Among leaked details of the still not fully written Trump tax plan is a final repeal of the estate tax, which would save a handful of millionaires and poor planners from what South Dakota’s members of Congress have somewhat inaccurately called a “double tax.”
Yet Republicans may be imposing a sort of double tax (arguably an inaccurate term here, too, but let’s see Noem and Thune apply this analysis consistently!) on many more Americans by repealing the 104-year-old (yes, since we enacted federal income tax) deduction for state and local taxes (SALT). The move appears to be a way to take an extra dig at blue states with higher local tax rates. Officials in Erie County, New York (where Buffalo is), have their steam up against repealing the SALT deduction:
Erie County Executive Mark Poloncarz says those same people would also see tax increases with no more state or local levies for which they may claim a deduction. He estimates the net result as an $815 increase for homeowners.
“If there’s $815 more dollars that have to be paid by the average homeowner on an annual basis, that’s $815 they won’t have in their pockets to go shopping, to go to Bills games, to go to stores, to go to entertainment, which means that’s a loss of sales tax,” Poloncarz said.
The home selling industry warns that the elimination of SALT would also deal an economic blow to the housing market. The National Association of Realtors commissioned Price Waterhouse Coopers to conduct a study on just how much losing SALT would impact real estate. The report suggests average home values would quickly drop 10 percent because the loss of SALT would take many would-be home buyers off the market [Michael Mroziak, “Poloncarz, Higgins Urge Congress to Preserve ‘SALT’ Tax Deduction,” WVIK Radio, 2017.09.24].
Repealing the SALT deduction is part of a cluster of GOP tax proposals that an analysis this summer by the Tax Policy Center found could result in tax hikes for a quarter of middle-class taxpayers… which doesn’t sound like what Trump promised, but we know what happens if we try to ascribe meaning to any of the sounds emanating from the current occupant of the White House.
Gee, Republicans could propose tax reforms that would actually help the economy, like, say, expanding the Earned Income Tax Credit, which new research in New York shows boosts employment, income, and child support payments. Instead, Republicans want to make getting the EITC far more complicated… which is the opposite of what they are trying to do for their upper-income constituents.
Folks, if you want this problem solved—if you want real tax reform that simplifies the code and helps those who need help the most without giving extra-special favors to Manhattan billionaires—you’re just going to have to wait… and elect a whole lot of Democrats in the next two elections.
How is the GOP Party going to pay for its tax cuts for millionaires and billionaires without first throwing 10 million people off of their health insurance? Will there be enough middle class tax increases in the bill to offset the yuge cuts for the wealthy?
The real purpose of “supply side” theory was to shift the tax burden down the income ladder—away from the high incomes. This is the operative objective: Tax work instead of wealth. That has been the practical result of favoring capital’s returns on stocks and bonds over wage income. The pivot was a landmark political reversal, and it continues to this day.
Cutting taxes on unearned income has become a favorite way for politicians to reward the upper middle class and wealthiest citizens but especially to benefit multinational corporations, which have enormous influence in electoral politics.
Bill Clinton’s administration reduced the tax on capital gains from 28 percent to 20 percent. George W. Bush came along after Clinton and cut capital gains from 20 percent to 15 percent. Imagine if government had cut the tax rate on wages nearly in half. Now it’s Donald Trump’s turn.
Trump’s so-called “tax reform” legislation is more accurately called “tax forgiveness.” He proposes post-facto rate reductions that allow corporations off the hook on hundreds of billions in back taxes they already owe on their overseas profits. Imagine if workers could legally dodge taxes so brazenly. The fundamental fraud of Reaganomics — that everyone will benefit if rich people get — is the same argument Trump is making for his bogus “tax reform.” It was the big lie in 1981, and it’s still the big lie in 2017.
It is a dodge of hundreds of billions in federal taxes they owe on their overseas operations (a nifty loophole allows them to defer paying taxes until they bring the money home). The titans owe some $600 billion, which they refuse to pay unless and until Congress reduces the tax rate on past profits as well as future profits. No surprise, Trump supports the corporates.
The top 50 US corporations owe more than $600 billion on $2.4 trillion in profits. …Refreshing the field of battle with new faces and original ideas risks losing the next election or two, but intramural contests can energize skeptical voters and redefine fundamental principles.
69 percent say wealthy corporations paying their fair share of the taxes is more important than cutting the taxes for American business to make them more competitive in the global economy,” the survey concluded. In other words, Americans have “progressive values” on taxation. They are more worried that Republicans will cut Social Security and Medicare to pay for tax cuts for corporations and the wealthy.
Sen. Bernie Sanders has proposed a simple solution: End the deferral of corporate taxes on overseas profits. Make them pay what they owe — now.
William Greider
Ror, they certainly won’t pay for it by spurring economic growth. Professor Sheila Kennedy blogs an analysis of 92 profitable companies that managed to pay less than 20% (the corporate rate the Trump plan proposes) in taxes from 2008 through 2015. Those companies had a job growth rate of –1% versus +6% for the private sector overall and boosted CEO pay 18% versus 13% for all S&P 500 CEOs and 4% for all private sector workers. The analysis she cites agrees with Leslie’s position that we need to close the loopholes and make corporations pay their fair share, not transfer more wealth up the ladder to their fatcat CEOs.
Trump’s tax plan to help the beleaguered 1% just keeps getting uglier and uglier for the middle class and lower income Americans. Under Trump’s plan the top income tax bracket would be reduced from 39.6% to 35% and the bottom bracket would be INCREASED from 10% to 12%. Couple this with Trump’s proposals to decrease corporate tax rates from 35% to 15% and elimination of the estate tax for the ultra wealthy and you have a plan that should widen the economic disparities between the rich and everyone else in America. As an added bonus, Trump’s plan will balloon the deficit even greater than its current out of control status and guarantee we don’t start getting our national debt under control. Let the middle class eat cake at Mar-a-Lago! Sad!