Republican’s ‘trickle-down’ tax plan is a bait and switch for workers

The GOP’s new “trickle-down” tax plan is built on the same sham economic theory Republicans have been promoting since the Reagan era – give more to those at the top and the rewards will “trickle-down” to the rest of us in the form of new jobs and higher wages.

The problem is “trickle-down” doesn’t work. It never has.

“This proposal is disastrous for working people,” Mary Kay Henry, president of the Service Employees International Union (SEIU) said of the tax plan. “History has shown us that these types of tax breaks never ‘trickle-down’ to working people and will result in cuts to healthcare, education and other programs our communities depend on. If passed, these tax cuts would give millionaires and corporations a reason to celebrate but would hurt working Americans who are trying put food on the table, start their first businesses, send their children to college, save for their retirement and buy homes.


“No matter how the Trump Administration and Congressional leaders try to spin these tax provisions, they are just wrong for working families as well as state and local governments, who will likely be forced to cut critical healthcare, education and infrastructure programs and eliminate good jobs,” added Henry.

Martin Sullivan, chief economist at the non-profit Tax Analysts and a former economist at the Treasury Department says the tax plans primary beneficiaries will be the wealthy and major corporations

“In fact, if you have a larger family, given the facts that we have now, you would pay more in taxes,” Sullivan said


In a scathing report by the International Monetary Fund (IMF), five economists pulled data over a long period – from the end of World War II through 2012 – to get a true sense of the impact of “trickle-down” during this incredible period of expansion.

The facts are clear, their report says, “trickle-down” is a joke on the middle class perpetrated by the wealthy.

Prosperity for the rich leads to prosperity for all, the setup goes, so let’s hurry up with those tax cuts.

But the IMF report found as the income share of top 20 percent increased, GDP growth actually declined, suggesting that “the benefits do not trickle-down.”


Washington Post opinion writer Eugene Washington looked at Kansas [a “right-to-work (for less) state], where for the past five years, Republican Governor Sam Brownback boasted of using his state as a “real-live experiment” in the “trickle-down” economics theory by slashing the state’s already-low tax rates, eliminating state income taxes for most owner-operated businesses and sharply reducing vital government services.

The results: “It ended up being a shot of poison. Growth rates lagged behind those in neighboring states and the nation as a whole. Deficits mounted to unsustainable levels. Services withered. Brownback had set in motion a vicious cycle, not a virtuous one,” Washington notes, one that created a billion-dollar deficit for Kansas.

The Republican-controlled Kansas Legislature finally came to its senses and raised taxes earlier this year.

“[Trickle-down] never works,” Washington says. “Republicans cannot point to an instance in which this prescription has led to the promised Valhalla of skyrocketing growth. Before Kansas, they could at least argue that the program had only been attempted partially and piecemeal, never in full and unadulterated form. After Kansas, that excuse is gone.

Josh Bevins, research director for the Economic Policy Institute, said “The biggest economic problem faced by the vast majority of Americans in recent decades has not been what taxes have taken out of their paychecks, it’s what employers have failed to put in. Solving the problem of near-stagnant wages, not cutting taxes for the wealthy and corporations, should be Congress’s top economic priority.”

(Information for this story from USA Today, New York Times, St. Louis Post-Dispatch, Washington Post, CNN, PAI Union News Service, Associated Press, the Progress Report.)

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House and Senate tax plans benefit the rich, not you

Here’s what the Trump/Republican House and Senate tax plans have in store if passed:


• Reducing the corporate tax rate to 20 percent, from 35 percent, is centerpiece of both the House and the Senate tax plans. The House bill would immediately cut the corporate tax rate, fulfilling the wishes of President Trump. The Senate plan would lower the rate in one year.

• Reduction or elimination of the tax on inherited wealth. The House plan doubles the amount of inherited wealth that is exempt from the tax to $11 million from $5.5 million, and calls for phasing out the tax after six years. The Senate version also doubles the exemption, but does not eliminate the tax.

• Preserves the so-called carried-interest provision, which provides a tax break to hedge-fund and private-equity executives. This is a tax break for the richest of the rich.

• Reduces the tax rate for ‘pass-through business’ that currently pay taxes at the individual rate of their owners. The House version creates a new 25 percent tax for pass-through businesses. The Senate version creates a new deduction for pass-through businesses along with incentives to promote investment.

• Eliminates the alternative minimum tax rate on the wealthy so they at least pay something.

• Reduction or elimination of the estate tax. Trump’s family could save over $1 billion from this provision, based on a New York Times analysis. The House bill aims to completely repeal the estate tax. The Senate version cuts taxes for wealthy heirs by doubling the threshold for inheritances from the current $5.6 million for individuals and $11 million for couples.


To pay for these wonderful benefits for the wealthy, here’s the impact on you:

• Medical expense deductions: The House plan repeals deductions for medical expenses. The Senate version maintains the deduction.

• Adoption tax credit: The House initially eliminated a tax credit for adoptions but later restored it. The Senate version also preserves this tax credit.

• Eliminates personal exemptions: Presently, you’re allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents. Both the Senate and House bills eliminate that option, lessening if not eliminating any tax relief you might get under other provisions in the bill.

• Tuition waivers: The House version counts tuition waivers – which are widely used by graduate students to pay for their degrees by doing work for the school – as taxable income.

• 15 percent tax credit for those over 65 or retired on disability. The House plan eliminates this credit.

• Deduction for state and local income, sales and property taxes. The House bill limits the deduction to just property taxes and caps it at $10,000. The Senate plan eliminates the so-called SALT deduction entirely.

• Eliminates deduction for alimony and moving expenses: Alimony payments would no longer be deductible and ex-spouses who receive alimony income would do so tax-free.

• Mortgage interest deduction. The House plan would cap the deduction for mortgage interest debt at $500,000, down from the current cap of $1 million. The Senate version would leave the deduction alone.



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