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Mark Fernald: Voodoo Economics

Supply-Side Economics: Fool Me Once, Shame on You; Fool Me Twice, Shame on Me; Fool me Three Times?  You Have Got to be Kidding.

Since the Reagan Administration, the Republican Party has been enraptured by what the first President Bush called “Voodoo economics:”  the ‘theory’ that tax cuts pay for themselves by boosting economic growth and tax receipts.

Republicans have acted on this misguided theory over and over, with the same results:  record-high deficits, soaring debt, and reduced economic growth in the long run.

The Reagan tax cuts caused huge deficits.  In the short term, the economy grew, as the borrowed money sloshed around the economy.  It was ‘morning in America.’  Or, as Senator Daniel Patrick Moynihan put it, we borrowed a trillion dollars from the Chinese and threw a party.

When the party was over, we endured the severe recession of 1989-1991.  Nearly every major bank in New Hampshire failed.  The re-election campaign of the first President Bush failed along with the economy.

Our next Republican president, George W. Bush, copied the Reagan playbook:  huge tax cuts for the rich, a temporary rise in the economy, followed by the Great Recession.

Recent Democratic administrations provide the counterpoint to “voodoo” supply-side economics.

In 1993, President Clinton signed a tax increase on the rich.  Republicans claimed a tax increase would throw us into recession.  Not a single Republican in Congress voted for the Clinton plan.  What followed was the longest and strongest economic boom in American history, and the first balanced budget in a generation.

During the Obama administration, many of the George W. Bush tax cuts were allowed to expire, particularly the tax cuts for the wealthy.  Under Obama, we experienced nearly eight years of steady growth, during which time the unemployment rate and the deficit were cut by more than half.

The last 37 years of economic history present us with two stark choices:

  • Republican tax cuts, huge deficits and a temporary boost to the economy, followed by a bust.
  • Democratic tax increases on the wealthy, followed by steady growth, falling deficits, and no bust.

Incredibly, Republicans appear to be poised to repeat the failed policies of the past.  Their dream is a tax cut bill that gives its biggest gifts to large corporations and the wealthy, while increasing the deficit by “only” $1.5 trillion over the next ten years.

The point in reviewing economic history is not that all deficits are bad.  Temporary tax cuts, and temporary deficits, are standard macroeconomic practice when the economy is weak.  When tax cuts are permanent, so are the deficits, but the boost to the economy is temporary.  Increased government borrowing to fund the deficits pushes interest rates up, making business investment more expensive.  Short-term deficits can boost the economy out of recession, but long-term deficits harm the economy in the long run by crowding out private investment.

It is true that tax cuts could be paired with spending cuts.  But consider this:  excluding spending for Social Security and Medicare (which is increasing as the Baby Boomers retire), federal spending is a smaller part of our economy than at any other time over the last four decades.

Republican faith in tax cuts and ‘supply-side’ economics is so strong, it has killed off the traditional Republican fear of deficits.

In the 1960s and 1970s, Democrats claimed that deficits did not matter, passing one unbalanced budget after another.  The stagflation of the 1970s followed.

Republicans won the debate about deficits in the 1970s.  Deficits do matter.  But here’s the irony.  Democrats started talking about fiscal responsibility.  When they gained control in Washington, they acted to reduce the deficit.  Republicans kept railing against deficits, but when they gained control of Washington, in 1981 and again in 2001, fiscal responsibility went out the window and the deficit soared.

The current Republican plan began with a good idea:  a revenue-neutral simplification of the tax code that reduces deductions and loopholes, and lowers tax rates.  That good idea has been swamped by the mania for tax cuts, with no regard for the deficit.  If the Republican plan passes, we will cut taxes for the big corporations and the wealthy by at least $1.5 trillion, and we will borrow every penny needed to pay for those cuts.

We have a lot that needs fixing, including the tax code.  Unfortunately, we are stuck with this Congress until 2018.  They don’t do balanced budgets.  They don’t do hearings.  They don’t listen to experts.  They don’t do science. They do tax cuts for the wealthy, no matter what the cost.

 

Mark Fernald is a former State Senator and was the 2002 Democratic nominee for Governor.  He can be reached at mark@markfernald.com.

Leo W Gerard: GOP Goes for Win on Taxes, Consequences be Damned

An entire year of legislative defeats has grated on the GOP.

Getty Images/marvinh

Their promised Affordable Care Act repeal failed – again and again and again. Their Muslim ban was, well, banned by the courts. And now, in the waning days of November, their infrastructure bill, big beautiful border wall and brand new NAFTA are all missing.

Republicans have lost so much, they’re downright desperate for a win. And that’s why they’re pushing a tax scam supported by a mere 25 percent of Americans, according to the latest Quinnipiac Poll.

They’ve just got to rack up a win, consequences and American workers be damned. They’re so desperate that GOP Sen. Bob Corker, a self-described deficit hawk, agreed in committee Tuesday to send the bill to the floor for a vote after he got promises for changes. What he wants is cancellation of the bill’s tax breaks if they don’t stimulate economic expansion as Republicans say they will. The GOP keeps swearing the cuts will cause growth despite the fact that the Bush tax breaks didn’t and despite the fact that the Congressional Budget Office (CBO) projects the cuts will add $1.44 trillion to the deficit.

Some deficit hawk. But, hey, anything for a win.

Republicans are so desperate that they’re shoving this scam through what is supposed to be a deliberative process without any of that deliberation – without, for example, routine hearings or assessment by the Treasury Department or Joint Committee on Taxation. So there’s no bipartisan government evaluation of the GOP assertion that the tax breaks will generate economic growth sufficient to account for the massive revenue losses they’ll cause.

Americans hate this scam for good reason. And they do hate it. The latest Harvard-Harris survey showed 54 percent oppose it and the same percent say the scam is likely to hurt them financially. They know a swindle when they see one.

But Republicans feel like they’ve got to have a win. No matter what. Poor people, working people, old people be damned.

And damned they are by the GOP scam.

The GOP bill delivers massive tax cuts for the wealthy and corporations. The House version, for example, eliminates the estate tax. This is charged only on estates worth $5.49 million or more. So only the richest of the rich, the top 0.2 percent pay. And among the tiny number nationwide that owe estate tax in 2017, the average effective rate paid is less than 17 percent, according to the Tax Policy Center. That’s because the rich employ experts to exploit loopholes so they never pay the official rate of 40 percent.

In addition to generating essential funds for the federal government for more than a century, this tax prevents America from reverting into a kingdom dominated by royal dynasties whose pampered scions thrive by the merit of their grandfathers rather than by the sweat of their brows. This was the system Americans fought a revolution to escape.

But Republicans are voting to bring it back. Anything for a win.

Their scam also bestows on corporations the privilege of paying zero U.S. taxes on the profits of their foreign factories. So instead of the current 35 percent, or the new, low 20 percent rate that Republicans plan to award companies in their tax scam, corporations will pay nothing at all if they move manufacturing from Iowa to India or from Idaho to Mexico.

This will kill American manufacturing and American jobs. Factories will flee even faster to low-wage, high-pollution countries like China where Republicans will absolve them from paying any U.S. income taxes at all! Those Michigan and Ohio auto parts factories – gone. Those Pennsylvania and Illinois steel mills – gone. Those family-supporting jobs – shipped overseas by Republican tax policy.

Republicans are appeasing fat-cat CEOs and shareholders to get themselves a win on taxes. Family-supporting jobs be damned.

The fattest of those cats, the richest 1 percent, rake in 62 percent of the benefits of this tax con by 2027.  Many in the middle class will get tax cuts in the first few years too, but by 2027, their rates rise back up. At that time, this GOP tax fraud would stick 87 million families making less than $200,000 a year with tax increases.

But by then, by 2027, many of those Republicans will have left Congress to become overpaid lobbyists – the kind now demanding income redistribution from the pockets of the poor and middle class up and into the treasure chests of the wealthiest. The tax scam seems like a win for Republicans now, and secure job offers from lobby firms later.

The CBO has estimated that those tax breaks in the Senate GOP bill will dig a $1.44 trillion deficit over 10 years. This hole will be dredged by the party that spent 8 years while President Barack Obama was in office decrying anything that would increase the deficit by a penny. But policy consistency be damned. Anything for a win.

To keep the deficit “down” to $1.4 trillion, Republicans slash and burn programs vital to workers and the elderly like Medicare and the tax credit for student loans.  Democrats have estimated the tax scam will slash $470 billion from Medicare over 10 years. The CBO has estimated those cuts will start next year with $25 billion.

Worse though, is the real potential for Republicans to contend by year five or six, as their tax cuts for the rich and corporations gin up government debt, that programs workers cherish like Social Security and Medicaid must be gutted as well.

So what looks like a Republican win in 2017 could be a tragic loss to American workers by 2027.

Ok. The American people get it. Republicans have had a rough year. They are aching for a win. But doing the wrong thing just to do something is not a win. It’s a scam perpetrated on American workers.

Leo W Gerard: Republican Tax Plan — Make America Grieve Again

A giant sucking sound, louder than a freight train, noisier than a tornado, shriller than Ross Perot yelling, “I told you so,” blasted across the nation Thursday as Republicans in the U.S. House passed their tax plan.

It was the terrible sound of jobs swept out of this country. When Perot ran for president, he said the North American Free Trade Agreement (NAFTA) would siphon off American jobs. And he was right. It did.

PHOTO BY STEVE DIETZ, UNIONPIX.COM

But this is much, much bigger.

House Republicans approved a scam exempting corporations from all taxes on their foreign operations. Under the GOP proposal, corporations like Carrier and Rexnord can benefit from protections provided by American patents, courts and armed forces, while moving their factories from the United States to Mexico. Or to other low-wage, high-polluting countries like China. Or to countries that charge little or no corporate tax. Once there, instead of paying the new, super-low 20 percent corporate rate Republicans propose for U.S-based producers, the expat factories will pay no taxes to the United States. Nothing. Not a cent.

Rather than Making America Great Again, Congressional Republicans plan to Make America Grieve Again as even more family-supporting factory jobs get shipped offshore to take advantage of the new tax rate of zip.

The math behind that job transfer is simple. Continue manufacturing in the United States and pay a corporate income tax dramatically lowered from 35 to 20 percent. Or move to a ridiculously low-tax country like Switzerland, Montenegro or Paraguay, and pay a measly 9 percent to that nation and nothing to the United States.

With the proposed corporate tax gift from Republicans, CEOs could uproot factories in places like Illinois, Indiana and Western Pennsylvania and ship them to brand new facilities in Bermuda, Palau or Turks & Caicos, where the corporate tax rate is zero. The corporation would pay no taxes on profits to the country hosting the factory and nothing to the United States, which hosts the headquarters.

Republicans contend such corporations will bring those foreign profits back to the United States and invest here. Why would CEOs do that when any American plant they invest in would be billed taxes on profits while the same factory located in certain other countries would pay nothing?

Why would they do that when they didn’t before?

Right now, corporations are sitting on $2.6 trillion in overseas profits. They have not invested that money in U.S. research, factories or jobs because they don’t want to pay the current 35 percent tax rate that would be charged when those profits are returned to the country.

To lure that money back, Republicans propose to give corporations a tax holiday, cutting the rate to between 5 and 12 percent for repatriating the $2.6 billion. The GOP insists corporations will take advantage of that tax deal to bring those billions home and invest in American production. But they won’t. The proof is that they didn’t last time.

Congress gave corporations a tax holiday in 2004 during which CEOs could return foreign profits to the United States and pay a mere 5 percent tax on them in exchange for investment in U.S. research, factories and jobs.

CEOs brought back the money and grabbed that 5 percent rate, alright. But they didn’t use the repatriated cash to conduct research, build factories or create jobs. Just the opposite.

A study by the Democratic staff of the Senate Permanent Subcommittee on Investigations found that the 15 corporations that benefited most from the tax holiday turned around and cut more than 20,000 jobs and diminished their pace of research spending.

Labeling the 2004 tax holiday a failed policy, the report cautions against repeating it, saying it cost the U.S. Treasury $3.3 billion in lost revenues over 10 years and led to U.S. corporations sending more funds offshore.

“There is no evidence that the previous repatriation tax giveaway put Americans to work, and substantial evidence that it instead grew executive paychecks, propped up stock prices, and drew more money and jobs offshore,” said former Michigan Senator Carl Levin, then-chairman of the subcommittee, when the report was released in 2011.

So the contention that corporations now would invest in U.S. research, factories and jobs because Republicans plan to give them another tax holiday is about as solid as smoke — the stuff emitted from American factories pre-NAFTA and now flowing from mills moved to Mexico. The same goes for the contention that corporations will invest in U.S. research, factories and jobs with completely untaxed foreign profits.

In fact, suspending taxes on foreign profits would create a perverse incentive for corporations to make it overseas instead of making it in America. But Republicans intend to do it anyway.

Republicans say they must cater to the tax demands of corporations because other countries – Germany and Ireland, for example – offer corporations low rates. And those same Republicans contend they must cease charging American corporations taxes on their foreign operations because other countries have stopped.

That describes a race to the bottom. Pretty soon, corporations won’t pay any taxes at all, anywhere to anyone. They’ll provide nothing toward the roads they use to transport their products, the school systems that educate their workers, the Army Corps of Engineers that protects factories from floods.

If countries don’t work together to stop corporations from playing one against the other, workers will get stuck with all of the costs. That’s what’s happening under the GOP tax scam. The tax changes were supposed to benefit middle-class workers. But they do not.

An analysis of the Senate tax plan, released this week by the Joint Committee on Taxation, which is the official nonpartisan review agency serving Congress, showed the scam would give large tax cuts to corporations and millionaires while raising the levies charged to families earning $10,000 to $75,000 – that’s low-income and middle-class families.

White House National Economic Council Director Gary Cohn said this week, “The most excited group out there are big CEOs, about our tax plan.” Of course they are. Those 1 percenters and their corporations get all the breaks.

To help pay for big fat tax cuts for millionaires and zeroed-out taxes for corporations, Republicans plan to slash programs crucial to workers – like Medicare and Medicaid – and vital deductions, like those for property taxes and student loan interest.

Just like NAFTA, this GOP tax scheme is a scam, a bait-and-switch ruse. Workers pay more and get less – fewer government services and far fewer job opportunities. This time, their jobs won’t just be going south of the border. They’ll be shipped anyplace in the world touting the lowest tax rates.

House Republicans Push Through Their Tax Hike On Middle Class Families

Last night, straight down party lines, Republicans voted to give millionaires and billionaires a massive tax cut and to raise taxes on millions of hard working Americans.

“Today’s vote is a missed opportunity to deliver the tax reform we need for middle class families and small businesses,” said Congresswoman Annie Kuster. “I strongly support reform that starts with the goal of providing tax relief for those in the economy who need it most. This bill is little more than a giveaway to big corporate interests and wealthy individuals while creating losers among many middle class families who will see their taxes increase in the coming years.”

“The tax bill that House Republicans passed today seeks to steal from the vast majority of Americans to benefit the very few. This is an attack on our economic security and on the fabric of our nation,” said Congresswoman Carol Shea-Porter. “House Republicans’ tax scam is loaded with provisions to help the wealthiest: it eliminates the estate tax, which will only be paid by an estimated 5,500 super-wealthy Americans this year, and slashes the corporate tax rate claimed by the biggest businesses. Meanwhile, it raises taxes on many middle-class families, and it sets small benefits for working families to expire in five years – while making cuts for corporations permanent. And make no mistake about it: these cuts will take money away from needed national security investments at this dangerous moment in time.”

The Institute on Taxation and Economic Policy, confirmed Shea-Porter’s claim by stating, “12 percent of taxpayers would pay more in 2019 and 13 percent would pay more in 2027.” These increases unfairly hit middle class families.

This tax increase to the middle class comes primarily from the loss of “itemized deductions” that allow taxpayers to deduct things like mortgage interest, state and local taxes, student loan interest, qualifying work related expenses, and medical expenses.

“One reason for the variation across states is that taxpayers who live in places with higher state and local taxes may be more heavily impacted because those taxes would no longer be deductible on federal tax returns,” ITEP added.

“The bill the House approved today hurts older Americans now and in the future,” said Richard Fiesta, Executive Director of the Alliance for Retired Americans. “Eliminating the medical expense deduction means it will be harder for families with high medical expenses, most of whom are seniors, to make ends meet. The House Republican tax bill axes deductions that help working people so it can give more to the wealthiest.”

“The wealthy and corporations do not need these tax breaks. The vast majority of Americans understand that trickle-down economics does not work, and they disapprove of this plan. Retirees and working Americans know who this plan helps and who it hurts. And they will remember this when they vote in 2018,” Fiesta concluded.

Shea-Porter added, “This bill eliminates the deduction for high medical expenses claimed by over 40,000 Granite Staters and the student loan interest deduction that helps people saddled with student debt. It even takes away the modest $250 above-the-line deduction I fought to make permanent for almost 20,000 New Hampshire teachers – while keeping the golf course tax loophole. The nonpartisan Congressional Budget Office says the plan would explode the deficit by $1.7 trillion, triggering automatic cuts to Medicare. We all know our tax code desperately needs reform – but those reforms need to help the working people who are already losing out under our tax code, not give even more to the wealthiest 1% and the biggest corporations.”

The AFL-CIO says the bill is a “job killer” and rewards corporations for offshoring American jobs. Under the House proposal “U.S. tax rate on offshore profits from 35% to 0%,” creating a subsidy for outsourcing jobs that would cost taxpayers “$208 billion over 10 years.”

In their letter of opposition to the proposed tax plan, William Samuel, Director

Government Affairs Department at the AFL-CIO, called the proposal the “poster child for the failed ‘trickle-down’ economic theory that has never worked and has repeatedly stuck working people with the tab for tax giveaways for millionaires, big corporations, and Wall Street.”

Republicans are trying to pull the wool over our eyes in this massive tax scam. The plan would slash the corporate tax rate from 35% to 20% and repeals the Alternative Minimum Tax on “pass-through” businesses. A couple of examples of a “pass through” business are “small businesses” like hedge funds, law firms, realty investment companies, and some large corporations like Bechtel construction (the 9th largest single owned business in the US). Without the Alternative Minimum Tax these “pass through” businesses would not be required to pay any federal taxes at all.

NBC News is reporting “Trump and his heirs potentially could save more than $1 billion overall under the GOP tax proposal that the House of Representatives passed Thursday,” though he continues to say that the plan will not benefit him.

The progressive coalition, Not One Penny, supports tax reforms but not one penny in reductions to “millionaires, billionaires, and wealthy corporations.”

“The tax bill that passed the House today is an affront to the people that our leaders in Washington claim to represent. The GOP voted to cut taxes for millionaires, billionaires, and wealthy corporations, inevitably forcing cuts to programs working families depend on like Medicaid, Medicare, public education, and Social Security. While passing the largest middle-class tax hike in a generation, the GOP said ‘no thanks’ to helping working families this Thanksgiving,” said Not One Penny spokesman Tim Hogan. “The tax proposal that passed today is wildly unpopular with a majority of Americans, and voters won’t forget those who enabled this hypocrisy. Republicans’ vote today is one that will haunt them in the weeks and months ahead.”

Over the last month, in mobilizing against Republicans’ disastrous tax plan, the Not One Penny coalition has coordinated more than a hundred events and actions across the country to hold congressional Republicans accountable for pushing tax cuts for the wealthy and well-connected at the expense of working families.

Advocates and activists continue to mobilize in opposition to Republicans’ tax scam. From hundreds gathering together at rallies alongside Leaders Pelosi and Schumer, Members of Congress, and progressive allies on November 1 and November 15, to local grassroots activity across the country, Americans will continue to resist this toxic tax plan.

“Progressive groups have come together to prevent Republicans from rigging the system even further for the wealthy and well-connected, and we will not quit until this taxpayer-funded giveaway to millionaires, billionaires, and wealthy corporations is stopped dead in its tracks. After months of activity, we continue to mobilize thousands of activists to stop Republicans attempts to raise taxes on middle-class families. Congressional Republicans should take note: we will hold you accountable for every vote you take that threatens the health and financial security of your constituents,” Hogan added.

“This bill has always been about giving massive tax cuts to the wealthy and corporations, paid for by the rest of us — and our groups have been fired up about that from the beginning,” said Ezra Levin, Co-Executive Director of Indivisible, a member of the Not One Penny coalition. “Even before this tax fight became a health care fight, we had over 100 events in every corner of this country to oppose the Trump Tax Scam. Now that Republicans have explicitly included ACA repeal, our groups are even more energized than before.”

The bill now moves to the Senate where it is sure to face stiff opposition, especially after the news that Senator McConnell added the repeal of the Affordable Care Act to their tax plan.

Should-be Republican supporters are beginning to defect from the GOP tax plan because of the disastrous impact it would have on the American economy and the harm it would have on millions of middle-class families. Opposition to the plan includes:

  • Wisconsin Senator Ron Johnson, who said the plan benefits corporations over small businesses, and he finds the process being used to rush the bill “offensive.”
  • Arizona Senator Jeff Flake said, “I remain concerned over how the current tax reform proposals will grow the already staggering national debt by opting for short-term fixes while ignoring long-term problems for taxpayers and the economy.”
  • MaineSenator Susan Collins said, “I don’t think it’s a good idea from either a political or policy perspective.” Tennessee Senator Bob Corker said, “If I believe it’s going to add to the deficit, I’m not going to vote for it.”
  • Oklahoma Senator James Lankfordsaid, “It’s one thing to be able to cut taxes. It’s another thing to say how are we going to deal with our debt and deficit.”
  • Texas Senator Ted Cruzsaid, “Right now, they don’t have my vote.”

Make sure to let your Senators know how you feel about this new proposal. The Senate Democrats are unanimous against the bill but in order to ensure this bill never reaches the President’s desk we need to get at least three Republicans to vote it down.

“We need bipartisan tax reform that simplifies our tax code to help small businesses and delivers meaningful relief to middle-class families. Sadly, the tax bill approved last night is a partisan effort that doesn’t meet any of those goals,” said Senator Shaheen. “This bill would add over one and a half trillion dollars to our national debt and hurt Granite State students, seniors and working families, all to provide tax cuts to the very wealthy and large corporations. I stand ready to work with Republicans and Democrats to reform our tax code, but we need a bill that’s fiscally responsible, helps grow our economy and prioritizes the middle class.”

“Not One Penny” Hosts Rally Against GOP Tax Proposal

Rally Comes As House Prepares to Vote on GOP Tax Proposal Tomorrow

Leader Schumer: “They’re taking away money from the middle class and working people’s health care so they can cut taxes for the rich. Shame on them.”

Leader Pelosi: “We will stand firm against the Republican efforts to cheat, swindle, and scam the American people.”

Washington, D.C. — As the House prepares to vote on massive tax cuts for the top one percent on the backs of working families, hundreds of activists and advocates rallied at the U.S. Capitol with Senate Democratic Leader Chuck Schumer and House Democratic Leader Nancy Pelosi to demand not one penny in tax cuts for millionaires, billionaires, and wealthy corporations. This comes the day after Republican leadership announced revisions to the Senate tax plan that would leave an additional 13 million Americans uninsured and inflate premiums for working families to pay for massive tax cuts for wealthy corporations.

Speakers at the rally, including numerous Members of Congress, the heads of progressive organizations, and constituents harmed by the tax plan, also demanded that President Trump release his tax returns so the American people know just how much he and his donors stand to gain from a tax bill that benefits the wealthy and well-connected.

“The Republican tax bill is a shameless tax scam of staggering proportions,” said House Democratic Leader Nancy Pelosi. “Republicans are hiking taxes on tens of millions of middle class families, all just to give deficit-exploding handouts to corporations and the wealthy. Democrats in Congress are proud to stand with Americans across the country to demand ‘Not One Penny’ for the 1 percent. Together, we will stand firm against the Republican efforts to cheat, swindle, and scam the American people.”

“They’re taking away money from the middle class and working people’s health care so they can cut taxes for the rich,” said Senate Democratic Leader Chuck Schumer. “Shame on them. It’s unbelievable: 13 million people will lose health care and premiums will go up 10 percent, all so the wealthy and powerful in America can get a huge tax break. No American wants that.”

“The Republican tax bill threatens our country.” said Representative Lloyd Doggett, Ranking Member of the House Subcommittee on Tax Policy and Congressman from Texas. “It is wrong. It’s all about financing tax cuts for those sitting way up top the economic ladder and the giant multinational corporations that have exported so many American jobs.”

“This is the most audacious bank heist in U.S. history,” said U.S. Senator from Oregon, Jeff Merkely. “They want to drain the national treasury, put us in debt, cut other programs, all in order to help the very richest Americans.”

“This bill is about enriching the wealthiest in our country and corporate special interests on the backs of our country’s middle class,” said New York’s 14th congressional district Representative, Joe Crowley. “The 1 percent will benefit because it will increase our debt by $2.3 trillion dollars. And that means we’ll have to cut Social Security and cut Medicaid. It’s a setup.”

“This bill is a classic bait and switch. It’s a con artist’s dream, and we are not buying it,” said Lily Eskelsen Garcia, President of the National Education Association. “One of the things we looked at in this bill is how it’s going to impact our students. For the kids in your life, this is the civics lesson of our time. There is a right answer and a wrong answer when this bill hits the floor. They didn’t do their homework, and we’re sending them back with a great big no.”

“How will they make up for millions of dollars in tax cuts for the wealthy? ” said Anna Corbin from the Little Lobbyists, and the mother of two kids with complex medical needs. “It’s pretty clear they’re going to come after us. They could get rid of the deductions that many families who have children with complex medical needs rely on, or they could cut Medicaid. Of course, there’s always the option that they’ll do both, and they’ll take away our Medicaid lifeline. Cutting taxes means cutting services. Not one penny can be taken from children with complex medical needs. Not one penny can be given to the wealthy at the expense of those who need it most. And not one penny can be sacrificed when our children’s lives, lifelines, and livelihoods are under attack.”

The rally was coordinated in partnership with Tax March, Americans for Tax Fairness, the Center for American Progress Action Fund, Communications Workers of America, Indivisible, League of Conservation Voters, Little Lobbyists, Main Street Alliance, MoveOn.org, Patriotic Millionaires, Stand Up America, and others.

Recent analysis shows that Republicans’ framework is designed to shower even more benefits on millionaires and wealthy corporations as time goes by, while at least 25 percent of taxpayers would pay more by 2027.

The video of the rally can be viewed here, or below.

 

House GOP Tax Plan Hurts Working Families

Today, the House Republicans released their new tax plan that would lower taxes for the ultra-wealthy and add trillions to the national debt. The plan would also drastically reduce the corporate tax rate while continuing to reward companies for offshoring American jobs.

“This tax bill is a job killer. It gives hundreds of billions of dollars in tax breaks to companies that outsource jobs and profits,” said Richard Trumka, President of the AFL-CIO. “No matter how it’s spun by Republican politicians, their tax bill is nothing but giveaways to Wall Street, big corporations and millionaires, paid for on the backs of working families.”

“It’s shameless to propose cutting Medicaid, Medicare, education and infrastructure to pay for tax breaks for the 1%. History tells us, commonsense tells us and careful analysis of this tax bill tells us that these tax giveaways for the wealthy and big corporations will never trickle down to the rest of us. Real tax reform actually can put money back in the pockets of working people, but this is not that kind of plan,” Trumka added.

“The Republican tax plan is a handout to millionaires, billionaires, and big corporations that will raise taxes on working families and give corporations new incentives to send more U.S. jobs overseas,” stated Chris Shelton, President of the Communication Workers of America (CWA). “Republicans and White House staff have been working overtime to spin this deal as a ‘middle class tax cut.’ It’s not.”

Shelton explained just a few of the ways the new tax proposal will hurt CWA members and working families across the nation.

  • It limits the ability to deduct property taxes and completely eliminates the ability to deduct state and local taxes.
  • It gets rid of tax deductions that help families pay education expenses. It will tax directly the value of employer-provided education assistance that at least 10,000 CWA members use.
  • It restricts the amount of home mortgage interest that can be deducted, hurting CWA members and working people especially in areas like California, New York, New Jersey, and other states with high housing costs.
  • It wipes out the ability of families to deduct their medical expenses.
  • Any employer-provided child care benefit will be taxed, and assistance from employers to help CWA families adopt a child also will be taxed.

“We cannot allow tax cuts for the wealthy to harm millions of working families. CWA and our allies are fighting back against this massive transfer of dollars from working families to the richest 1 percent,” added Shelton.

David J Cox, President of the American Federation of Government Employees (AFGE) also spoke out against the new tax plan.

“The tax plan unveiled by House leadership would mostly benefit those who need the help the least: wealthy individuals and large corporations. While the plan would lower the tax rate for many middle-income families, most would end up having more of their income taxed. And the plan would actually raise taxes on our poorest citizens.”

“Too many American workers have been suffering from stagnant wages, rising costs for health care and other essentials, and an economic system that favors the millionaires and billionaires. This plan does nothing to help them,” he concluded.

The new plan angered the Alliance for Retired Americans, a national advocacy group for seniors.

“This is the latest cruel scheme. The tax cuts for the wealthiest Americans are so massive that they plan to cut nearly $500 billion from Medicare and more than $1 trillion from Medicaid over the next 10 years to pay for them – but they will still add $1.5 trillion to the deficit,” said Richard Fiesta, Executive Director of the Alliance for Retired Americans.

“Exacerbating the problems they are creating, the House and the Trump Administration would no longer allow Americans, including retirees, to deduct their medical expenses, including nursing home costs or out of pocket medical or dental expenses from their taxes.”

Even some on the right oppose this new tax proposal. The Concord Coalition, a self proclaimed “non-partisan, grassroots organization,” heavily funded by former Sec. of Commerce Peter G Peterson, spoke out against this new proposal calling it “fiscally irresponsible.”

“True tax reform should aim to grow the economy without growing the debt ” said Robert L. Bixby, Concord’s executive director. “This plan would move U.S. fiscal policy in a dangerous direction, openly inviting higher deficits in the face of unsustainable debt.”

The federal debt recently passed the $20 trillion mark, and the Congressional Budget Office (CBO) projects that under current law the government is on track to add more than $10 trillion to that in the next 10 years. This version of the tax plan will add at least another $1.5 trillion onto that projection.

“It is important that any changes made to this draft to accommodate interest group concerns and increase potential support be paid for by reducing tax cuts rather than increasing the number of budget gimmicks,” Bixby added.

Working people across the country should not be made to suffer to give the top 1% more tax breaks.

Former Sec. of Labor and respected economist Robert Reich said, “The proposed tax cuts are tiny and temporary. And some middle class Americans will actually get a tax increase.”

Reich calls this tax plan a “Trojan Horse” in this short video released today.

“Meanwhile, the top 1 percent will get a gigantic tax cut. The Tax Policy Center estimates that the current plan will save the bottom 80 percent between $50 and $450 in taxes per year, but that it saves each person in the top 1 percent an average of $129,000 a year. For people at the very top, like Trump himself, the tax cuts are humongous. And the corporations they own will also get a massive tax cut,” Reich added.

Working people have suffered through decades of stagnant wages, budget cuts to programs that help them and provide healthcare when they get old.  Enough is enough. We must stop this massive giveaway to the wealthy 1%.

100-Plus Organizations Urge Congress to Reject Giant Tax Loophole for Offshoring and Tax Avoidance

Republican Proposal for a “Territorial Tax System” Would Encourage Corporations to Send Jobs Offshore and Avoid Paying Taxes

(Washington, D.C.) Today, more than 100 organizations sent a letter urging members of Congress to reject a proposal that would allow U.S. multinational corporations to pay little to nothing on their offshore profits.

President Trump and Republican leaders in Congress included this proposal for a “territorial tax system” in the tax framework they unveiled last week.

The letter says, “This is an incredibly bad idea. Ending taxation of offshore profits would give multinational corporations an incentive to send jobs offshore, thereby lowering U.S. wages. It would also be a giant loophole for corporations to use accounting gimmicks to move their profits to tax havens, resulting in the loss of billions of dollars in tax revenue for the United States.”

“I’ve got to hand it to them. They’ve really outdone themselves this time. It must take a lot of effort to come up with an idea this bad,” said AFL-CIO President Richard Trumka. “It takes a lot of nerve to propose tax incentives for offshoring and then try to fool people into thinking you’re doing the exact opposite. Up is down, black is white.  What a con job.”

“Already, the U.S. encourages tax avoidance by allowing U.S. corporations to indefinitely defer taxes on profits that they book offshore. If the United States moves to a territorial tax system, multinational companies would have even greater incentive to engage in accounting tricks and move their profits to countries with zero or single-digit corporate tax rates. Corporate bosses would win while the rest of us would be left to pick up the tab,” said Alan Essig, executive director, Institute on Taxation and Economic Policy

“This scheme is a massive tax cut for wealthy corporations, that puts Main Street businesses and domestic companies at a terrible disadvantage,” said Frank Clemente, executive director, Americans for Tax Fairness. “We must continue to fully tax the profits U.S. corporations make offshore. If they pay less U.S. taxes on offshore profits than they pay now, or if they pay no taxes, they will have even more incentive to send jobs offshore and shift profits to tax havens to avoid paying their fair share.”

“It is, quite simply, the largest offshore loophole in the history of our tax code,” said Gary Kalman, Executive Director of the Financial Accountability and Corporate Transparency (FACT) Coalition. “While hard to fathom, the proposal creates new and greater incentives to book profits offshore. When you get past the rhetoric, they propose a near zero percent tax on all profits moved offshore. Other countries have tried this, failed, and are now struggling desperately to fix it. How do you look at their failure and say ‘let’s do the same?’”

For more details on why a “territorial” tax system rigs the rules of the economy in favor of multinational corporations and against working people, see this fact sheet from the Institute on Taxation and Economic Policy (ITEP).

Income Inequality Grows As CEO Pay Jumps 6 Percent To 347 The Average Worker

Image courtesy of the AFL-CIO

A new report and searchable database from the AFL-CIO’s Executive Pay Watch highlights the lavish compensation executives receive while workers wage remain stagnant.

Income inequality has become one of the largest economic issues facing America.  As workers wages remain stagnant, corporations continue to rake in massive profits and pay their executives lavish salaries.

According to the new AFL-CIO Executive PayWatch, the average CEO of an S&P 500 company made $13.1 million per year in 2016 – 347 times more money than the average rank-and-file worker. CEO pay for major U.S. companies has risen nearly 6 percent, as income inequality and outsourcing of good-paying American jobs have increased.

“This year’s report provides further proof that the greed of corporate CEOs is driving America’s income inequality crisis,” said AFL-CIO President Richard Trumka. “Big corporations continually find ways to rig the economy in their favor and line their CEOs’ pockets at the expense of the workers who make their businesses run. Too often, corporations see workers as costs to be cut, rather than assets to be invested in. It’s shameful that CEOs can make tens of millions of dollars and still destroy the livelihoods of the hard-working people who make their companies profitable.”

The Executive PayWatch website showed that in 2016, the average production and nonsupervisory worker earned approximately $37,600 per year. When adjusted for inflation, the average wage has remained stagnant for 50 years.

Take for example, Raymond Barrette, CEO of White Mountain Insurance Group LTD of Hanover, NH.  Barrette raked in $8.1 million in salary and stock options.  That is 270 times the average rank and file worker.

Another example comes from Patrick T. Ryan, CEP of Press Ganey Holdings in Wakefield, Massachusetts. He collected a whopping $28.9 million in compensation, 769 times the average worker.

The report allows viewers to search their comprehensive database of CEO pay by industry or state.

Screenshot from Executive Pay Watch

The PayWatch site also highlights U.S. corporations that don’t pay taxes on their offshore profits. By “permanently reinvesting” these profits overseas, they can forever defer paying federal income taxes and reinvesting back into the community.

According to the report, Massachusetts based General Electric is holding $82 billion in “Unrepatriated Profits” overseas in tax havens.  That is only one-third of the amount of money Apple is shielding overseas ($230 billion).

The report also highlights the growing trend of corporations offshoring good American jobs at the expense of hard working people.

“Avoiding corporate income taxes is one way CEOs boost their companies’ profits and thereby increase their own pay. This corporate tax avoidance reduces the amount of money that is available for public goods like roads and schools. As a result, our economy increasingly has become out of balance,” wrote the AFL-CIO in their report.

Image courtesy of the AFL-CIO

Mondelēz International, highlighted in this year’s PayWatch, represents one of the most egregious examples of CEO-to-worker pay inequality. The company, which makes Nabisco products, including Oreos, Chips Ahoy and Ritz Crackers, is leading the race to the bottom. Last year, it closed the Oreo cookie line at the iconic Nabisco factory in Chicago, sending 600 family-sustaining jobs to Mexico, where workers face poor labor and safety standards. Mondelēz CEO Irene Rosenfeld made more than $16.7 million in 2016 – about $8,000 per hour.

“Greedy CEOs are continuing to get rich off the backs of working people,” said Michael Smith, who was among hundreds of Nabisco workers from the South Side of Chicago laid off in March of 2016. “I loved working at Nabisco, and I took pride in the work I did to make a quality product. It’s not as if the company isn’t profitable. The Oreo alone brings in $2 billion in annual revenue, and the CEO makes more in a day than most of us made in a year. I just don’t understand the disrespectful attitude toward working people.”

While companies are continuing to put profits over people, working people are fighting back. The AFL-CIO has endorsed the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union (BCTGM) boycott of Nabisco products made in Mexico.

These corporations are just examples of the insatiable greed that has taken over Corporate America.  The never ending race to the bottom continues to punish worker, shipping their jobs overseas.  To begin to address the growing income inequality in America, we must first address the outrageous pay ratios between CEO’s and rank and file workers.

Leo W Gerard: Another GOP Tax Plan For Captains

Donald Trump
Image by DonkeyHotey CC FLIKR

It’s based on the same voodoo economics we’ve heard many times before.

As he ran for office, Donald Trump repeatedly reminded audiences that he was “really, really rich,” but assured voters that as president he would be a working man’s champion, a blue-collar Superman.

He said he would stop corporations from offshoring manufacturing jobs with a border adjustment tax on imports. He would end trade cheating and declare China a currency manipulator on his first day in office. He would launch within his first 100 days a $1 trillion infrastructure improvement program to create millions of jobs fixing the nation’s airports, bridges and roads.

Trump’s record of promise-keeping to America’s working men and women in his first 100 days is this: So far, no good. The tax plan, well, the one-page tax sketch that the administration released last week is symbolic. While it would slash federal levies on fat cats and corporations, administration officials refused to say it would help the middle class at all. And it contains no border adjustment tax.

The tax plan rewards the captains of industry, the captains of Wall Street, the captains of real estate, like, well, like Trump himself. But the middle class, not so fast. The poor, not at all. Someone needs to tell Donald Trump that banksters and real estate tycoons sporting navy golf polos aren’t blue-collar workers. The tax scheme, like so many of Trump’s other pledges to workers, is a stab in the back of that indigo shirt.

On the campaign trail, Trump said rich people like him should pay more in taxes. Yet, the tax plan he offered last week would cut his taxes – by tens of millions a year. That’s because it would eliminate the alternative minimum tax. This is a levy intended to require billionaires like Trump to pay at least something after subtracting their multitude of special-rich-people deductions.

Trump has refused to release his tax returns – the first American president to keep them secret since Gerald Ford, who provided summaries. But Trump’s 2005 return, uncovered in part by a newspaper, shows that he had to pay $31 million as a result of the alternative minimum tax.

Trump’s plan also calls for eliminating the estate tax. That is paid only by people who inherit more than $5.5 million – as Trump’s children will. And it calls for cutting by more than half, to 15 percent, the tax paid by entities called pass-through corporations. Trump’s attorneys indicated in his presidential financial disclosures that his approximately 500 businesses are almost all pass-throughs.

Trump will be hobnobbing with his country club buddies in benefitting from this break. A 2015 study by the nonpartisan National Bureau of Economic Research found that the top 1 percent gets 69 percent of pass-through income.

Right now, a worker can’t get in on that low 15 percent tax rate unless reporting income below $37,950. But doctors and lawyers and investment bankers would get that special discount rate, no matter how much they make, as long as they pay a few bucks to establish a pass-through corporation. Trump’s plan would allow a lawyer paid $1 million a year to cut his taxes by $180,000 by setting up a pass-through.

Certainly, with all of those perks going to the nation’s most wealthy, Trump’s tax men would assure workers that they will benefit too.

Not really. When asked on ABC’s “Good Morning America” last week whether the middle class would pay more under the plan, Treasury Secretary Steven Mnuchin said: “I can’t make any guarantees.”

And the director of Trump’s National Economic Council, Gary D. Cohn, could not say how much of a break – if any­ – a middle-income American would get under the plan.

If it’s not absolutely clear who Trump’s tax plan would benefit, there’s also this from George Callas, the senior tax counsel for the Speaker of the House. Callas wants a permanent break for corporations, saying of a temporary one:

“It would not alter business decisions. It would not cause anyone to build a factory. It would just be dropping cash out of helicopters on corporate headquarters for a couple of years.”

Lots of small towns in Ohio, Michigan and Pennsylvania – towns that suffered when corporations offshored factories, towns that voted for Trump – would really benefit from cash dropping out of helicopters for a couple of years.

But that’s not Trump’s plan.

Trump’s money men, Mnuchin and Cohn, said slashing levies on the wealthy will pay for itself because giving the rich more cash will spur economic growth. So, no need to worry about Trump’s tax cuts ballooning the national debt, they assured.

This is called the Laffer Curve. Really.

Economist Arthur Laffer, an adviser to Trump, explained to the Washington Post last week that it works like this: “When you think about cutting that corporate rate, let’s say, from 35 to 15, that’s not going to cost you any money.”

He convinced the likes of Ronald Reagan and George W. Bush this hocus-pocus would work. And now, he has bamboozled Trump.

Both Reagan and Bush cut taxes. Both also left the country with larger deficits and uneven economic growth. Reagan raised taxes several times after his initial 1981 cut. Bush gave the country the Great Recession.

Laffer still insists his curve works, contending, “It’s a no-brainer.”

No. It’s voodoo economics. That’s what George H.W. Bush called it.

The Committee for a Responsible Federal Budget, a nonpartisan group that advocates fiscal restraint, estimated that Trump’s Laffer tax plan could reduce federal revenue by $3 trillion to $7 trillion over a decade. The economy would need to grow at a rate of 4.5 percent to make that proposal self-financing.

It grew at a pathetic 0.7 percent during Trump’s first quarter in office. In President Obama’s last quarter, the fourth of 2016, it increased at 2.1 percent. To rise at 4.5 percent would be phenomenal. Maybe paranormal.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, put it this way: “It seems the administration is using economic growth like magic beans: the cheap solution to all our problems.”

Ronald Reagan, who like Trump was adored by blue-collar workers, promised that benefits from his massive tax cuts for the rich would trickle down to the rest. That never worked. But now Trump is taking advice from the same Svengali and promoting the same flim-flam plan.

Those heartland workers can’t tolerate another hit. But it’s not just taxes. The health insurance proposal Trump is pushing would cost many low- and middle-income workers thousands of dollars more a year. Trump has proposed eliminating the Chemical Safety Board, which prevents workplace deaths. He delayed rules protecting workers from deadly silica and beryllium. He signed a law ending a requirement that large federal contractors disclose and correct serious safety violations. Trump has no federal infrastructure plan and reneged on naming China a currency manipulator.

These are all the actions of a president protecting the captains of commerce, not one championing blue-collar workers.

The Media Are Not The Only Ones Who Believe Trump Should Release His Taxes And Divest From His Company

By now, you have probably already heard about the train wreck that was President-Elect Trump’s first press conference as the President-Elect and his first press conference since July of last year as a nominee.

During the press conference a few key issues were supposed to be resolved mainly dealing with the President-Elect’s business and his potential conflicts of interest.

Trump has continued to say that the President cannot have conflicts of interest and that he will do whatever is necessary to resolve any potential conflicts that stem from his business. Part of the problem is that we do not even know what those conflicts are because we have not seen his tax returns to see what investments he holds or has direct dealings with that could be impacted by decisions made by the federal government.

Trump announced that his sons would be taking over the family business while he is President but will not be divesting from the company in any way.

“President-elect Trump’s planned arrangement with the Trump Organization falls far short of what’s necessary to avoid conflicts of interest and Emoluments Clause violations that will dog his administration and severely undermine the public’s faith in government,” said Common Cause Vice President for Policy & Litigation Paul S. Ryan. “Common Cause has called on President-elect Trump to divest from the Trump Organization and put his wealth into a blind trust managed independently from him. Instead, he’s decided to retain full ownership of the Trump Organization and have two of his sons run it—no divestment and no independence.”

“These are the same two sons who recently had their name attached to an inauguration fundraiser that promised access to their father for those willing to pay $1 million dollars. The event was cancelled but the precedent was troubling,” Ryan continued.

Common Cause describes themselves as “a nonpartisan, grassroots organization dedicated to upholding the core values of American democracy. We work to create open, honest, and accountable government that serves the public interest; promote equal rights, opportunity and representation for all; and empower all people to make their voices heard in the political process.”

“It is clear from President-Elect Trump’s statement and answers today that he will not fully separate himself from his business transactions and potential conflicts of interest. He also has no intention of disclosing his financial interests, as past presidents have done. His response to these legitimate questions was simply ‘trust me.’ Our democracy and the American people deserve better,” said NH Congresswoman Carol Shea-Porter.

Shea-Porter has cosponsored legislation to hold President-Elect Trump accountable and to investigate the Russian interference in the U.S. elections to remedy this dangerous situation. H.R. 371, the Presidential Conflicts of Interest Act, and H.R. 356, which would establish a bipartisan commission on the Russian interference in our elections, will protect our democracy and ensure that the President-Elect cannot enrich himself and his family while conducting the official business of the United States. Congresswoman Shea-Porter has also cosponsored H.J.Res. 26, which would deny Congressional consent for President-Elect Trump to accept any present, Emolument, Office, or Title of any kind from a foreign leader or government.

“The legislation I have cosponsored would apply the ethical standards, norms, and precedents that have been developed over decades to our incoming administration, which refuses to follow them. I urge Speaker Ryan to put these measures to a vote and pass them with the urgency these critical issues demand,” continued Shea-Porter.

“The American public must now demand complete transparency of the Trump Organization and President-elect Trump’s finances. Such transparency is America’s only hope for protecting itself against conflicts of interest and Emoluments Clause violations—and holding President-elect Trump accountable for his promises to avoid conflicts and violations of the constitution,” Ryan added.

During the campaign Trump confirmed he would release his taxes after the election however now that he is the President-Elect he is stating that it is only the media who wants to see his tax returns.   This is simply not true.

Paul S. Ryan stated that Common Cause’s 700,000 members are also demanding to see his tax returns.

“The President-elect must take additional steps immediately to safeguard the integrity of the office of the President. To begin with, Trump must release his taxes and quit hiding the facts and the potential conflicts from the American people. At today’s press conference, when asked to release his tax returns, the President-elect rejected the request and claimed that the ‘only one that cares about my tax returns are the reporters.’ Common Cause’s more than 700,000 members and supporters care about the President-elect’s tax returns and additional financial disclosure. We demand it.”

What exactly is he hiding by not releasing his taxes? Is he hiding the fact that he has failed to pay anything in taxes for the last few years due to loopholes in our tax laws? Is he hiding the fact that he and his company have been doing business with foreign governments that are currently under sanction from the US Government? Is he hiding the fact that he will gain massive amounts of wealth from simple policy changes he can make as President?

We do not know because he is hiding it all from us.

It is time to come clean and do what he promised to do: release his taxes, fully divest from his company and put all of his assets in a blind trust.

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