Nel's New Day

March 29, 2018

Did Your Pay Check Go Up?

Filed under: taxes — trp2011 @ 8:45 PM
Tags: ,

Republicans will be running for re-election this year on their signature legislation of the first two years—a tax cut for the wealthy and big business. How’s that working out?

CNBC’s All American Economic Survey from last week found one-third of respondents with more money in their paychecks from the law that will crank up the deficit by $1.5 trillion. Over half—52 percent—found no difference. Of the one-third with more money, under 40 percent—that’s about 13 percent of the respondents–said that the increase improved their finances “a great deal” or “a fair amount.” The remainder of the one-third said that the increase helps a small amount or not at all.

Corporations, however, are having a great time with all their extra money. Sen. Susan Collins (R-ME) defended her vote to pass the bill by saying:

“The purpose of lowering the corporate rate is to encourage job creation here. It is not to encourage stock buybacks.”

Immediately after the bill was signed into law, a few corporations announced $1,000 bonuses. (That gives workers less than $.28 per day.) Raises are planned by 13.2 percent of companies, and tax savings for 44 percent of businesses will go to acquisitions and new equipment, including robots to replace workers. The rest goes for stock buybacks and dividends, causing the stock market to go up almost 2,000 points before it dropped almost 3,000 points. Workers may have seen little extra money in their paychecks, but the average banker bonus on Wall Street last year was $184,220, the highest since before the financial crisis.

By the beginning of March, just two and a half months after the bill became law, retail companies gave employees bonuses about $3 million while spending $200 billion for stock buybacks, inflating the value of shares by reducing their supply. Executive pay is tied to stock performance, accounting for 82 percent of their pay in 2015. Sen. Ron Wyden (D-OR) said in a Senate floor speech:

“Stock buybacks are windfalls that drive up the value of investment portfolios for CEOs and high-flyers, and they’re coming in at a rate 30 times greater than worker bonuses—30 to one! They’re on pace to double the amount from the first quarter of last year.”

The richest 10 percent of stock owners owned 84 percent of all stock in 2016 while one in four jobs pays below the federal poverty level.

Almost 37 percent of households in the nation are “liquid asset poor,” lacking enough savings to support their families for three months at the federal poverty level if they lose their jobs. The cost of houses has gone up 4.1 percent to $8,000 since last year while the median household income has increased by only 2 percent. Despite workers searching for temporary employment and jobs to supplement their other jobs, 40 percent of households have difficulty paying bills. And the tax cuts have given a pittance—if anything—to these people, less than $60 to families earning under $25,000.

DDT told workers in Ohio that they would receive between $2,000 and $4,000 from the Tax Cuts and Jobs Act and that more than 300 companies delivered bonuses, raises, or 401(k) investments to over three million people. DDT’s chief economic adviser Gary Cohn announced that with another $1,000, a family “can renovate their kitchen, they can buy a new car, they can take a family vacation.” Twitter took on Cohn’s statements; the most accurate one stated, “To Cohn’s credit, he’d be right if this were the 1930’s.”

Republican legislators did well with the new tax law. House Speaker Paul Ryan (R-WI) got $500,000 from the Koch brothers and another $500,000 from just five wealthy donors for his tax bill. The bill also gave Ryan a $19,000 tax break with his bill, far more than the $78 that Ryan bragged that a school worker received. The new law threatens affordable health insurance and Social Security, costing people far more than any extra they now receive.

Over 12,000 retail stores are expected to close in 2018, up from the 9,000 that closed in 2017. Two-dozen major chains including Walgreens, Gap, and Gymboree are planning to close over 3,600 stores this year. Last year 50 retail chains filed for bankruptcy. Among 25 major retailers likely to file for bankruptcy are Sears, Bon-Ton Stores, Bebe Stores, Destination Maternity Corp., and Stein Mart. Almost one-fourth of U.S. malls, approximately 310 of 1,300 shopping malls, may lose its anchor tenants, causing other retail stores to flee.

Even the bonuses come with strings such as longevity of service, and they are attached to firings and store closures, like those at AT&T, Lowe’s, Walmart, Pepsi, Carrier, Kimberly Clark, etc.

The new GOP tax law causes huge problems for almost every state. Some blue states are examining the reclassification of state property and income state taxes as charitable contributions because that’s the biggest hit for places such as California, New York, and New Jersey. But almost all 41 states with personal income tax use either federal adjusted gross income or federal taxable income as their starting points for the state income tax. The federal shift can cause big swings in state revenue, causing losses of tax income. The almost-double standard deduction and giveaway to pass-through entities blows up the deficit on both the federal and state levels, and states will hurt even more with cuts in entitlement and safety net funding. Plus states’ responsibility for 80 percent of infrastructure funding will cause more problems. The federal government is taking taxes to give to the wealthy and big corporations leaving states in serious debt to take up the losses. And almost every state must meet a balanced-budget requirement, meaning no deficit from one year to the next the way that the federal government operates. One solution is to “decouple” from the federal code which means trickle-down complexity.

The tax bill was based on lies, such as the one that the tax cuts will pay for themselves and not raise the deficit. Treasury Secretary Steve Mnuchin made the claim that his department had run the numbers and found no deficit, but he even lied about the existence of this study. Then Republicans will use the deficit to take away the safety net, including Social Security and Medicare.

Not happy with everything that they have given to the wealthy and large corporations, Republicans are planning another tax cut bill. In the first one they passed last year, cuts for individuals expire in ten years; now the GOP plans to force a vote to make them permanent. If Democrats oppose the bill, the GOP will call them opponents of the middle class.

The GOP plan to corner Democrats with Tax Cut Bill II may turn on them. Making the taxes permanent will add at least another $1.5 trillion to the deficit in the decade after 2025 while reminding people that the GOP favored corporations over them by making taxes permanent for businesses. Another problem for Republicans is that they need at least nine Democrats this time around because of different Senate rules, and they still won’t let Democrats be involved in talks about the bill.

To pass the tax cut law, Republicans promised that everyone would get $1,000 or $2,000 or $4,000 during the next year depending on who was talking and when. People are beginning to figure out that the Republicans lied. The next arguments might not get swallowed as easily. Sen. Thom Tillis (R-NC) said, “The proof is in the paycheck. That’s a message we can run on.” It might be easier to use this for an election argument if the paycheck showed more money.

Republicans are still planning to take Social Security and Medicare to pay for the deficit caused by tax cuts for the wealthy and big business. House Speaker Paul Ryan (R-WI) said last week, “The name of the game in debt and deficits is entitlements.” The GOP needs older voters who may not vote for candidates who take their living expenses and health care.

AGR Daily 60 Second News Bites

Transformational News In 60 Seconds; What Works For Seven Future Generations Without Causing Harm?

JONATHAN TURLEY

Res ipsa loquitur - The thing itself speaks

Jennifer Hofmann

Inspiration for soul-divers, seekers, and activists.

Occupy Democrats

Progressive political commentary/book reviews for youth and adults

V e t P o l i t i c s

politics from a liberal veteran's perspective

Margaret and Helen

Best Friends for Sixty Years and Counting...

GLBT News

Official news outlet for the Gay, Lesbian, Bisexual, and Transgender Round Table of ALA

The Extinction Protocol

Geologic and Earthchange News events

Central Oregon Coast NOW

The Central Oregon Coast Chapter of the National Organization for Women (NOW)

Social Justice For All

Working towards global equity and equality

Over the Rainbow Books

A Book List from Gay, Lesbian, Bisexual, and Transgender Round Table of the American Library Association

The WordPress.com Blog

The latest news on WordPress.com and the WordPress community.

%d bloggers like this: