Nel's New Day

January 2, 2019

Shutdown,Tax Law Disadvantages for Most

Filed under: taxes — trp2011 @ 8:32 PM
Tags: ,

Day 12 of government shutdown: Dictator Donald Trump (DDT) failed to make progress in today’s White House “briefing” about border security with congressional leaders, but he told a lot of whoppers. After saying that he was lonely without going to Mar-a-Lago over the holidays, he spent over 90 minutes repeating lies and flip-flopping.

Syria: Instead of his previous comments that the U.S. had won, DDT said, “Syria was lost long ago.” He compared the country with Iraq’ oil reserves, “We’re not talking about fast wealth…. Iran an do what they want there. It’s not my fault.”

Former Defense Secretary James Mattis: “What’s he done for me?” DDT said and claimed that he fired Mattis. He didn’t: Mattis resigned.

Stock market: DDT called the huge losses of last year “a little glitch.”

Immigration: There are “probably 30-35 million” immigrants in the U.S. illegally, according to DDT, although a non-partisan group said that 10.7 million undocumented immigrants lived in the U.S. in 2016. The number has decreased since that time.

Wall: DDT said that he just waited in the White House for “people [who] wanted to come and negotiate the border security.” He cited the Vatican that “has the biggest wall of them all.”

Mitt Romney: Addressing the criticism from Utah’s new GOP senator, he bragged that he “got rid of” former Sens. Jeff Flake (R-AZ) and Bob Corker (R-TN) dhow didn’t run for re-election in the midterms. DDT said that Flake would be looking for a job as a paid cable news contributor or “selling real estate.” (DDT worked in the media and sold real estate.)

DDT said that he won’t open the government until he gets money for his wall, but his tweets in December indicate that he doesn’t need the money:

“Mexico is paying for the Wall through the new USMCA Trade Deal. Much of the Wall has already been fully renovated or built. We have done a lot of work.”

“Our Southern Border is now Secure and will remain that way…….

“….People do not yet realize how much of the Wall, including really effective renovation, has already been built. If the Democrats do not give us the votes to secure our Country, the Military will build the remaining sections of the Wall.”

According to DDT, he already has his wall, but he couldn’t accept the Democrats’ offer because “I would look foolish if I did that.”

With the advent of 2019, people will begin filing their taxes, hoping for the magical tax cut passed on December 22, 2017. Republicans promised that the law primarily benefiting the super wealthy and big business would not cause any annual debt and would do wonders for the economy, yet the deficit will increase $1.3 trillion in one year. Analysts’ view of the law’s effects:

The stock market wildly boomeranged since DDT signed his signature bill, despite big increases in after-taxes profits for those who made the most money. DDT combined his signature with a U.S.-China trade war and government shutdown to create serious economic problems.

After a tax cut dropped the corporate tax rate from 35 to 21 percent and reduced taxes on private businesses by 20 percent, workers received an average extra $.02 per hour wage increase from the much-touted $1,000 bonuses. That’s $41.60 for a year of 40-hour weeks. Companies are not required to report how they used their tax savings, but an estimate shows that only 4.4 percent of U.S. workers received a wage increase or bonus from the legislation. The corporations spent their gains in buying back their shares to inflate value for shareholders, using $1 trillion for this purpose in a 64-percent increase from 2017.  Companies spent 117 times more in these buybacks than on worker pay hikes. Of the Fortune 500, 34 companies said they invested in U.S. operations. Average hourly earnings rose about 0.9 percent last year after considering inflation.

Money isn’t going into reinvestments, as promised. Instead it’s going into dividends as corporations own more and more of the stock.

The loss of taxes is shooting up the annual debt—this year to about $1.3 trillion. One of DDT’s promises was to eliminate the annual debt; instead he doubled it in his second year with his tax cuts.

The promised jobs from tax cuts are outside the United States. GM plans to close four plants in the U.S., lay off almost 15,000 workers, and build the Chevrolet Blazer in Mexico because the tax cut charges corporations only half the tax rate on foreign profits that it does on domestic earnings. GM used $100 million of its tax cut of over $150 million to buy back their own shares and nothing on workers. Chief executive Mary Barra got $22 million last year.

So-called “U.S. corporations” are owned by foreigners, either through foreign subsidiaries or foreigner-owned U.S. stocks. One-third of U.S. corporate profits go to foreign nations—and that includes one-third of the tax cuts—leaving people in the U.S. to raise other taxes or cut spending on programs that people want. that the people in the U.S. must compensate for, making almost all the people in the U.S. poorer instead of richer. Because 84 percent of stocks are held by the wealthiest 10 percent of the population, no one else will see the benefit. The tax cut makes most people in the U.S. poorer, not richer.

Sen. Marco Rubio (R-FL) tweeted:

“When corporation uses profits for stock buy back it’s deciding that returning capital to shareholders is better for business than investing in their products or workers. Tax code encourages this. No surprise we have work life that is unstable & low paying.”

Rubio also wrote an essay for The Atlantic in which he argued:

 “Trusting in a corporate tax cut alone to generate innovation and boost productivity is the thinking of the past. A corporate tax-rate cut makes all corporate assets more valuable, causing a bigger return to investment no matter how it is used. In our globalized and financialized economy, though, it’s as likely to induce stock buybacks as it is to spur the construction of new American factories.”

For Rubio, “the past” may be December 2017 when he pushed the passage of the tax cut law that he now lambasts. Sen. Bob Corker (R-TN) now leaving the Senate said his vote for the law was the worst of his career, but that was after he added his “yes” vote to the other Republicans.

DDT’s tax cut law does have a grand bonus for himself, members of Congress, and their real estate development friends with governors permitted to select “opportunity zones” in supposedly economically distressed areas. By putting profits into a fund designated for these zones, they can defer or eliminate capital gains. Amazon is moving one of its two headquarters into an “opportunity zone,” getting a $225 million tax break added to the $1.7 billion New York is already giving Amazon. Anyone building apartments for the tech workers, office parks, or grocery stores will make a huge profit from U.S. taxpayers. Profits for congressional members from the law can be seen here. The tax incentives cost $1.5 billion a year for the first eight years—all going to wealthy people. In the 1980s, Margaret Thatcher did the same thing in the U.K., costing taxpayers $35,000 to $45,000 for each job that didn’t benefit taxpayers. Those areas are still home to the poorest people in the UK.

DDT found a way to give big banks even more money with his tax cuts. Corker created the “Corker Kickback” which excluded banking from “financial services,” giving them the same lower pass-through tax cuts as real estate magnates. Banks will put away about $2.5 billion over a decade. DDT benefits from the new regulation because it narrows the definition of excluded businesses that rely primarily on the “reputation or skill” of their owners to earn money. DDT’s business doesn’t apply.

Since the tax cut law passed, half the huge 32 corporations in a coalition to slash the corporate rate with over $48 million in lobbying has laid off employees. These companies include AT&T, Capital One, Ford, General Dynamics, Intel, Kimberly-Clark, Lockheed Martin, Macy’s, T-Mobile, Verizon, Viacom, Walmart, Walt Disney, and National Retail Federation. The group is now working on retaining the tax cuts so that “the American people will not be deprived of their meaningful tax reform wins.” Almost all of these people had no “wins.” In addition, at least 16 large retail companies declared bankruptcy this year including Nine West, Sears, Bon-Ton, Toys R Us, and Brookstone.

When the Heritage Foundation wrote the new tax law passed last year, Republicans didn’t bother to read it. Now churches have discovered that they will be required to pay “a 21 percent tax on some types of fringe benefits they provide their employees” such as parking, meals, and entertaining clients. Churches receive $82.5 billion in exempt taxes, and DOJ justifies the separation of migrant children from their parents with a bible verse out of context that requires people to abjectly obey their government’s laws. Republicans still haven’t figured out how to reverse their mistake. Meanwhile, the aides who actually prepared the law have moved on to work as lobbyists.

DDT promised that everyone would now be $4,000 richer because of his 2017 tax law. I’m still waiting.

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