The legislation winding its way through the House and Senate, known as “Tax Reform,” is not tax reform. It represents a gift for the richest one percent, and a massive tax cut for corporations.
Three in 10 working families will see their taxes increase by about $2,000 per year. Working class and middle-class families in Idaho will not enjoy the benefits advertised.
America needs genuine tax reform, but this plan, pursued on the basis of reconciliation with no interest in seeking bipartisan support, is not the right plan.
Eighty percent of the tax cuts go to the richest one percent. As it stands, corporations do not pay the 30 percent statutory tax rate; they pay, rather, an effective average rate of about 17-18 percent. This corporate tax break will be financed on the national credit card, a $1.5 trillion tax bill to be paid off by our kids, our grandchildren, and their children. Where are the morality hawks on this abomination? Where, indeed, are members of the Idaho congressional delegation—Crapo, Risch, Simpson and Labrador--the self-defined deficit hawks elected by Idaho voters to prevent Washington from eating our young?
Another way to put the corporate tax rate in perspective is to look at the total size of corporate revenue. That has diminished over time. By this test, corporate taxation in America is not so large, when compared to other industrialized and developed countries. In 2014, corporate revenue represented only about 2.2% of the gross national product, less than the 2.8% paid by corporations in other nations. In sum, the government has come to rely less and less on corporate taxation to fund our programs and policies. The GOP wants to rely even less on American corporations. Gary Cohn, economic adviser to President Trump, has said Wall Street is “very excited” about this tax plan. Wonder why?
Trump and congressional Republicans have portrayed their tax overhaul as a windfall for the middle class, but the facts speak otherwise. Analyses based on the open-source software, TaxBrain, reveal that roughly 20% of Americans earning between $75,000-$100,000 will see their taxes rise. Twenty percent of the Senate’s tax cuts would go to families and individuals earning more than $1 million per year.
The GOP tax plan calls for elimination of the medical deduction, which is a gut punch to working-class families and the middle class, as millions of Americans struggle to cope with high medical expenses in a nation without comprehensive, national health care coverage. Many readers here will see themselves—and family members and friends—facing this dilemma.
A congressional study last January determined that most Americans who claim this deduction have incomes less than $100,000, with 40% of the claims filed by those earning less than $75,000. More than half of those filing this claim, according to the AARP, are over 65 years old, and face huge medical and long-term health care costs. Idahoans—do you see yourselves in this family portrait?
The medical deduction, moreover, hits young families very hard. Many need it to provide child care for children suffering from severe disabilities and chronic conditions. Friends of mine in eastern Idaho have found it critical in their pursuit of fertility treatments such as expensive in vitro fertilization. The medical deduction has provided the difference for those seeking cancer surgeries, mental health care and chemotherapy drugs.
The Trump tax plan also calls for the elimination of the student loan interest deduction, another stick in the eye of working-class and middle-class Idahoans who, without those loans, could not afford a college education. According to IRS records, three out of ten of the 44 million Americans with student loan debt file this claim on annual basis. A small number of Americans, you say? That’s roughly the same percentage that constitutes President Trump’s base.
To rob the Peters-- young, struggling college graduates, and working class and middle-class families, trying to find their financial footing—to pay the Pauls, is wrong on so many levels.
Adler is president of the Alturas Institute, headquartered in Idaho Falls, which promotes the Constitution, civic education and gender equality.