The Building Tradesman Newspaper

Friday, January 12, 2018

GOP tax cut: fulfilling a corporate wish list

By The Building Tradesman



By Mark Gruenberg
PAI Staff Writer


WASHINGTON (PAI) — It’s not just the big tax cut for the 1 percent, and the even-bigger tax cut for corporations. The tax cut bill the GOP-run Congress passed could be termed a corporate Christmas wish list, too. President Donald Trump, who lobbied hard for it, signed the bill, HR1, into law on Dec. 22. 

Josh Bivens of the Economic Policy Institute points out workers would be left holding an empty bag as a result. His calculations show most middle-income and lower-income workers would see their taxes go up, starting with their 2019 tax filing, covering next year’s income.

“The GOP tax bill represents nothing short of wholesale looting by the Republican Party, on behalf of the wealthiest Americans and large corporations,” Bivens says. "Despite claims that it will trickle down to working people, there is no evidence corporations will do anything with the money they save in taxes other than reward shareholders with more dividends and executives with higher salaries — a fact many high-profile CEOs have admitted to. 

“When fully-phased in, the bill will give 83 percent of its benefits to the top 1 percent. Incredibly, it raises taxes on half of working families. To add further injury, the bill kneecaps the Affordable Care Act by eliminating the individual mandate — destabilizing health insurance markets, raising health insurance premiums, and leaving 13 million people without health insurance.”

By a party-line Senate vote – all Republicans for and all Democrats against – and a 227-203 House vote, with only 12 Republicans defecting, lawmakers sent the $1.5 trillion 10-year tax cut plan to Trump. Then the Republicans, in a staged show, boarded buses for a White House photo-op/pep rally – call it what you will – patting themselves on the back for approving a deeply unpopular piece of legislation.

Non-partisan studies, notably from the congressional Joint Committee on Taxation, calculate more than 80 percent of the tax cut’s benefits, through 2027, go the top 10 percent of the population with more than 60 percent of the overall benefits going to the top 1 percent.

Meanwhile, Democrats predicted voter retribution at the polls next November, and several union leaders agreed, vowing to remind members, their families and their allies about how the tax cut skews towards the 1 percent.

"At a time when big business is already pocketing sky-high profits and the top one percent of earners are seeing their incomes significantly grow, it is confounding why Congress would focus on increasing their wealth at the expense of the country’s workers," said Teamsters President James Hoffa. “Working Americans would see much-needed deductions for medical costs ended under this legislation. The bill would also cap deductions on local and state taxes as well as home mortgages, deductions that middle-class families rely on."

Time Magazine reported that "there are elements of the bill that help middle-class Americans. "It nearly doubles the standard deduction—the amount taxpayers can deduct from the annual income figure on which they’re taxed—to $24,000 for families and $12,000 for individuals," Time said. "At the behest of Sen. Marco Rubio (R-FL), the final version of the bill hikes the child tax credit, allowing parents to subtract $2,000 per child from your tax bill. (Both changes are temporary, set to expire along with the individual tax cuts in 2025.)"

But ultimately this is a bill for businesses and the people who own them. “The most important part of this tax reform is the corporate tax reform,” Dr. Wayne Winegarden, an economist with the Pacific Research Institute, a free-market think tank, told Time.

Needless to say, corporate interests are crowing. Besides the overall cuts for companies, HR1 has a grab bag of corporate goodies. The Beer Institute cheered lawmakers’ decision to cut excise taxes on wine and beer for two years. The American Petroleum Institute – the oil and gas lobby – lauded the opening of ANWR Alaska National Wildlife Refuge to oil and gas drilling. 

Then there’s the real big goody for private real estate investors, like President Trump. Lawmakers put it in during negotiations over the final version of HR1. International Business Times reported that privately owned real estate limited liability companies -- firms with lots of buildings and few actual workers -- would get an extra “pass-through” 20 percent deduction from their earnings.

Congressional bargainers added the LLCs’ (limited liability corporation) deduction while cutting or killing deductions middle-class and working-class people use, like home mortgage interest, medical expenses and state and local taxes.

Said David Kamin, an NYU law professor and former economic assistant to President Obama, to the IBT: “If you’ve got an LLC that’s a trade or business with a bunch of real estate holdings and few employees, (I) think you’re now golden. You get the deduction.”