The Tax Bill Is Why No One Trusts Congress
By
Leonard Zwelling
You don’t need a PhD in economics to understand a few simple truths about the proposed tax reduction bill making its way through the Congress.
If you cut taxes, the government is going to take in less money. Thus the deficit and the national debt will grow. Republicans are saying this will be offset by economic growth, but does anyone really think a few dollars in the pockets of most middle class families, if that even transpires, is really going to spur a round of huge economic growth in the country? Why would it?
If you cut taxes as a means to pump money into the economy to create that growth, who do you think will benefit most? The people paying the most taxes. They are called the well off. They put their extra money in the stock market which may or may not stimulate true economic growth (rise in GDP). The large companies on the Big Board are likely to use that money for stock buy backs and dividends, not the creation of more jobs. I mean who is supposed to buy the increased stuff they might make if they used the money to make more stuff.
Of course this bill is a tax break for the wealthy. The only way it wouldn’t be is if the bill specifically keeps the taxes on the wealthy high. This bill does not do that.
If state and property taxes are removed as tax deductions along with the interest on mortgage payments, that is likely to hurt the middle class home owners in high tax states the most—New York, New Jersey, California and Illinois. Who will benefit? Mostly middle class folks in Red states with low to no state income taxes and lower property values.
The fact is this is a shift in money from the coastal professional well off and middle classes to the Red state business class. It may even selectively hurt small businesses if the earnings on small family businesses (pass through income) are taxed like regular income rather than as the earnings of large corporations (set to decrease from 35% to 20%) which is among the proposals being sorted out now.
Finally, if the bill includes the stipulation that health insurance is no longer mandatory as is the case under the ACA, more people will lose their coverage or choose to go without it which could be a disaster waiting to happen as well as a likely source of premium increase for those wishing to maintain coverage purchased on the open market.
This bill is terrible and don’t let any one try to convince you otherwise.
The president is so desperate for some sort of congressional victory that he would say or do anything to get this through. Of course, he says and does anything most days on Twitter.
And just to take this to the ultimate ridiculous place, the GOP says that the bill’s net cost to the national debt over the next ten years can be as much as $1.5 trillion dollars because that is what they say will come in with the expansion of the economy. No one believes that even though it looks like the final debt growth will be about $1T.
Just as it was false that “if you like your health insurance you can keep it” when President Obama tried to sell the ACA, it is just as false that this bill will lead to a rapidly expanding economy.
It is time for the American people to realize that Mr. Trump is now and has been selling them a bill of goods. He has accomplished nothing and is unlikely to if he keeps insulting his fellow Republicans in Congress. His State Department is a basket case and should any challenge arise on, let’s say, the Korean Peninsula, the US is ill-equipped to handle it and I suspect our allies realize this and are getting really nervous.
All we can hope for is that the Mueller investigation moves along and what many suspect, the Trumps have been in cahoots with Russia all along, is found to be true and he will be impeached.
In 2011, I wrote that I thought that the new president of MD Anderson was not qualified for his job and shortly thereafter, I believe I called for his ouster. It took another five years.
The same is true now in the country. Again, there is a preening narcissist in charge and this will undoubtedly lead to disaster—financial, international or otherwise.
Mr. Mueller, get a move on! We can’t wait five years.
And as for the truly do-nothing Congress, well, 2018 is right around the corner.
