative minimum tax (huge windfall for Trump himself)
- Drastic reduction in corporate tax rate, which will increase corporate valuations to the benefit of their owners, who are overwhelming the top 1%
- Lowers tax rate for pass-throughs (Senate version is bad, House version is worse)
- No change to the carried interest exception – breaking a big, oft-repeated Trump campaign promise to eliminate it. This loophole allows hedge-fund managers and real estate managers to pay at the 20% Capital Gains rate. It is what allows Warren Buffett, worth 79 billion dollars, to pay at a rate lower than his secretary. This loophole is preserved, while the deduction that assists middle class people with high medical expenses is eliminated. That seems pretty reasonable, right?
4. So where does all the money come from to hand over to the Top 0.1%?
It comes from everyone else. Here’s how:
- Reductions in medicare and medicaid reimbursement that are indicated in the budget.
- Reductions to housing assistance, also indicated in the budget.
- Elimination of tax deductions that help defray excessive medical costs
- Elimination of tax-deduction on student loan interest. (You read that right! The government is already making a profit on student loans, even as these loans cripple with brutal debt the very people the Republicans claim to adore – those who are working to better themselves. Many are already driven to bankruptcy due to student loan debt. Now, if the administration gets its way, it will be even worse.)
- Elimination of deductions for state and local taxes
Still, even with all of these cuts, much of the money given the very rich will be borrowed – massively increasing the debt. We are literally borrowing money to give to billionaires!
And since the wealthy will pay less and less tax, paying back this debt will then fall increasingly on everyone else.
5. Come on! Are you really saying we’re taking from the poor and the sick, from in-debt students, and giving it to the billionaires?
6. And you’re really saying we’re borrowing money so we can give it to billionaires?
7. Sorry, I’m gagging, but I can’t quite puke. Can you repeat that one more time?
Sure. We are borrowing money – taking it from your children – to give to the billionaires! We are cutting medicaid and medicare to give to the billionaires!
8. Blechhh! That did it.
Glad I could help.
9. How come I don’t hear more about these cuts in benefits? What exactly is getting cut?
Huge cuts are required by the Republican-passed budget – up to 1 trillion dollars of cuts to Medicaid and 500 billion dollars of cuts to Medicare in the next decade. But there is no plan for how this will happen. This deliberate vagueness allows the Republicans to go on about the tax cuts and act as thought the huge cuts in benefits will magically not affect anyone, or not even happen. The truth is the tax cuts are the illusion – for the vast majority of Americans. The cuts in benefits will be very real.
10. Okay, this sounds pretty bad. But won’t this lead to faster growth, which will help everyone?
Probably there will be somewhat faster growth.
Injecting money into an economy, through borrowing, can increase spending and lead to better growth – which is why it is a good strategy when an economy is in recession. (Obama’s stimulus package of 2009, for example, was half one-time tax-cuts and half one-time spending increases).
But first, if your aim is to get money circulating, it is far more effective to give the money to those who need to spend it, the poor and middle class, rather than to the wealthy who are likely to just sit on it. And second, economic stimulus should be temporary. Permanent tax cuts will explode the debt that the Republicans claimed to care about.
In short, we can expect slightly better growth, the super-rich to be the beneficiaries of this growth, unsustainable and ever-increasing debt, and increasing costs to millions of American families.
- I keep hearing that tax cuts will pay for themselves. What’s the deal with that?
It has never happened. Tax cuts reduce government revenue. Tax increases increase it. As noted above, somewhat faster growth is possible, but it is never even to make up for the decreased revenue due to the cuts.
The term to describe those who claim the tax cuts will pay for themselves is, “liars”.
- What about the farmers and small businesses who will be helped by eliminating the estate tax?
This is, of course, another lie. They don’t exist. One study found that in the entire country, the estate tax current would affect 80 farmers and small businesses in the entire country. No, not 80,000. 80.
The only true purpose of eliminating the Estate Tax is to allow the likes of Don Trump jr. to inherit 100% of their dad’s billions, and then lecture the rest of us about how in capitalism we all create our own destinies.
- Didn’t Trump claim this was very bad for the rich?
Yes. This is the kind of insane, laughable lie that is truly worthy of a Banana Republic Dictator.
- Trump keeps saying we have the highest taxes in the world. Is there any truth to that one?
None. It is hard to know if this one is ignorance, lying, or some combination.
Our taxes are well below average among industrialized countries.
- How come the some of the middle class cuts expire, whereas the cuts for the wealthy continue in perpetuity?
In order to fit within the reconciliation rules, the tax cuts must stick to the 1.5 trillion dollar budget shortfall that the Republicans approved. So not all cuts can last forever. Something has to give. And you don’t really expect the cuts for the wealthy to expire, do you?
- Gosh this plan sounds like a real winner!
I assume you are joking.
- Yeah, sorry, that was a joke. Okay, I get it. This is truly appalling beyond words. So where is the organized opposition, like we saw with Repeal and Replace?
Beats the living hell out of us.
Where are the Democrats? Where is their alternative proposal? Where is their outrage? Why are they not pounding the podium in fury? Why are they not organizing rallies against this? Saturating the free media? Showing off graphs and charts for all to see, so every American understands just how they are being cheated and lied to?
- Is there anything else Democrats can do to fight this?
How about starting by calling it what it is: The Wealth Redistribution Act of 2017 – Taking from your children and giving it to the top 0.1%.
- One thing I still don’t get. How come Republican voters don’t realize how badly they’re getting conned?
Many wise people have pondered this question. There is no known answer.