Massive tax cuts for the wealthy are moving forward in Congress, with the Senate passing its own version on Dec. 1. All that is left now is for the House and Senate to combine their two very similar bills and smooth out the minor differences. Once that is done, the plan will gift hundreds of billions more dollars to the wealthy every year.
tax plan is designed to further enrich billionaires, Wall Street,
corporate executives, stock owners, and even mere millionaires, while
taking money away from the poor and working class, immigrants, and
Medicare. Taxes on the wealthy and corporations are slashed across
the board, while tax deductions used by working people will be
eliminated or phased out.
fact, the official analysis of the Senate bill shows that, by 2027,
it will raise taxes for everyone making under $75,000. That is
because many deductions are eliminated right away and others
eventually expire. For example, the bill would slightly raise the
child tax credit for a few years, before eliminating it altogether.
Another change would make all immigrants ineligible for the child tax
elimination of the personal exemption will lead to many families
paying higher taxes right away, as an increase in the standard
deduction won’t make up the difference. Taxes for everyone else
will go up in 2025, when the increased standard deduction also
expires. Many other deductions, such as for medical expenses or
student loan debt, will likely be eliminated in the final bill as
tax plan uses many accounting gimmicks to mask the true costs of the
tax cuts for the wealthy—for example, setting some tax breaks for
the rich to expire, such as the estate tax cut, which would very
likely be renewed. But even after all of the measures to make it look
like the tax cut won’t cost as much, there is one group whose tax
cuts only go up and up and up: the 0.1 percent super-rich.
costs will be paid for by cutting programs and deductions that
benefit poor and working-class people. For example, the projected
increase in government deficits of $1.5 trillion over 10 years will
automatically trigger major annual cuts to Medicare to pay for it.
That means that next year, $25 billion will be taken from Medicare
and given to the ruling class.
elderly aren’t the only ones whose health care will be cut by the
law in order to give more money to the rich. The Senate tax bill
makes changes to Obamacare that are intended to keep 13 million
people from signing up for subsidized health insurance or
Medicaid—increasing the number of Americans without health
insurance to 41 million, and paying for $338 billion worth of tax
cuts for the rich.
bill also continues the capitalist attack on the environment by
opening the Arctic National Wildlife Refuge in Alaska for oil and gas
drilling, a longtime goal of oil companies.
of the tax plan’s biggest giveaways to the rich are in corporate
taxes. The corporate tax rate will be cut almost in half, from 35
percent to 20 percent, though what companies actually pay is often
much less than that. They have endless loopholes, tax deductions, and
ways of reclassifying or hiding their profits in order to pay the
lowest taxes possible.
recent study of Fortune 500 companies’ taxes showed that one in 10
paid “less than nothing” in income tax over a five-year period,
actually receiving tax credits, despite reporting profits into the
tens of billions of dollars. The new House and Senate bills
scrupulously maintain these loopholes and opportunities to cook the
books—and they create new ones.
also won’t owe taxes on overseas profits anymore. If any American
companies decide they’d like to repatriate some of the $2.6
trillion in untaxed profits that they are holding overseas, the bill
will allow them to do so at a considerably reduced tax rate.
Otherwise, they can have their accountants move their windfall
profits to a country with very low corporate taxes—or none at
all—and very friendly policies.
for example, kept their overseas profits in Ireland, where in 2014
they paid a tax rate of 0.005%. After the European Union (EU) found
this basically tax-free arrangement to be illegal and ordered Apple
to pay $14.5 billion in back taxes, Ireland appealed, saying Apple
shouldn’t have to pay anything. The recently released Paradise
Papers show that the company has since decided to move its $252
billion in overseas profits the to nearby island of Jersey, where
they pay no taxes and EU tax laws don’t apply.
next big gift in the House and Senate tax bills go to the owners of
companies whose income can be re-classified as personal income. These
are the so-called “S corporations,” whose income is not taxed as
corporate income but instead “passed through” to shareholders and
counted as personal income. They are often referred to as “small
businesses,” but in reality many of them are holding companies,
hedge funds, and real estate companies. More than two-thirds of
“pass-through” income goes to the top 1 percent, according to a
2015 study by economists at the Treasury Department and two major
universities, not to “Mom and Pop” stores.
the “small business” label is used to justify low taxes on these
companies. Under the new plan, income from this type of business
would receive a huge tax cut. In the House version, it would have a
maximum tax rate of 25 percent in the House bill—way below the
current top rate or 39.6 percent. The Senate plan has a tax deduction
for the first 23 percent of pass-though income. Either way, the tax
cut is enormous.
person who would benefit is Donald Trump himself, who has more than
500 pass-though corporations.
The Trump Organization, with $9.5
billion in reported revenue in 2016, qualifies as a pass-through
entity. On Trump’s 2005 tax return—the most recent one
available—he reported $109 million of this kind of income. Both
versions of the new plan would save him tens of millions of dollars
in taxes, on this one portion of his income alone.
is also one of the biggest loopholes in the new tax plan. Simple
accounting maneuvers will allow the wealthy to switch their income
from regular income to “pass-though” business income and save
billions in taxes. This loophole is not accidental or due to “haste,”
New York Times described
it. It is entirely intentional and just another way that this bill
will cut taxes for the rich in ways that go far beyond the officially
addition to what the bourgeoisie stands to gain from the business tax
cuts, they will also get large cuts on their personal income. The
House and Senate bills have different ways of giving the rich these
tax cuts, but both bills mainly benefit people making more than
$500,000—right about where the 1 percent starts. And, of course,
the higher you go, the bigger your tax cut gets. The 0.1 percent and
up are the real beneficiaries.
estate tax is slashed and possibly repealed, depending on how the
House and Senate combine their versions. Either way, the amount of
tax-exempt inheritance will immediately double from $5 million to $10
million per person, an amount that would only affect 0.1 percent of
estates. Although, as Gary Cohn, Trump’s chief economic advisor and
former president of Goldman Sachs, said earlier this year, “only
morons pay the estate tax,” because there are so many way of
getting around it.
the bills raise taxes on the poor and the working class. Both bills
eliminate all kinds of tax deductions used by working people, in
order to offset some of the cost of the huge tax cuts for the
bourgeoisie tells us that all of this will result in a better economy
for everyone, with more jobs and higher wages. They’re giving
themselves huge tax cuts for our benefit, they say. At an event
hosted by The
Wall Street Journal with
Gary Cohn, Trump’s economic advisor, a journalist asked a roomful
of CEOs how many would use the money from these tax cuts for hiring
and expanding their businesses, rather than lining their pockets.
Only a few raised their hands. “Why aren’t the other hands up?”
Cohn demanded. They forgot to lie.
companies are already getting record profits, while wages are at a
historic low and falling. Income inequality has never been higher,
but everywhere the ruling class looks for more. Whether it’s
cutting retirees’ pensions out from under them, raising the price
of insulin 300 percent, or closing down schools and packing more kids
into overcrowded classrooms, they squeeze a little bit more every
time because capitalism demands profit at the expense of human life,
and driving down the average quality of life of the workers increases
Marx wrote, the way capitalists see it, “a quick succession of
unhealthy and short-lived generations will keep the labor market as
well supplied as a series of vigorous and long-lived generations.”
Only a socialist society, in which production is not based on profit
but on human needs, can change this.
will always seek to pull ever-greater profits out of the hides of the
workers. It is the nature of the system. Only by having the means of
production not in the hands of a tiny few—the 0.1 percent or
less—but in the hands of the many, deciding democratically how to
meet their needs, can we break capitalism’s need for increasing
impoverishment of workers in order to suck ever greater wealth
>> The article above was written by Nicolas Brannon, and is reprinted from Socialist Action newspaper.