Nel's New Day

April 15, 2019

Tax Day: ‘Cuts,’ Returns

Today is the deadline for paying 2018 taxes, and the amount of taxes that people pay has consumed conversation for over a year, ever since DDT and other Republicans gave the wealthy and big business a huge tax break that cost the United States $1.5 trillion. When Dictator Donald Trump (DDT) delivered his rally speeches, he promised that people would get an additional $4,000, but over 80 percent of taxpayers didn’t get this generous bonus. Instead 10,260,263 paid more taxes last year after DDT’s 2017 Tax Cut and Jobs Act, and raises for most people were under $1,000. The law eliminated personal and dependent exemptions, caps on state and local deductions, employee business expenses deductions, etc. The cap of $10,000 on state and local tax deductions was onerous for many people, especially those who have lived in their home for a long time or have high state income tax, although DDT claimed that only the wealthy were hurt.

Researchers found that “half the tax cuts went to the richest five percent, with about a quarter going to the richest one percent. Those among the top five percent got bigger tax cuts not just in dollar terms but even when measured as a share of their total income.” Households making between $500,000 and $1 million had their after-tax income rise by an average of 5.2 percent. Households making less than $50,000 experience only a 0.6 percent increase. In even greater income inequality, W-2 wages fell 2.0 percent in 2018. Bonuses fell $0.22 for 2018, and the average bonus for 2018 was just $0.01 higher than in 2017. Most bonuses came from recruiting because of low unemployment instead of production from company tax cuts.

Big benefits went to Fortune 500 companies: at least 60 profitable corporations will pay nothing—some of them getting back extra money from the government. That number is double from previous years. Instead of paying $16.4 billion in taxes on their $79 billion of pretax income, the companies got rebates of $4.3 billion—a GOP gift of over $20 billion used to buy up stock and sock away in hidden offshore accounts. A few corporations with this advantage: Amazon, Chevron. Deere, Delta Air Lines, General Motors, Halliburton, Honeywell International, Molson Coors, and Prudential Financial. Another 51 companies with zero or minus taxes.

Jamie Dimon, J.P. Morgan’s CEO, bragged to shareholders that tax cuts for the bank add “$3.7 billion to net income.” But the increase “will be erased” so that shareholders won’t expect to get higher profits. The justification for the company’s spending $55 billion in stock buybacks? You have to buy back your own stock at “tangible book value.” And then at “two times tangible book value.” So buy back stock at any price, according to Dimonomics.

DDT surely gained millions—perhaps hundreds of millions of dollars—from DDT’s tax cuts for the wealth as did people he chose for his officials. Education Secretary Betsy DeVos testified in support of $6.7 billion in education cuts at a congressional hearing, but she saved at least $10 million in taxes for 2018. Amway, her family’s company structured as an S-corporation, dropped its taxes from 39.6 percent to 29.6 percent in what Republicans called a small business cut. The education cut comes from the tax cuts’ failure to continue revenue for the government; instead revenue is plummeting. DeVos’ $10 million in taxes would have supported work-study funding for 5,600 students, Nevada’s entire share of the 21st Century Community Learning Center after school program, or funding for Full Service Community Schools academic and social services at schools in 20 communities—programs that DeVos wants to eliminate because of no revenue. DDT wants to make his tax cuts for the wealthy permanent with a conservative addition to the deficit of $1 trillion over a decade.

In their effort to convince people that they are paying lower taxes, Republicans have decided to make the withholding form so complicated that they can just say that people aren’t being ripped off. Past forms asked for the number of allowances based on exemptions. The new form requires annual dollar amounts for nonwage income, such as interest and dividends; itemized and other deductions; income tax credits expected for the tax year; and total annual taxable wages for all lower-paying jobs in the household for people with multiple jobs. The new form references 12 IRS publications for its completion and looks like the 1040 for final taxes instead of a simple W-4. The former year’s 1099, pay stubs, or 1040 returns are necessary for making the withholding calculations.

People are required to tell the “primary” employee about all their other income as well as that of their family and will probably need training to fill it out. Productivity will shrink and privacy goes out the window. And states may also require a new withholding form instead of the current W-4. Remember when Republicans said that people could fill out their tax return information on a postcard? It’s not happening.

Polling indicates that only 17 percent of people think that they got any tax cut even if they did. This perception comes from most taxpayers getting only a small cut. Only one-third of people approve of the legislation that DDT saw as his signature legislative achievement. Economic growth, a talking point around tax cuts, is slightly worse than in 2015, and job growth has slowed. Senate Majority Leader Mitch McConnell (R-KY) said about the tax cut when it was passed:

“If we can’t sell this to the American people, we ought to go into another line of work.”

The 77-year-old man is up for re-election next year. He may have the chance for “another line of work.”

Presidential candidate Sen. Elizabeth Warren (D-MA)’s tax reform proposal, “Real Corporate Profits Tax,” might force a modicum of honesty on huge corporations. She recommends that companies reporting more than $100 million in worldwide profits pay seven percent on every dollar above the first $100 million claimed in profits to their investors. After CEO’s like Dimon brag about their tremendous profits, companies currently convince the IRS that they make no profits and thus pay no taxes. J.P. Morgan made over $131 billion in 2018 but paid less than $10 million in taxes. Warren maintains that raising the corporate tax rate does no good because the tax code is “so littered” with loopholes. She estimates that charging 1,200 companies subject to this tax would give “smaller” businesses “a fighting chance.” Companies paying no taxes would pay some taxes—Amazon would pay $698 million in taxes and Occidental Petroleum, $280 million. Last year, Amazon got a tax refund of $129 million plus paying no taxes.

For people who complain about costs of Social Security and healthcare, consider another destination for tax money. Of every dollar in taxes, 24 cents go to the military. Of those 24 cents, only 5 cents go to our troops while 12 cents go to corporate military contractors. The average taxpayer gave $1,704 to Pentagon contractors last year but only $683 for military pay, housing, and other benefits except $833 to military health care. The average U.S. taxpayer gave $225 to Lockheed’s executives and shareholders. Its CEO Marillyn Hewson got over $20 million for 2017, but the top pay for a four-star general or admiral is $189,600. The lowest-rank enlisted soldiers make just $20,172. Boeing got $100 from the average taxpayer, the same amount as all of education received.

And a shout out to DDT’s tax returns. Writing that concerns from Treasury Secretary Steve Mnuchin “lack merit,” House Ways and Means Committee Chair Richard E. Neal (D-MA) has given IRS Commissioner Charles Rettig a firm deadline of April 23 to turn over six years of DDT’s tax returns. Two days later, DDT’s personal lawyer wrote the Treasury Department to stop the tax returns from being handed over to House Democrats.

DDT’s tax preparer Mazars USA told House Oversight Committee Chair Elijah Cummings (D-MD) that it would turn over ten years of DDT’s tax returns if the company received a subpoena. In an attempt to hide the returns, DDT’s lawyers have threatened the firm with legal action if it follows the law. The letter accused Cummings of wanting the returns only for political reasons, basically accusing a member of Congress of being a liar.  calling it a politically motivated scheme to take down the president. Reps. Jim Jordan (R-OH) and Mark Meadows (R-NC), members of the Oversight Committee, also accused Democrats of requesting DDT tax returns “solely to embarrass President Trump.”

Press Secretary Sarah Huckabee Sanders passed along the DDT party line of smears and threats about Democrats requesting DDT’s his tax returns when she claimed that Democrats aren’t “smart enough” to look through his returns and that they are on a “dangerous, dangerous road.” DDT was tried twice for civil tax fraud, criticized by judges in both cases, and faced his own tax lawyer testifying against him.

Protesters brought an inflatable figure to the steps of the IRS when they asked for DDT to release his tax returns. The group uses the figure because DDT is “too chicken” to release his tax returns. The first “chicken bearing a resemblance to DDT was 23 feet tall and complete with golden hair pompadour and preening gestures. It arrived at a Chinese mall less than a month before DDT’s inauguration in preparation for the Year of the Rooster in the Chinese lunar calendar.

Questions: If there is nothing wrong with DDT’s tax returns, why would he be embarrassed? If there is something wrong, why isn’t a look at them not warranted?

 

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