In what has become a Ground Hog Day type moment – Republican House Speaker Paul Ryan (R-WI) has pushed forward yet another plan to shower the rich with tax cuts while telling the middle class to pull themselves up by their bootstraps. A recent analysis by the non-partisan Tax Policy Center shows that – when fully implemented in 2025 – 99.6% of the tax cuts proposed in Paul Ryan’s plan would benefit the top 1% of earners nationwide.
Despite being treated as a “serious person” within the D.C. establishment – there is nothing serious or responsible about a plan that would add $3.0 trillion to the national debt the first ten years and another $6.6 trillion over the following ten. The tax cuts would be equivalent to giving an additional $240,000 per wealthy household per year. On a positive note – the country’s poorest 20% would receive $120 in support annually; yes – he’s willing to give the poorest households an additional $10 per month because the Republican party is generous and magnanimous.
You can find the report HERE; some highlights:
The plan would reduce the top individual income tax rate to 33 percent, reduce the corporate rate to 20 percent, and cap at 25 percent the rate on profits of pass-through businesses (such as sole proprietorships and partnerships) that are taxed under the individual income tax. Individuals could deduct half of their capital gains, dividends, and interest, reducing the top rate on such income to 16.5 percent.
The plan would increase the standard deduction and child tax credit. It would repeal personal exemptions and all itemized deductions except those for charitable contributions and home mortgage interest. The plan would also eliminate the alternative minimum tax (AMT), estate and gift taxes, and all taxes associated with the Affordable Care Act (ACA).
The corporate income tax would be replaced by a cash-flow consumption tax that would apply to all businesses: investments would be immediately deducted (i.e., expensed) and business interest would no longer be deductible. The cash flow tax would be border adjustable, meaning receipts from exports would be excluded and purchases of imports would not be deductible. The plan would move the US tax system to a destination-based system in which only income from sales to US consumers would be taxable.
It’s a boon for corporations and their shareholders who not coincidentally – a majority of them happen to be the wealthiest 1% and .01% of earners. This is trickle down economics and all its left is huge deficits and an ever increasing concentration of wealth and power. It’s a boon for rich people across the board. But at least poor people get $10 a month extra.
The Washington Post shared this HERE:
Friday’s analyses are the Tax Policy Center’s first attempt to estimate those broader effects, which are known as “dynamic” in the jargon of budgetary research.
When Republicans took control of Congress last year, they ordered the Congressional Budget Office and the Joint Committee on Taxation to begin incorporating dynamic estimates in their official forecasts for major new laws.
As the center adopts dynamic scoring, these estimates will work their way into the broader public debate during campaign season. The group plans to release dynamic forecasts for Democratic nominee Hillary Clinton’s and GOP nominee Donald Trump’s agendas in the coming weeks.
One of the Republican party’s favorite techniques when rolling out tax cuts for the rich is to force the CBO (Congressional Budget Office) to report their plans based on a technique called dynamic scoring. Dynamic scoring became famous when George W. Bush and the Republican led Congress changed the way the government accounted for its budgets; in short – dynamic scoring is the contention that tax cuts will lead to increased economic activity which will lead to an improved economy and thus paying for the tax cuts.
George H.W. Bush called it “voodoo economics” when he ran against Ronald Reagan in the primary leading up to the 1980 presidential election. For decades leading up to Reagan – these types of economic claims were laughed at and ridiculed by Academia. The only inevitable result of this plan are major cuts to Social Security, Medicare, investments in roads and infrastructure etc; quite literally – Paul Ryan has already proposed all of these things. There have been many attempts by Paul Ryan over the past 10 plus years without any political blowback; you can read about some of his proposals to kill grandma HERE.
It’s total bullshit and any person who repeats the benefits of dynamic scoring should be laughed out of the room. The notion that giving the wealthiest people and corporations more money than they already have in order to increase their spending to benefit the economy is actually the exact opposite of what will work. Putting more money and power in an ever concentrated, smaller number of people’s hands has a negative impact not only on the economy but also on our democracy.
REMEMBERING THE LESSON OF GEORGE W. BUSH
President George W. Bush and a Republican controlled Congress passed two different rounds of tax cuts which led to huge benefits for the country’s wealthiest and ever larger deficits for the country. After having taken over for budget surplus – he left office with a $1.4 trillion annual deficit and a significantly increased national debt. The Washington Post shared some great charts highlighting who the George W. Bush tax cuts benefited HERE:
You can see how much of an impact it had on the deficit:
For a more historical perspective on tax rates for the wealthiest Americans – you can see that in this chart HERE from the Congressional Research Service: