The Republican tax plan released by
House Speaker Paul Ryan on Nov. 2 is a giveaway to corporations and the
ultra-wealthy at the expense of the middle class and future generations of
|NYU Professor David Kamin showed that the tax burden for average families would decrease over time - eventually turning into a tax increase - while the corporate and estate taxes for the wealthy would be permanent.
Credit: David Kamin/medium.com
That’s the assessment of the plan’s critics in organized labor, who say the Republican talking points calling the proposal a tax cut for the middle class are untrue. Instead, they say, the real beneficiaries of the tax cuts are corporations, which will see their rates cut almost in half, and the ultra-wealthy, who will benefit from new loopholes and the elimination of the estate tax, which only applies to multimillionaires.
Even more, the plan is a job killer, encouraging companies who want to ship jobs overseas by eliminating key taxes paid by U.S. corporations on foreign profits. Construction jobs would be especially affected thanks to the elimination of incentives for home ownership, which would hurt the entire industry.
“This Congress and the White House are trying to sell their plan as a tax cut for working people and a job creator, but the facts tell a different story,” said International President Lonnie R. Stephenson. “IBEW families aren’t the winners in this. It’s millionaires and billionaires who are going to make out like bandits.”
Middle class Americans – some of them, anyway – would see only a modest tax cut under the proposal. Whether or not working families receive a cut, however, is highly dependent on where those families live, how many children they have and a host of other factors that make it difficult for casual observers to predict the plan’s effect. At least 30 percent of households making between $50,000 and $150,000 would pay more in taxes under the Republican plan.
“The truth is, if you live in a city or in a high-tax state like New York, California, Massachusetts or New Jersey – and those are just a few of them – you’re probably going to end up paying more to help finance tax cuts for rich people,” said Austin Keyser, director of the IBEW’s Political and Legislative Department. “This bill isn’t what President Trump promised when he was running in 2016.”
Some of the popular tax deductions that would go away are breaks for state and local taxes and drastically lower caps for the popular mortgage interest deduction that encourages home ownership. Even cuts that should be popular, like a $300 credit for parents, end after five years, while the estate and corporate tax cuts are permanent.
The bill’s backers also argue that giving money back to corporations will create jobs and raise wages, but if past tax cuts are any indicator, that’s not usually the case. History shows that corporations use tax savings to boost profits, not share the wealth with their workers. Even productivity-enhancing investments stopped having a positive effect on wages decades ago, according to the Economic Policy InstituteEconomic Policy Institute.
Instead, the plan will increase the national debt by $1.5 trillion while still making drastic cuts to Medicare and Medicaid. It would also raise the Medicare eligibility age from 65 to 67, putting retirement plans on hold for millions of Americans. Schools, infrastructure and other vital programs could be on the chopping black when Congress decides it’s finally time to balance the budget in the future.
In releasing their plan, Republicans pointed to a fictional family of four who earned $59,900 per year. That family, they said, would receive an $1,182 break on their 2018 taxes under the new plan. But David Kamin, a law professor at New York University, did the math and found that, over time, even that idealized middle-class family would end up paying more in taxes – almost $500 more per year – a decade from now. “This is even as tax cuts for those at the top are maintained,” he wrote.
“Trading a small tax cut now for giveaways to corporations and the wealthy that ship jobs overseas and cut into vital programs like Medicare and Medicaid is a bad deal for American workers,” Stephenson said. “We’re working hard to get a better deal for the folks Donald Trump promised to help, but we need working people to speak out.”
Call or email your member of Congress and tell them to support real middle-class tax cuts, not windfalls for billionaires. Find your representatives here.