Trump’s ‘massive’ middle-class tax cut is pure bunkum
Earl O. Hutchinson | 8/3/2017, 6 a.m.
Donald Trump said it officially back in February in his address to Congress. And he’s said it again and again in assorted speeches and interviews since then. The “it” is that he’ll provide — his words — “massive” tax relief for the middle class. He didn’t spell out exactly what that “massive” cut would be. There’s a reason for his haziness. It’s pure bunkum. The Trump tax cut plan has been picked apart from every angle and it still comes up the same. The rich get richer, a fabulously lot richer. Their tax rates will be slashed practically to the bone. The extra added tax goodies from it will pile up from there. The investment income tax and alternative minimum tax are eliminated. The estate tax will be virtually eliminated in all but name. The corporate tax will be hacked down to next to nothing.
The wealthy will pocket nearly $3 million of the estimated $6 trillion in tax cuts, according to the Tax Policy Center. Surely, some of that must flow the middle class’s way. Well, it depends on who’s labeled middle-class. If the income of a middle-class family lands somewhere just south of $150,000 and north of $50,000, they’ll rake in a little more than 10 percent of the Trump tax cut. For anyone making less than that, their share is a bare digit blip on the chart. The highest income middle class rollers will pocket the grand total of about $1,500 more a year in spending money. That’s less than one-tenth of the extra cash that the top income earners will rake in.
It’s not just dollars, percentages and who pays what, along with where the taxes they pay go — or, rather, don’t pay go — that animate the Trump giveaways to himself and his wealthy and corporate cronies. The Trump tax plan also peddles the same tired myth that the wealthy and corporations are ridiculously overburdened with crushing taxes. The mega-corporations and banking entities have long possessed an endless storehouse of tax dodge schemes to pay zero or minimum taxes on their sales and investments. This especially is the case when they do business abroad and their tax avoidance gambits are perfectly legal.
Tax laws allow companies that do business outside the U.S. to park their profits — that’s cash — in offshore accounts and they are exempt from taxation as long as they stay there. In a candid moment, a few years ago Apple CEO Tim Cook said as much when he explained how Apple made billions abroad and paid no taxes on the income. The fallback retort of corporate tax dodgers is that they pay billions in U.S. taxes on their operations here, so there’s no issue.
This is an absurd argument. These companies are American-owned and operated firms, and worse, they pay little or no taxes in the countries where they sell their products. A decade ago, the libertarian Cato Institute documented nearly $100 billion in direct and indirect subsidies that the banking industry and major corporations grabbed from the federal government. This figure doesn’t include the billions more in direct and indirect subsidies from state and local governments. This figure almost certainly is even higher today.