Sunday, December 3, 2017

The Tax Bill

by Madeleine Kando

I am not an expert on taxes, other than knowing that taxes, if structured right, come back to benefit the tax payer. Taxes pay for everything that is essential in a well-run society: roads, bridges, police, firefighters, schools and so on. If you lower taxes too much, you jeopardize these services and a society becomes dysfunctional. A few bananas at the top that have and control everything, and everybody else be damned.

We do not pay a lot of taxes compared to most OECD countries. Taxes accounts for about 26 percent of the United States’ GDP, placing the U.S. 31st out of 35 countries studied (See: General Government Revenue). In countries with the highest percentages, (Denmark, France, Belgium, Finland, Austria, Italy and Sweden), taxation accounts for more than 42 percent of GDP. The countries continue to improve their quality of life, because they pay more taxes. Their roads are better, their health care is better and cheaper, their educational system is better and cheaper. Among OECD countries, only Korea, Chile, Mexico, and Ireland collect less taxes than the United States as a percentage of GDP.

Here, we already have an anemic social safety net that leaves too many Americans without the basic needs to live a decent life. Our health care system is one of the worst of the OECD countries. Our infrastructure is appalling, our schools are underfunded and higher education is so expensive that many young people cannot afford it.

The Republican tax bill reduces the corporate tax rate from a 35% top bracket to only 20%, which they claim, puts the US more in line with other countries. What you seldom hear is that most other developed countries also have value-added tax (VAT), a kind of consumption tax. The US doesn’t.

Half of US federal revenue comes from individual income taxes and payroll taxes make up 34% (which is mostly paid by employees). In 1952, a third of all revenue in this country came from large corporations. Today it is only 9%, and although corporations only make up 10% of the economy, they rake in huge profits.

What will lowering the corporate tax rate do to improve our economy? Will they pay their employees more or will the higher profits land in executives’ pocket? The Atlanta Federal Reserve Bank asked executives, “If passed in its current form, what would be the likely impact of the Tax Cuts and Jobs Act on your capital investment and hiring plans?” Only 8% of the executives said the bill would make them increase hiring plans “significantly.” (See: Here's why a corporate tax cut will never boost economic growth.)

This tax bill is simply going to ruin our economy by putting even more of the money into the pockets of the top 1%. How can an economy run when only 1% of the population can afford to buy things?

Soon, the truth about the ‘pie in the sky, trickle down economics’ scenario that this whole bill is built on, will become apparent. Then the Republicans will try to fill the trillion dollar deficit hole by cutting more and more of the already slim entitlement programs that so many Americans rely on: Health care, Social Security, Public Education and Infrastructure.

It is a sickeningly immoral, ill-devised bill that will accelerate this country’s decline and we will finally qualify to be called a Banana Republic. Courtesy of the Republican Party. leave comment here