Pay now … or later
I might be observing an effect that the article on the derelict RV problem is having in my own neighborhood. At least one residence has been improved. But there is a much bigger problem with vacant and abandoned deteriorating structures. Money seems to be the underlying problem. From a legal and liability stand point, I’m reminded of an old commercial. A mechanic told his customer “You can pay now, or you can pay later.”
GOP tax cuts won’t create jobs
The Republican tax plan reminds me of the story about the Wizard of Oz. The Great Oz bellows out from behind the curtain that Americans will get a wonderful Christmas present of tax relief. He adds the corporate tax cuts will create countless jobs. He states he and his family will receive no personal financial benefit from the plan. His chief economic adviser, Gary Cohn, says their wealthy donors will be very happy. His budget director, Mick Mulvaney, says the plan has a lot of gimmicks. Let’s pull back the curtain and take a closer look.
Corporate taxes will be reduced from 35 percent to 20 percent, or possibly 22 percent. The alternative minimum tax (which ensures wealthy Americans with high deductions pay at least a minimum income tax) will be eliminated. The estate tax will be eliminated. And all these changes will be permanent.
Meanwhile, an estimated $1.5 trillion will be added to the deficit over 10 years; more debt for our children and grandchildren to pay. The non-partisan Tax Policy Center found about 9 percent of Americans will pay more taxes in 2019; 12 percent in 2025; and 50 percent in 2027, when all the tax cuts for lower and middle-income Americans expire. An estimated 13 million Americans will lose their health insurance; and health insurance premiums will rise dramatically. State and local taxes cannot be deducted from federal income tax (double taxation); nor can excessive medical expenses paid out-of-pocket. Property taxes may also be eliminated as a deduction. Tuition waivers for students will be counted as taxable income, forcing some to quit school. Sequestration laws require at least $25 billion be cut from Medicare each year if this tax plan passes. And the minions of Oz promise to make cuts next year to Social Security (25 percent of all Social Security recipients have no other source of income) and Medicaid (serving 67 percent of nursing home residents), plus additional cuts to Medicare.
So what about all the jobs to be created from this corporate tax cut? Let’s use General Electric (GE) as an example. As of the end of 2014, GE had about 300,000 employees worldwide, with 100,000 of them in the U.S. Since then, GE has laid off about 30,000 in the U.S. alone; and just announced they will lay off another 12,000 worldwide in the near future. GE has an effective tax rate of zero. So tax rates aren’t their problem. Their stock value has decreased during all of 2016. Their announced plan is to use their financial resources to buy back stock at this low price and increase dividends. They won’t be hiring. And with very low unemployment, very few other corporations will be hiring. Five of the largest companies in the U.S. were recently noncommittal when asked if they would hire more following a tax cut.
During the George Bush Jr. presidency, a tax relief package for corporations resulted in stock buy backs, dividend increases, higher CEO salaries and other capital investments. And that was when unemployment was high. The package didn’t reduce the unemployment rate.
An Oz of the people would have increased the deficit by investing in infrastructure; or increasing subsidies for health insurance; or creating educational and vocational opportunities for the underemployed.
The Emerald City will hopefully shine again in November 2018 when the minions of Oz are testing their corporate employment theories in the unemployment lines; and Oz is sent off in a balloon with no Twitter feed.
More to our economy than taxes
(Responding to guest column by Don C. Brunell, “Remember 1993”)
It’s frustrating when (self-proclaimed) experts (who exist on both sides of all the current issues) cherry pick facts, offer simplistic answers to complex questions and (seem to) assume that we (the public) will fall for their tactics.
The fact that some of the public does (fall for it) is even more frightening.
Mr. Brunell’s editorial remembrance of 1993 ends with the warning “It’s the economy, don’t kill it.”
What he didn’t tell you (I assume he remembers) is that (despite the tax hike), interest rates fell, unemployment dropped, consumer confidence grew and a slow recovery turned into an economic boom, ultimately turning a (nearly) $300 million federal deficit into a (more than) $200 surplus.
Before you respond — no, I’m not suggesting that the tax increases caused or resulted in the economic growth.
What I am suggesting is that the economy is (apparently) more complex than the suggestion that taxes will kill the economy or that rewriting the tax code (to favor business) will make America great again.
Rewriting the tax code probably needed done.
The PR folks are telling us “relax,” that the current revision (which looks like a boondoggle for big business and the rich) will “eventually” result in an improvement in my life, although none of them are able to connect the dots to tell me what form that improvement will take or when I’ll see it.
Trickle down remains good theoretically but has never fully worked in practice.
Before you ask, I’m not buying a “it will be great, believe me” from the current administration.
And, oh by the way, if the tax plan doesn’t work… remember 1993.