While “tax reform” sounds like a worthy goal, there are many potential pitfalls along the line.
With President Donald Trump and a Republican-controlled Congress in the driver’s seat, the primary concern is that their eventual plan will further rig the economy in favor of the super-rich and wealthy corporations. This would result in drastic funding cuts for our country’s safety net– services like Medicare, Medicaid, Social Security disability programs, nutrition assistance, and education.
A new analysis by the Tax Policy Center fleshes out these worries. Its study starts by calculating that Trump’s vague tax plan would result in an estimated revenue reduction of around $3.5 trillion over ten years. The lowest 20 percent of earners would receive an average of $40 in cuts, while the wealthiest .1 percent would average $938,000. While this disparity is startling on its face, it gets even worse upon closer examination.
The Tax Policy Center study then looked at who will ultimately benefit once these tax cuts are paid for by increases in other taxes, or more likely, through spending cuts. If these tax responsibilities are split evenly amongst all payers, it would result in the lowest earners seeing a 16 percent decrease in their after-tax income. Meanwhile, the wealthiest Americans would still see double digit growth in their annual income. The report showed these negative effects can be lessened when the richer households are asked to pay a greater percentage—the basis for having progressive taxes.
Economist Jared Bernstein’s analysis of the study predicted that the outcome could be even rougher for the working class. That’s because the Tax Policy Center report assumed that Republicans would eventually consent to raising taxes on the wealthy to partially pay for these cuts, instead of focusing solely on the more likely scenario of them cutting safety net program spending. Given what emerged from the Obamacare repeal attempts, this is a very reasonable worry.
It’s from this reality of the superrich and mega corporations pushing for more tax giveaways at the expense of programs that keep Americans healthy, teach our children, and help struggling families put food on the table that Not One Penny emerged. This new campaign, which counts Public Citizen among its members, is organized around a simple principle: there should not be even one penny in tax cuts for millionaires, billionaires, and wealthy corporations.
85 percent of income growth since the recession has gone directly to the richest 1 percent of Americans. Given this reality, it’s simply immoral to pay for further cuts to their tax rates through cuts to programs that benefit the rest of America.
Please join this essential fight for tax fairness by adding your name to the growing list of Public Citizen members and supporters planning activities in their communities to call on our nation’s leaders to commit to ensuring that not one penny in tax cuts will go to millionaires, billionaires, and wealthy corporations.
Photo courtesy Julio Urrutia.