Republican tax cut scam
I am a CPA with 40 years of experience as a financial manager for a variety of large and small high-tech companies. The Republican tax cut is a giant scam on the American middle class. Follows are some Republican claims.
Claim: It will create jobs. I have never been with a company that hired people because of a tax cut. Companies hire people when they need them. Demand creates need for workers, not tax cuts.
Claim: It will create a $4,000 wage increase for most middle class workers. Companies don’t give out wage increases because of tax cuts. Companies raise wages only if there is a shortage of workers. Workers companies want to hire are skilled workers with relevant education. Tax cuts will not help workers get skills and education needed in a 21st century economy.
Claim: Companies will make big investments. Companies invest when they need to increase capacity.
When they do invest, it will be mostly in automation, which reduces the need for unskilled workers. Cost of money is at its lowest rate in decades. A tax cut now will not create new incentives to invest. Corporations will use the tax cut to payout out dividends or buy back stock to increase stock price. This benefits owners of stock which are the wealthy.
Claim: American companies are the highest taxed in the world at 35 percent. The largest 500 companies in America pay an average of 18 percent, because of tax loopholes, none of which are eliminated. American companies pay less in taxes now than at any time since World War II.
Claim: Most of the tax cut for the wealthiest 1 percent will trickle down to the rest of us. The top 0.1 percent own more wealth than the lowest 90 percent of Americans. If all America was 1,000 people, one person would own more than the lowest 900 people combined. If the top 0.1 percent own that much wealth, they should pay as much in taxes as the lowest 90 percent pay, not less.
Claim: Tax cuts will pay for themselves due to growth. There has never been a tax cut that paid for itself, not the Reagan tax cut (which resulted in a recession and deficits), not the Bush tax cut (resulted in the financial crisis of 2008 and deficits) and a tax cut in Kansas that created an ongoing budget crisis.
The Republican tax cut will increase the deficit by $1.5 trillion. This will result in automatic cuts to Medicare of $25 billion a year. Because of deficits they created, Republicans will demand cuts to Social Security, Medicaid and other areas of the budget to pay for the deficit. The Republican tax cut scam is a payoff to wealthy donors.