Fact Sheet and Talking Points on the GOP/Trump Tax Bill 2.0 March 6th, 2018

 

Most current arguments against the bill characterize it as a $1.5 trillion tax cut. The tax bill is a much more massive shift than $1.5 trillion–that’s just what is being borrowed (and more recent government analysis now pegs that number at $2.3 trillion) and doesn’t include the net taxes of approximately $1 trillion on middle and working class families in the bill. These taxes are necessary to pay for the approximately $2.8 trillion which under EPI’s analysis is what the top 1% and corporations receive over the decade.

 

The argument that the country borrowed $1.5 trillion (now 50% more) which  primarily benefits the wealthy—is not a bad argument and is somewhat resonating with the public. A more powerful indictment of the bill is that in addition to increasing the debt by $1.5 trillion to pay for a huge unneeded tax cut for the wealthiest families and corporations,  the remaining 99% in the aggregate not only eventually lose any initial tax relief but are then forced to kick in another $1 trillion by having their taxes raised to pay for that windfall. Add to that point, the trillions of dollars in Medicaid, Medicare, Social Security, infrastructure, scientific and medical research, and support programs cuts proposed in Trump’s budget and by Republican leadership to offset the borrowing and you have a 1, 2, 3 knockout punch.

 

Below is a more detailed analysis on how these amounts were figured.

Here is a typical comment from Josh Bivens at the Economic Policy Institute. The reason that Donald Trump is going back on a key campaign promise―to protect Social Security, Medicare and Medicaid―is that he wants to pay for his $1.5 trillion tax handout, which mostly benefits the richest 1% and wealthy corporations.  The tax bill is a much more massive shift than $1.5 trillion–that’s just what is being borrowed (and that has since been increased to $2.3 trillion of borrowing) and doesn’t include the net taxes of estimated $1 trillion on middle and working class families in the bill which are necessary to pay for the approximately $2.8 trillion which under EPI’s analysis is what the top 1% and corporations receive over the decade. 

Over the next decade the bill cuts taxes by $3.9 trillion, $2.8 of it going to the wealthiest 1% and corporations paid for by borrowing $1.5 trillion and  raising $1 trillion of taxes from working and middle class families. According to the CBO there are $5.2 trillion cuts during the next decade. Corporate loophole closings of $1.3 leaves a net $3.9 trillion of tax relief.  Extrapolating from EPI’s institutes findings  approximately $2.8 trillion of that is split between the top 1% and corporations (initially 60% goes to the top 1% and by the end of the decade 83% is for our wealthiest families and corporations for an average of 71%). That leaves $1.1 trillion for individual cuts.

The $3.9 trillion in total cuts are paid for, according to the CBO, by borrowing $1.5 trillion (now 50% higher), raising individual taxes or eliminating individual deductions for $2.2 trillion (by eliminating the personal deduction, changing the inflation rate, eliminating state and local tax deduction—mainly hitting upper-middle class voters–, and eliminating miscellaneous deductions) and cutting Obamacare by $314 billion. If your subtract the $1.1 trillion cuts going to individuals from their increased taxes, that leaves a net increase in taxes to individuals (the 99%) of $1 trillion over the decade. In short, to pay for most of the $2.8 trillion tax cuts to our wealthiest families and corporations the country needs to borrow a trillion and a half dollars to $2.3 trillion and tax the 99% of families another trillion.

 

The use of the  $1.5 trillion which represents only the borrowing part of the bill to describe the magnitude of the cuts is highly misleading and masks the much more extensive cuts and the large shift in who pays. It should be obvious that the using the $1.5 trillion borrowing is not enough to pay for the $2.8 trillion cuts for the wealthiest 1% and necessitates an additional net $1 trillion subsidies over the decade from those lower on the income spectrum. This analysis does not include the additional cuts of trillions of dollars in Medicaid, Medicare, Social Security, infrastructure, scientific and medical research, and support programs proposed in Trump’s budget and by Republican leadership which the EPI newsletter chronicles.

Most of the present arguments against the GOP/Trump tax bill characterize it as a $1.5 trillion tax cut which was borrowed and which  primarily benefits the wealthy—not a bad argument. A more powerful indictment of the bill is that in addition to increasing the debt by $1.5 trillion to pay for a huge unneeded tax cut for the wealthiest families and corporations,  the remaining 99% in the aggregate not only eventually lose any initial tax relief but are  then  forced to kick in another $1 trillion by having their taxes raised to pay for that windfall.

Below is an email to Seth Hanlon of the Center for American Progress as part of an on-going discussion on this issue. Somebody has to step up and clarify this point. I’ve also attached and included a set of talking points  and would appreciate your feedback on their accuracy. If you have some time to call, please contact me at 415-383-8680. Bill Honig

Sent: Wednesday, February 21, 2018 8:38 PM

To: shanlon@americanprogress.org

Subject: Rationale for not using the figure of $1.5 trillion for the cost of the tax cut

Why the GOP/Trump tax should not be described as a $1.5 trillion tax cut.

Seth, you are right that some of the tax cuts are neutralized by offsetting tax increases. But the net amount of $1.5 trillion for the decade which people are using which is equal to what is borrowed will not by itself pay for the large cuts to the extremely wealthy and thus will require an additional net $1 trillion subsidies from those lower on the income spectrum.

Using CBO figures there are $5.2 trillion of cuts for the next decade. In the corporate sector there is an off-setting $1.3 trillion of tax increases and loophole closings etc. so that leaves $3.9 trillion of cuts. It is legitimate to use the total net corporate figure because, even though some companies benefit and some lose, the corporate sector’s relief is lowered by $1.3 trillion. It is not fair to use the same logic for the individual sector because the benefits for individuals are highly skewed to rich families while the tax increases primarily hit the middle and working classes. This results in a pronounced shift of the tax burden from lower and middle income families to pay for the large amount of high income and corporate cuts which are substantially more than the $1.5 being borrowed.

Here is how I figured it. CBO figures state that the $3.9 trillion dollars in cuts are paid for by borrowing $1.5 trillion, raising individual taxes or eliminating individual deductions for $2.2 trillion (by eliminating the personal deduction, changing the inflation rate, eliminating state and local tax deduction—mainly hitting upper-middle class voters–, and eliminating miscellaneous deductions) and cutting Obamacare by $314 billion.

EPI finds that initially 60%  of the cuts  go to the top 1% (individual and corporate ownership) which grows to 83% by the end of a decade. For purposes of argument let’s assume that we average those percentages so that over the decade 71% of the relief goes to the top wealthy families. 71% of  $3.9 trillion is about $2.8 trillion for the top families and corporations (the remaining 99% of families receive $1.1 trillion) So, even after borrowing $1.5 trillion by increasing the debt to pay for a part of the $2.8 trillion provided to the wealthy, that still leaves a shortfall of $1.3 trillion which ends up being almost all paid for by the tax increases on working and middle class families.  While $1.1 trillion of the $2.1 trillion tax increases on individuals can be legitimately netted out because that is the amount of cuts going to individuals ($3.9T total cuts minus $2.8 to the 1%), the remaining $1 trillion of tax increases is used to pay for most of the outstanding amount of the super-wealthy’s large tax cuts. This means that during the decade any tax relief for the 99% gets wiped out by these tax increases and in aggregate those families are in the hole for an additional $1 trillion dollars.

Since there were some assumptions, the actual numbers may be off a little but Isn’t this analysis substantially correct? Most of the present arguments against the GOP/Trump tax bill characterize it as a $1.5 trillion tax cut which was borrowed and which  primarily benefits the wealthy—not a bad argument. A more powerful indictment of the bill is that in addition to increasing the debt by $1.5 trillion to pay for a huge unneeded tax cut for the wealthiest families and corporations,  the remaining 99% in the aggregate not only eventually lose any initial tax relief but are  then  forced to kick in another $1 trillion by having their taxes raised to pay for that windfall.

GOP/Trump Bill Talking Points

The GOP/Trump tax bill is a ten-year $3.9 trillion tax cut which overwhelmingly benefits the top 1% of families and corporations. It is paid for by borrowing $1.5 trillion indebting your children, raising taxes on middle and working class families by $2.1 trillion and cutting medical services under Obamacare by $314 billion.

(The net tax increase to the bottom 99% of families is about $1 trillion over the decade after deducting what the EPI estimates is $1.1 trillion in tax cuts to those families during the same period—the top 1% get $2.8 trillion in tax cuts. Of course, some families in the 99% get more relief and some get more taxes. At the end of the decade the individual relief is phased out, the corporate cuts are permanent and most of the tax increases on individuals stay.)

Republicans argue that theirs is a “middle class” tax bill. Don’t believe it. For every dollar you get from the GOP/Trump tax bill, the super-wealthy (the top 1%) initially get $150 which grows to over $500 after a decade while over half of everyone else’s taxes go up. That’s not fair. It’s not right. Or to put it another way, the average tax cut for the top 1% is $150,000, the average cut for everyone else is around $900 skewed to richer families so that a family making between $40-50,000 receives just over $400.

Those that passed the tax bill made a choice to provide almost all the tax breaks to the super-wealthy. They could have cut your payroll taxes, not raised taxes on the middle and working classes, or invested in rebuilding America creating jobs, improving safety, and producing economic growth. Eliminating the tax breaks for the top 1% would have doubled your tax cuts.

The GOP/Trump tax cut bill is a much more massive shift of the tax burden from the wealthy to the middle-class and low income families than reported–essentially borrowing from the future, taxing the working classes, and cutting needed services to finance an unnecessary tax cut for the wealthy who are already living high on the hog and receiving an unprecedented share of post-tax income. Republicans in congress are already planning to drastically cut Medicaid, Medicare, and Social Security, medical and support services, rebuilding roads and bridges,and medical and scientific research to pay for their giveaway to the rich.

Donald Trump’s budget would cut more than a trillion dollars from Social Security, Medicare and Medicaid, and trillions more from education, food stamps, infrastructure spending and more. Tell Congress to reject a budget that hurts working families just to pay for tax cuts for the rich and corporations.

Supporters of the tax bill’s huge windfall to corporations claimed that the companies would share with their workers. They haven’t. Estimates are that so far $6 billion has gone to workers (mostly in the form on one-time bonuses which often replace normal wage increases) and $171 billion has gone to shareholders and buybacks—a mere 3% for workers and 97% for stockholders and executives. Two-thirds of stocks are owned by the top 1%; and 35% of shareholders are foreigners.

Don’t’ fall for the transparent “bait and switch” of the GOP/Trump tax bill. They threw you a bone of some initial tax cuts as a distraction to mask the huge windfall going to the ultra-wealthy and corporations. After ten years your cuts disappear, most of you will experience tax increases, while the corporate tax breaks are permanent.

Do the wealthy really need such a large tax break so that they can buy another mansion, a bigger yacht or jet, throw another party, buy another designer outfit, or pad their bank accounts while tens of millions of families living paycheck to paycheck receive a pittance or get taxed? Republican mega-rich donors must think so because they drove the whole perverted process by which the tax bill was passed.

Leave a Reply

Your email address will not be published. Required fields are marked *

Designed and Developed by Pointline.net