Republicans capped a popular deduction for state and local taxes to pay for the tax bill. That may have hurt some House Republicans in the midterms.
President Trump signed a $1.5 trillion tax cut into law last December. The law capped a popular tax break used by high-earning taxpayers in high-tax states. Credit: Doug Mills, The New York Times
President Trump’s $1.5 trillion tax cut was supposed to be a big selling point for congressional Republicans in the midterm elections. Instead, it appears to have done more to hurt than help Republicans in high-tax districts across California, New Jersey, Virginia and other states.
House Republicans suffered heavy Election Day losses in districts where large concentrations of taxpayers claim a popular tax break — the state and local tax deduction — which the law capped at $10,000 per household. The new limit resulted in an effective tax increase for high-earning residents of high-tax states who claim more than $10,000 per year in SALT.
Democrats swept four Republican-held districts in Orange County, Calif., where at least 40 percent of taxpayers claim the SALT tax break, defeating a pair of Republican incumbents and winning seats vacated by Representatives Ed Royce and Darrell Issa. Those districts include longtime Republican strongholds, like Newport Beach, and rank among the country’s largest users of the state and local tax break.
Trump and Republicans promised their massive tax cuts for the rich and big corporations would create jobs and raise wages, but that never happened. Voters know the truth: the Trump tax law hasn’t benefited them.
The Trump tax law has not created jobs. The 1,000 largest public companies eliminated nearly 140,000 jobs since the tax law was passed.
New York Times: “Many companies also said they would use tax savings to create jobs. But the Just Capital research finds that, since the tax cuts were passed, the 1,000 largest public companies have actually reduced employment, on balance. They have announced the elimination of nearly 140,000 jobs.”
The Trump tax law is not doing what Trump said it would. Trump and his White House said it would increase business investment and spending, but new data shows that’s not the case. They also said it would raise wages, but most Americans have not seen an increase in take-home pay. The only ones benefiting are the rich and big corporations.
WHITE HOUSE: The White House cited business investment and spending on factories as evidence their tax cut was working.
Hassett: “Because what’s happened is that the capital spending boom that we promised would happen if we passed the tax cuts is underway.”
REALITY: Business investment and spending on factories was extremely weak in the third quarter of 2018.
Wall Street Journal: “Investment by companies was weak. Nonresidential fixed investment-reflecting spending on commercial construction, equipment and intellectual property products such as software-rose only 0.8% in the third quarter after rising at a 8.7% rate in the second quarter and 11.5% in the first. The third-quarter rate of business investment was the weakest since the fourth quarter of 2016. Spending on structures fell at a 7.9% rate in the third quarter.” Continue reading “Trump Tax Law Has Not Benefited Workers And Business Investment Is Slowing”
In response to Senate Majority Leader Mitch McConnell saying the budget deficit increase is “disturbing” and suggesting cuts to Medicare, Medicaid, and Social Security programs were the only way to pay for it, DNC spokesperson Daniel Wessel released the following statement:
“The deficit increase is ‘disturbing’ because of the trillion-dollar tax break Trump and Republicans gave to the rich and big corporations. The Trump tax law was always a scam, and now Republicans are suggesting taking seniors and middle-class families to the cleaners by gutting Medicare, Medicaid, and Social Security to help pay for it.
“Make no mistake: These vital programs are on the ballot this November. The only thing left for Americans to do is vote.”
‘At the end of the day, this is a question of priorities. The GOP continues to make it painfully clear that their first priority is to make the rich even richer, at the expense of the middle class.’
This morning, Republican Senate Majority Leader Mitch McConnell told Bloomberg News what we’ve long suspected: the GOP’s only plan to address the ballooning federal deficit is to make deep and painful cuts to Medicare, Medicaid, and Social Security. His statement comes on the heels of yesterday’s announcement that the deficit has reached a six-year high of $779 billion, due largely to the trillion dollar tax cut for billionaires and wealthy corporations the GOP pushed through earlier this year.
The federal deficit swelled by nearly 17 percent largely because of a sharp decline in corporate tax revenues after the Trump tax law. Trump said his tax law would pay for itself, and he claimed he would quickly eliminate the national debt and balance the budget. We now know those were all lies.
LIE: The Trump administration claimed the tax law would “pay for itself” and even suggested it already has.
Secretary Mnuchin: “‘This will be the most significant change to the tax code since Reagan,’ he said, adding that the plan ‘will pay for itself’ by boosting economic growth.”
The following article by Matt Phillips was posted on the New York Ties website February 26, 2018:
President Trump promised that his tax cut would encourage companies to invest in factories, workers and wages, setting off a spending spree that would reinvigorate the American economy. Companies have announced plans for some of those investments. But so far, companies are using much of the money for something with a more narrow benefit: buying their own shares. Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies’ stock. A company purchasing its own shares is a time-tested way to bolster its stock price. But the purchases can come at the expense of investments in things like hiring, research and development and building new plants — the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans. The tax overhaul is the cornerstone of Mr. Trump’s economic plan. It has been a big win for companies, offering lower corporate rates and a permanent break on overseas profits. Warren E. Buffett said in his annual letter to investors on Saturday that his company, Berkshire Hathaway, enjoyed a $29 billion gain thanks to the new tax law. Continue reading the main story RELATED COVERAGE Opinion Editorial Well-Heeled Investors Reap the Republican Tax Cut Bonanza FEB. 25, 2018 Apple, Capitalizing on New Tax Law, Plans to Bring Billions in Cash Back to U.S. JAN. 17, 2018 Bonuses Aside, Tax Law’s Trickle-Down Impact Not Yet Clear JAN. 22, 2018 Tax Overhaul Gains Public Support, Buoying Republicans Feb. 19, 2018
President Trump promised that his tax cut would encourage companies to invest in factories, workers and wages, setting off a spending spree that would reinvigorate the American economy.
Companies have announced plans for some of those investments. But so far, companies are using much of the money for something with a more narrow benefit: buying their own shares.
Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies’ stock. A company purchasing its own shares is a time-tested way to bolster its stock price.
But the purchases can come at the expense of investments in things like hiring, research and development and building new plants — the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans.
The tax overhaul is the cornerstone of Mr. Trump’s economic plan. It has been a big win for companies, offering lower corporate rates and a permanent break on overseas profits. Warren E. Buffett said in his annual letter to investors on Saturday that his company, Berkshire Hathaway, enjoyed a $29 billion gain thanks to the new tax law.
What companies do with the trillions of dollars they’re bringing back to the United States, and the money they will save each year on their tax bills, will in large part determine whether the plan is a success or a failure.
As the tax cuts kick in, companies have laid out a variety of uses for the money. Some are paying out one-time bonuses to employees. Others are raising salaries. Others plan to open new factories.
In the fourth quarter, American companies’ investments in things like factories and business equipment grew by 6.8 percent. That was the fastest growth rate since 2014, but far from the giant surge in capital spending that was promised ahead of the tax overhaul.
But the buying back of shares is also at record levels.
Almost 100 American corporations have trumpeted such plans in the past month. American companies have announced more than $178 billion in planned buybacks — the largest amount unveiled in a single quarter, according to Birinyi Associates, a market research firm.
Such purchases reduce a company’s total number of outstanding shares, giving each remaining share a slightly bigger piece of the profit pie.
Cisco said this month that in response to the tax package, it would bring back to the United States $67 billion of overseas cash, using $25 billionto finance additional share repurchases. Alphabet, the parent company of Google, authorized up to $8.6 billion in stock purchases. PepsiCo announced a fresh $15 billion in planned buybacks. Chip gear maker Applied Materials disclosed plans for a $6 billion program to buy shares. Late last month, home improvement retailer Lowe’s unveiled plans for $5 billion in purchases.
On Monday, Mr. Buffett said on CNBC that Berkshire might be open to buy some of its shares. The remarks helped send Berkshire’s stock — and the broader market — higher.
More buybacks are almost certainly on the way. UBS analysts covering Apple said the iPhone maker might authorize another $30 billion in share purchases when it reports its next quarterly earnings in April. That would be on top of the $30 billion it already spends each year to buy back its shares.
“I’m expecting buybacks to get to a record for 2018,” said Howard Silverblatt, a senior index analyst with S.&P. Dow Jones Indices. “And if I’m disappointed, there’s a lot of people with me.”
The flurry of planned buybacks has been good for the stock market. Early this month, stocks were down more than 10 percent from their January peak. The prospect of companies flooding markets with “buy” orders helped the market recoup some of its losses.
The broader impact on the economy is less clear. Economists believe a rising stock market benefits the economy, helping support consumer and business confidence. But the vast majority of the billions of dollars in planned share purchases will benefit the richest 10 percent of American households, who own 84 percent of all stocks. The top 1 percent of households own about 40 percent of all stocks.
Ultimately, the effect of the rising stock market depends on how those wealthy investors use their windfall. It helps the economy more, for example, if they put the money toward productive new companies than if they invest in government bonds.
The following article by Chelsea Parsons and Scott Sargrad was posted on the Center for American Progress website February 16, 2018:
Thousands gathered for an evening vigil at Pine Trails Park in Parkland, FL, to remember those killed and injured in the February 15, 2018 shooting, in Parkland, FL. Credit: Getty/Carolyn Cole/Los Angeles
In his address to the nation the day after the massacre at Marjory Stoneman Douglas High School in Parkland, Florida, that killed 17 students and teachers and injured another 14, President Donald Trump vowed to take action, stating that he would soon hold meetings with governors and attorneys general in which “making our schools and our children safer will be our top priority.” He continued, “It is not enough to simply take actions that make us feel like we are making a difference. We must actually make that difference.” However, the president’s actions have already spoken louder than these hollow words. Just two days before the shooting, his administration released its fiscal year 2019 budget, which proposed cutting funding to crucial programs that help prevent gun violence and ensure school safety.
The following article by Eliza Schultz, Katherine Gallagher Robbins, Rejane Frederick, Silva Mathema, Connor Maxwell, Heidi Schultheis, Anusha Ravi, Leila Schochet, Leonard Scott IV and Shabab Ahmed Mirza was posted on the Center for American Progress website February 16, 2018:
Copies of President Donald Trump’s fiscal year 2019 budget sit on a table at the House Budget Committee on Capitol Hill in Washington, February 12, 2018. Credit: Getty/AFP/Saul Loeb
Immediately after President Donald Trump signed into law a tax overhaul that jacks up the deficit by $1.5 trillion—and unabashedly funnels enormous tax cuts to the nation’s millionaires, billionaires, and corporations—he and his colleagues in Congress made clear how they planned to pay for it: by slashing the very programs that help everyday people make ends meet. In February, President Trump released a budget that doubles down on his Robin Hood in reverse vision for the country. His proposals are draconian—seeking to dismantle the nation’s health care system; dramatically curtailing access to affordable housing and nutrition; and even threatening programs that Trump pledged not to touch, such as Social Security, Medicare, and Medicaid. Continue reading “Fact Sheets: President Trump’s FY 2019 Budget Harms Nearly Every Community Across the Country”
The following article by Dena Bunis was posted on the AARP website February 13, 2018:
Spending proposal slashes many health and safety net programs
Credit: Gregory Reid, Gallery Stock
President Trump unveiled his federal budget proposal Monday, which takes aim at many of the health and safety net programs that older Americans rely on. The plan sharply reduces funding for Medicare, Medicaid, Social Security Disability Insurance and food stamps.
