As an economist, nothing frustrates me more than the lies that get trotted out, like clockwork, to justify massive tax cuts for the rich.
For 40 years, tax cutters in Congress have told us, “we have a tax cut for you.” And each time, they count on us to suspend all judgment.
In exchange, we’ve gotten staggering inequality, collapsing public infrastructure, a fraying safety net full of giant holes, and exploding deficits. Meanwhile, a small segment of the richest one tenth of 1% have become fabulously wealthy at the expense of me, you, and everyone else. That’s 0.001% of people, getting richer and richer, while the rest of us are working harder and harder for less and less.
And it’s still, somehow, not enough.
Trump and congressional Republicans have rolled out a tax plan that helps only the people who need help the least: the independent Tax Policy Center estimates the plan — which is making its way through Congress right now — will give 80% of its benefits to the richest 1% of taxpayers.
But at some point, enough has to be enough, and increasingly, Americans are finally fed up. Recent polls indicate that over 62% of the public oppose additional tax cuts for the wealthy, and 65% are against additional tax cuts to large corporations.
Of course, that still leaves a big chunk of people who are swallowing — and spreading — the .001%’s lies about taxes. So here’s the independent thinker’s guide to the tax debate for people who aspire to be guided by facts, not magical thinking. When you hear congressional leaders (or your uncle on Facebook) utter these claims, take a closer look.
Lie #1: “Corporate tax cuts create jobs.”
You’ll hear that the U.S. has the “highest corporate taxes in the world.” While the legal rate is 35%, the effective rate — the percentage of income actually paid — is closer to 15%, thanks to loopholes and other deductions.
The Wall Street corporations with their big lobbying guns have a lot of experience with lowering their tax bills this way, but they don’t use the extra cash to create jobs.
The evidence, as my Institute for Policy Studies colleague Sarah Anderson found, is that they more often buy back their stock, give their CEOs a massive bonus, pay their shareholders a dividend, and for dessert, lay off workers.
Lie #2: “Bringing back offshore profits will create jobs.”
Enormously profitable corporations like Apple, Pfizer, and General Electric have an estimated $2.64 trillion in taxable income stashed offshore. Republicans like to say that if we give them a tax amnesty, they’ll bring this money home and create jobs.
Any parent understands the folly of rewarding bad behavior. Yet that’s what we’re being asked to do: placate a screaming toddler by giving him a cookie, and believe he’ll ask nicely next time.
When Congress handed over a cookie in the form of a “repatriation tax holiday” in 2004, these same companies gave raises to their CEOs, raised dividends, bought back their stock, and — all together now — laid off workers. The biggest 15 corporations that got the amnesty brought back a measly $150 billion, while cutting their U.S. workforces by 21,000 between 2004 and 2007.
For decades now, those big corporations have made middle class taxpayers and small businesses pick up the slack for funding care for veterans, public infrastructure, cyber-security, and hurricane mop-ups. Let’s not give them another cookie for their trouble.
Lie #3: “Tax cuts pay for themselves.”
Ugh. Members of Congress who consider themselves hard-nosed deficit hawks when it comes to helping hurricane victims, or increasing college aid for middle class families, are quick to suspend basic principles of math when it comes to tax cuts for the rich.
It’s the “trickle-down” you know and love: the long discredited theory that tax cuts for the 1% will create sufficient economic growth to pay for themselves. Right now, with the GOP pushing their tax plan through, the theory is rising up like a zombie at Halloween. As the economist Ha Joon Chang observed, “Once you realize that trickle-down economics does not work, you will see the excessive tax cuts for the rich as what they are — a simple upward redistribution of income.”
Lie #4: “Abolishing the estate tax will help ordinary people.”
This is the biggest whopper of them all.
The estate tax is only paid by families with wealth starting at $11 million and individuals with $5.5 million and up. There is no credible economic argument that this will have any positive impact on the economy. None. But it would be a huge boon for billionaire families like the Trumps, so the tax plan doesn’t just cut it: it gets rid of it entirely.
I’ve been doing this for decades, so I don’t say this lightly: this tax plan is an unprecedented money-grab. It’s built on lies, so we need to be armed with the truth. Because whether or not they get away with it is entirely up to the rest of us.
Originally published by Other Words