Saturday, December 23, 2017

Tax Bill In Your Stocking

As Republican representatives, senators and president take their victory march down P. T. Barnum Avenue, some final thoughts and observations on the recently passed tax bill …

It is not long-promised and seriously needed tax REFORM, but just another simple tax cut giveaway. Nothing got simpler. No filing on a “postcard.”

The tax cuts promised to target the lower/middle income taxpayers. But virtually all economic analyses conclude that corporate America and the rich will get the lion’s share of tax breaks. So savings for lower/middle taxpayers had to be limited (or eliminated) in order to underwrite the upper-income savings, and to contain future anticipated budget deficits to “only” $1.5 trillion.

Tax cuts targeted to the rich do not “trickle down.” That was proven 35 years ago with the failure of the Reagan “supply side” tax cuts. “Voodoo economics” they truly were.

Corporations had their taxes cut by 1/3rd – permanently.  Did your taxes get cut by a 1/3rd – permanently?

No CEO hires more employees simply because the company has more cash in the bank from a tax cut. Instead, they keep the extra money as merely more profit on top of their current piles of cash, and ultimately use it for other self-interest purposes. It is increased consumer spending that creates new jobs to keep up with new sales demand; consumers are the ones who can actually grow the economy.

Headline stories of cash bonuses given out look good in the moment. But they do not create sustained higher base salaries nor any new jobs. Such stories are cheap p.r. wins for companies.

Donald Trump and his family will personally benefit substantially from these tax cuts, in spite of his lies to the contrary.

It is easy to be a deficit hawk complaining about excess spending when you are out of power. Once in power, politicians cave into more deficit spending and giveaways ($1.5 trillion) regardless of political party and what principles and priorities they claim. When the political chips are down and the obligations to the donors/lobbyists come due, hypocrisy knows no limits.

The tax bill was hatched in secret by Congressional leaders, given virtually no public hearings, allowed minimal floor debate, advanced while ignoring negative analyses by virtually all responsible economic impact studies, given minimal time for legislators to even read a final draft of the bill, and passed with less than 30% approval by the public. Democracy gone haywire and the citizenry be damned.

Be prepared to spend the upcoming years finding out about all the special exemptions, hidden deals, flawed assumptions, and “unintended consequences” contained in the bill. It is rife with them, none of them benefiting Mr. and Mrs. John Doe Citizen. Just enough token cuts included for the general population to distract them from the true beneficiaries and long-term consequences. Then listen skeptically to the “happy talk” of the legislators who passed this bill trying to explain away the surprises.

It was all done at warp speed to fulfill campaign promises, and to show at least one piece of significant legislation passed in a full year of trying. Most of us would be fired if we had so little to show for a year’s time of employment in a leadership position.

Horrible way to run a government.

Not much of a Christmas present after all.

A “Happy Holidays” wish for you – in spite of it all.

©   2017   Randy Bell     


Anonymous said...

Yes, yes, yes! Plus, the $1.5 trillion "bump" to the deficit may set the stage for Ryan et al to try cutting certain social and health benefit programs, but not defense.

Anonymous said...

Excellent summation of the end result of this great rush to nothing meaningful — at least nothing meaningful for those who need/deserve it most.

Anonymous said...

I agree with all your analysis and commentary on the recently passed tax bill. The only question I have is will the “blue collar Republicans” in West Virginia, Kentucky, Tennessee, Mississippi, Louisiana, Alabama, etc. realize how they are getting passed by? They have continued to vote Republican in spite of the fact that it’s against their economic and personal self-interest. Some of it is on social issues (God, gays and guns). But, much of it is on racial issues – belief that hard earned money is going to support the “black urban welfare queen.” As long as the Republican Party is successful in reinforcing these beliefs, they may very well continue to get voted back into office.

One doesn’t have to go back to Reagan to see the failure of tax cuts to stimulate the economy. Kansas, Louisiana and North Carolina are all recent examples…. With Wisconsin heading down the same road. In Kansas, the Republican legislature finally voted to increase taxes – and overrode Governor Brownback’s veto just so they could keep the schools open. The Kansas school system was formerly a very good system – but, has fallen in stature in the last eight years.

Meanwhile California and Minnesota are going the other way – judicious increases in taxes – and fueling a growing economy. We can make fun of “Governor Moonbeam” in California – but, he was able to lead the state out of a $36 billion deficit into a $4 billion surplus in less than 24 months.