But Trump’s broken promises are hurting American families.
As the Trump administration’s much hyped Tax Cut and Jobs Act (TCJA) – a plan that was supposed to greatly benefit working people – turns two, the reality of just how much America was sold a bill of goods is finally settling in.
Just days before the holidays, U.S. Steel announced plans to lay off more than 1,500 workers in Detroit, Mich. The announcement came about 48 hours after President Trump promised supporters in the state that “steel mills are doing great,” and that steel jobs were “expanding all over the country.”
This marks the second time in the past year that steelworkers have been laid off at the same plant. U.S. Steel had already announced temporary layoffs of about 200 workers at the Detroit-area plant earlier this year.
This latest round of manufacturing layoffs comes two years after the Trump administration and Republicans in Congress passed a massive corporate tax cut, and on the heels of the Trump administration’s steel tariffs.
Trump’s broken promises are hurting American families.
In 2016, Trump promised, “If I’m elected, you won’t lose one plant…The long nightmare of jobs leaving Michigan will be coming to a very rapid end.”
Trump promised his trade policies and lower corporate taxes would reinvigorate the manufacturing economy. In reality, the policies of the Trump administration have had catastrophic results for working families.
EXPOSING THE FRAUD
A new report from the Economic Policy Institute in collaboration with the Center for Popular Democracy exposes the fraud: Despite the Trump administration’s claims of success, the TCJA:
- Did NOT increase wages for working people. Real (inflation-adjusted) wage growth accelerated in 2018 relative to 2017, similar one-year accelerations have been seen in recent years. Further, wage growth in 2019 has decisively decelerated. Other influences pushing up wage growth in 2018—tight labor markets and higher state-level minimum wages—can fully explain the mild pickup in wage growth for that year.
- Failed to spur business investment. There was no uptick in business investment in 2018 and significant declines in the six months of available data in 2019 when investment absolutely cratered, with out-right declines in the last nine months of available data.
- Corporate tax revenues have plummeted. Estimates show that corporate tax revenue has declined more than originally anticipated. The statutory corporate income tax rate was decreased from 35 to 21 percent. Loopholes and widespread evasion led to U.S. corporations facing an effective tax rate much lower than 35 percent even before the TCJA was passed. By slashing the statutory rate and doing little to close loopholes (while in fact introducing new ones), the TCJA has cut the effective rate faced by U.S. corporations almost in half.
- Boosted stock buybacks. Stock buybacks rose more than 50 percent to $560 billion in 2018—and look on-pace to hit $500 billion again in 2019. Most corporations have passed TCJA tax savings on to their wealthy shareholders instead of investing in the workers who are increasing the companies’ bottom lines.
- Redesigned International Tax Rules. U.S. corporations are no longer required to pay U.S. taxes on income earned in other countries, unless this income exceeds a global benchmark rate of profit. The TCJA allows companies to use foreign tax credits to offset the taxes they may owe if their income exceeds this global benchmark.
- Repealed the Corporate Minimum Tax. Previously, there was a 20 percent corporate alternative minimum tax. This tax required profitable corporations to pay at least some share of taxes on their profits in a given year, but was repealed in the TCJA.
Overall, the vast majority of Trump’s tax cuts benefit people with wealth, including financial investments and real estate. The bill combines permanent tax breaks for corporations that overwhelmingly benefit the wealthy with a mixed bag of temporary changes to the individual taxes.