Tag: GOP trickle down economics

It’s Official: The Trump Tax Cuts Didn’t Pay for Themselves in Year One

Federal tax revenues declined in 2018 while economic growth accelerated, undercutting the Trump administration’s insistence that the $1.5 trillion tax package would pay for itself.

It’s time to put to rest any notion that President Trump’s signature tax cuts are paying for themselves. Anyone who says otherwise is lying with numbers.

A year after the $1.5 trillion tax-cut package took effect, economic growth has accelerated, just as Republicans promised it would when pushing the law through Congress. Growth appears likely to hit 3 percent for 2018, after adjusting for inflation, which is a full percentage point higher than the Congressional Budget Office forecast for the year in 2017. Not all of that increase is attributable to the tax cuts, but some of it is.

That’s good news for Republicans’ longstanding claim that cutting taxes would provide such an economic bump that additional tax revenue would flow in to make up for what was lost through lower tax rates.

View the complete January 11 article by Jim Tankersley on The New York Times website here.

One Year Later, the TCJA Fails to Live Up to Its Proponents’ Promises

On December 20, 2017, the U.S. House of Representatives and Senate passed a new tax law, commonly known as the Tax Cuts and Jobs Act (TCJA).1Since the fall of 2017, the legislation, which provides huge tax cuts for the wealthy and corporations, has been consistently unpopular with voters.2 Its proponents, however, frequently pushed claims and promises that ranged from aggressive puffery to outright lies. A year after the law’s passage, the major promises made by the TCJA’s proponents have been exposed as hollow.3 Here is the reality of the TCJA’s impact thus far.

Tax cuts primarily benefit the wealthy

Promise: “Any reductions we have in upper-income taxes will be offset by less deductions, so there will be no absolute tax cut for the upper class.” – Treasury Secretary Steven Mnuchin, November 20164

Reality: The TCJA showered massive tax cuts on the richest Americans. The highest-earning 1 percent can expect tax cuts averaging more than $51,000 in 2018 alone—more than what the median American worker makes in a year.5 Even when considering the tax cuts as a percentage of income, the benefits for the richest far exceed those for the middle class. (see Figure 1) American voters have overwhelmingly recognized the tax bill as primarily a giveaway to the wealthy. President Donald Trump essentially admitted as much when he floated the idea of a 10 percent tax cut for the middle class only weeks before the 2018 midterm elections.6 The Administration has since dropped the idea.7

View the complete December 20 article by Andrew Schwartz and Galen Hendricks on the Center for American Progress website here.

The Trump Tax Law Is Not Delivering The Results Trump Promised

Trump promised his tax cuts would pay for themselves, boost economic growth, and raise wages. Instead, Trump’s tax breaks have blown up the deficit, failed to boost long-term growth, and left working Americans behind.

Corporations used their massive tax breaks for a record-high $1 trillion of stock buybacks, not to benefit their workers.

CNN: “Corporate America celebrated the first full year under the new tax law by rolling out a record-setting $1 trillion of stock buybacks.”

Morning Consult: “Twenty-three percent of registered voters said they noticed an increase in their paycheck this year as a result of the law, while 60 percent didn’t, according to a Dec. 4 poll conducted among 1,975 registered voters.” Continue reading “The Trump Tax Law Is Not Delivering The Results Trump Promised”

Rising Deficits, Falling Revenues

President Donald Trump and congressional Republicans celebrate Congress passing the Tax Cuts and Jobs Act on the South Lawn of the White House, Washington, D.C., December 2017. Credit: Chip Somodevilla, Getty Images

The Fiscal Damage Caused by the New Republican Tax Law

The law commonly known as the Tax Cuts and Jobs Act1 (TCJA), enacted in December 2017 by the Republican-controlled Congress, is substantially increasing federal deficits—and will for years to come. Regrettably, the law increased federal borrowing while addressing none of the nation’s most pressing challenges. In particular, after decades of growing income inequality and stagnant real wages for working-class Americans, the law conferred its largest benefits on the wealthiest Americans. The law did nothing to rebuild the nation’s infrastructure, advance education, or prevent climate change. Moreover, by increasing federal deficits and debt, the law will increase pressure to cut vital programs, including Social Security, Medicare, and Medicaid.

This issue brief assesses the fiscal damage from the TCJA and finds: Continue reading “Rising Deficits, Falling Revenues”

Trump Tax Law Update: Record Profits For Banks & Corporations, While Workers Lose Their Jobs

Trump and Republicans promised their massive tax cuts for the rich and big corporations would benefit workers, but that never happened. Here’s an update on the latest from the Trump tax law.

Corporate profit growth hit a 6-year high.

MarketWatch: “A torrid U.S. economy blazed a 3.5% pace of growth during the summer and boosted corporate profits to the highest rate in six years, fresh government figures show.”

Banks hit record-high profits.

Washington Examiner: “The U.S. banking sector reported record-high profits in the third quarter of 2018, thanks in large part to last year’s tax law.”

GM workers lost their jobs.

Detroit Free Press: “Congressional Democrats let loose on General Motors’ decision to close plants in Michigan and Ohio on Monday, saying that the company got millions in tax breaks heralded by President Donald Trump but that they haven’t saved workers.”

GM Layoffs Reveal Trump’s Broken Promises And Failed Tax Plan

Trump promised workers he would protect their jobs and that corporations would use massive new tax breaks to benefit their workers. Neither of those happened. Instead, General Motors plans to close multiple factories, lay off even more workers, and failed to invest their tax windfall in American jobs.

BROKEN PROMISES: Trump promised workers they “won’t lose one plant” and that GM would expand jobs. Now, GM is shutting its factories and cutting more than 14,000 jobs.

Washington Post: “GM layoffs pierce the heart of Trump’s #MAGA promise”

Huffington Post: “The GM Layoffs Sure Look Like A Broken Trump Promise”

Continue reading “GM Layoffs Reveal Trump’s Broken Promises And Failed Tax Plan”

Did a Tax Increase Tucked Into Trump’s Tax Cut Come Back to Bite Republicans?

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.

View the complete November 19 article by Jim Tankersley and Ben Casselman on The New York Times website here.

Trump Tax Law Hasn’t Created Jobs Or Raised Wages

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.”

Continue reading “Trump Tax Law Hasn’t Created Jobs Or Raised Wages”

Trump Tax Law Has Not Benefited Workers And Business Investment Is Slowing

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.

Kudlow: “Business investment is booming.”

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”

Mitch McConnell Calls for Social Security, Medicare, Medicaid Cuts After Passing Tax Cuts, Massive Defense Spending

After instituting a $1.5 trillion tax cut and signing off on a $675 billion budget for the Department of Defense, Senate Majority Leader Mitch McConnell said Tuesday that the only way to lower the record-high federal deficit would be to cut entitlement programs like Medicare, Medicaid and Social Security.

“It’s disappointing, but it’s not a Republican problem,” McConnell said of the deficit, which grew 17 percent to $779 billion in fiscal year 2018. McConnell explained to Bloomberg that “it’s a bipartisan problem: Unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.” The deficit has increased 77 percent since McConnell became majority leader in 2015.

New Treasury Department analysis on Monday revealed that corporate tax cuts had a significant impact on the deficit this year. Federal revenue rose by 0.04 percent in 2018, a nearly 100 percent decrease on last year’s 1.5 percent. In fiscal year 2018, tax receipts on corporate income fell to $205 billion from $297 billion in 2017.

View the complete October 16 article by Nicole Goodkind on the Newsweek website here.