By Robert Reich
Here are the 3 main Republican arguments in favor of the Republican tax plan, followed by the truth.
1. It will make American corporations competitive with foreign corporations, which are taxed at a lower rate.
Rubbish.
(1) American corporations now pay an effective rate (after taking deductions and tax credits) that’s just about the same as most foreign based corporations pay.
(2) Most of these other countries also impose a “Value Added Tax” on top of the corporate tax.
(3) When we cut our corporate rate from 35% to 20%, other nations will cut their corporate rates in order to be competitive with us – so we gain nothing anyway.
(4) Most big American corporations who benefit most from the Republican tax plan aren’t even “American.” Over 35 percent of their shareholders are foreign (which means that by cutting corporate taxes we’re giving a big tax cut to those foreign shareholders). 20 percent of their employees are foreign, while many Americans work for foreign-based corporations.
(5) The “competitiveness” of America depends on American workers, not on “American” corporations. But this tax plan will make it harder to finance public investments in education, health, and infrastructure, on which the future competitiveness of American workers depends.
(6) American corporations already have more money than they know what to do with. Their profits are at record levels. They’re using them to buy back their shares of stock, and raise executive pay. That’s what they’ll do with the additional $1 trillion they’ll receive in this tax cut.
2. With the tax cut, big corporations and the rich will invest and create more jobs.
Baloney.
(1) Job creation doesn’t trickle down. After Ronald Reagan and George W. Bush cut taxes on the top, few jobs and little growth resulted. America cut taxes on corporations in 2004 in an attempt to get them to bring their profits home from abroad, and what happened? They didn’t invest. They just bought up more shares of their own stock, and increased executive pay.
(2) Companies expand and create jobs when there’s more demand for their goods and services. That demand comes from customers who have the money to buy what companies sell. Those customers are primarily the middle class and poor, who spend far more of their incomes than the rich. But this tax bill mostly benefits the rich.
(3) At a time when the richest 1 percent already have 40 percent of all the wealth in the country, it’s immoral to give them even more – especially when financed partly by 13 million low-income Americans who will lose their health coverage as a result of this tax plan (according to the Congressional Budget Office), and by subsequent cuts in safety-net programs necessitated by increasing the deficit by $1.5 trillion.
3. It will give small businesses an incentive to invest and create more jobs.
Untrue.
(1) At least 85 percent of small businesses earn so little they already pay the lowest corporate tax rate, which this plan doesn’t change.
(2) In fact, because the tax plan bestows much larger rewards on big businesses, they’ll have more ability to use predatory tactics to squeeze small firms and force them out of business.
Don’t let your Uncle Bob be fooled
Republicans are voting for this because their wealthy patrons demand it. Their tax plan will weaken our economy for years – reducing demand, widening inequality, and increasing the national debt by at least $1.5 trillion over the next decade.
Shame on the greedy Republican backers who have engineered this. Shame on Trump and the Republicans who have lied to the pubic about its consequences.
Robert Reich is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, and Time magazine named him one of the 10 most effective cabinet secretaries of the 20th century. He has written 14 books, including the best-sellers Aftershock, The Work of Nations, Beyond Outrage and, most recently, Saving Capitalism. He is also a founding editor of The American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences and co-creator of the award-winning documentary, Inequality for All.
Ed says
California at Berkeley..
Enough said..
Common Sense says
I couldn’t say it better. Many of the people who voted these republicans in one and all…will be hurt the worst. SMH.
Steadfastandloyal says
https://www.forbes.com/sites/paulroderickgregory/2013/09/10/robert-reichs-f-minus-in-economics-false-facts-false-theories/
a tiny manatee says
Instead of sucking big business dick how about addressing the fact that all of this is all done at the expense of people that make under $200k a year
len hann says
So who believes anything that a UC – Berkeley professor rants about a Republican administration? Oh wait – other wacked out leftists!. I’m guessing he is one of the guys that said he was moving to Canada if Trump got elected.
Veteran says
Robert Reich……..are you kidding me!
Richard says
Rubbish, Baloney, Untrue. ROTFLMAO. With UC Berkley’s reputation how can you put ANY faith and belief into ANYTHING that comes out of that place? Plus these are people who constantly spew propaganda and hide behind their masks while protesting and destroying property. However, he and others are entitled to their opinions even as wrapped as it is!
gmath55 says
How are they going make up the $1.5 trillion debt? We are already $20.1 trillion in debt.
https://www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778
Duncan says
Well said. There is nothing worse than giving the most greedy an even bigger advantage iver the middle class. Corporation that are seeing record profits and Wall Street are the big winners. I can’t believe this is going through. Are deficit will baloon and my kids will be paying for greedy that support this bill.
ConstantlyAmazed says
And I’m sure Mr. Reich, being a “tenured” professor from UC Berkeley is an OBJECTIVE, NON-PARTISIAN, APOLITICAL, oh wait
1. He’s a professor at Berkley
2. Former Clinton administration cabinet member
3. Contributor to Time magazine and other “left wing” publications
Policies he advocates and has endorsed over the years has placed this country in the mess it was in and is slowly coming out of. I work hard for my salary this is the first time I will be able to keep more of what I earn instead of the govt taking it and spending it it on one socialist program after another.
Just me says
This says it all from this socialist/communist “American corporations already have more money than they know what to do with. Their profits are at record levels” ALL moneys belong to GOVERNMENT is what he is saying. It matters not if we are talking about a company or a individual. Be happy what GOVERNMENT lets you keep of what you earned no matter how much they let you keep.
Bc. says
All the liberals keep bashing TRUMP even though the USA 🇺🇸 is humming along better than it has in the last 15 years. We even have some respect back. MAGA. AND NO I DID NOT VOTE FOR TRUMP MY MISTAKE
palmcoaster says
The further deterioration and undermining of our middle and poor classes.
All around us is proof of it. When I arrived in 1991 to live in Florida (under Clinton) every time I crossed the bridges over the intracoastal were always a myriad of vessels sailing by north and south was a sight to be seeing. I also recall on weekends was so busy, that to water sky we had to get out early morning to have some enjoyable smooth water and avoid the motor boats traffic.
Then we elected Bush and his 911 and the rip off per gallon price and all the middle class boat traffic disappeared….to almost never come back. Kind of recovered a a bit after 2008 but never the same. Now we have Trump …and Sea-Ray is being sold….(simply because they see the writing in the wall) of course there is no middle class buying boats as before and the wealthy goes to overseas “more trendy” show of like keep up with the jet setters markets.
Also we were trying to recall in our lives about when have we ever seeing soo many homeless among us panhandling the corners with heavy traffic, in our many trips across America..in the 70′ 80′ and 90’s? We didn’t recall this many sad sights even about 15 years ago… That is telling us that the GOP agenda keeps eroding our middle class and sinking the poor and I believe with the current tax reform will just get worst. What an deceivingt, damaging, selfish, self serving legislation.
Trailer Bob says
“Robert Reich is the Chancellor’s Professor of Public Policy at the University of California, Berkeley” Well that pretty much says it all…lol.
Mark says
Haven’t you noticed that the economy really sucks right now. Everybody has and opinion. The last 8 stagnant years prove nothing. I guess the Dems just don’t want an even playing field. It’s our money not the governments!
Pogo says
@Bragging about shortcommings
Senile trolls and proud members of trump’s book burning zombie apocalypse – unite – you’ve made it to the bottom of the bottom.
“Where they have burned books, they will end in burning human beings.”
– Heinrich Heine
Edith Campins says
Funny how you Trump supporters diss the writer but not what he said. He is right about the tax plan, regardless of his politics.
How many of you have actually looked at the documents that explain the tax reform? Be none of you have. You are just parroting FAUX news.
Richard says
For all of those posting here that agree with this article and its author, please, Please, PLEASE make sure you give that extra $12,000, of the NEW Standard Deduction ($24,000) that the new tax plan is offering to EVERY taxpayer regardless of income, to the local fire and first responder’s in the Flagler Beach/Palm Coast area. Do you homework BEFORE complaining that it only benefits the rich. I am not rich by any means and I am not stupid. Either there are a lot of stupid people posting or you haven’t done any research as to how the new tax plan directly affects YOU.
hawkeye says
I have way too much taxes coming out of my pay right now , I think we should give Mr Trumps plan a chance .My 401 K has gone up nearly $30,000 since he has been president .Maybe a businessman ,instead of a career politician is what we need in this country. I work real hard for my money and hate a lot of the things my tax dollars have been wasted on, under Obama’s tax plan.
Anonymous says
Trump—doing what he said he would do….go against the establishment! Creating jobs is what is going to get this county back on its feet. There is no future in nothing but retail stores and restaurants like they have in Flagler County. People can’t afford to live here-you can’t make the payments on retail and restaurant wages. Trump didn’t get to be a multi-millionaire by being stupid….he knows how to make money and he knows more than Obama and Clinton as far as working for what you have rather than being paid for the positions you hold. It is time for a equal investigation on Hillary Clinton like what is taking place now. Coomey didn’t do his job honorably and played the game.
Stanley Wolak says
California at Berkeley,isn’t that a Communist College with Communist Professors which allows no free speech and is full of brain washed snow flake students!!!
Veteran says
Palm coaster – Sea Ray closing because middle class can’t afford boats. They make million dollar boats here. Who in the middle class can afford a million dollar boat?
Harry Allen says
Before the Congress of our nation is a tax bill that gives more to the rich and takes more from the poor. Let us remember, regardless of our particular faith (or non-faith), that humanitarian efforts are required. In Jerusalem, the message was to care for the widow. In Mecca, it was to give 10 percent of your wealth to the poor. And in faith communities following the Way of Jesus, the poor were championed by Jesus. Buddhists feel compelled to feed the poor.
One friend of mine, not wealthy by any means, finds ways to give cash to an unemployed woman who stands almost daily on concrete steps, asking for food for groceries. She is crippled by arthritis and can barely walk. Before that, he fed a homeless man who was not demented, could carry on a decent conversation, and asked nothing of others. I have two people I give money or food to every time I see them.
Why? Because as a follower of Jesus, it is my duty and privilege to feed the poor. Those who are more importantly politically need to do the same, regardless of their faith. We follow Jesus’s homilies, parables and teachings. To raise the question that Mark chose to end his gospel: “And what do you do now”?
palmcoaster says
Hey BC do you get paid in rubles also to hype on line? Can you tell us in what specifically is that “USA is humming along better than it has in the last 15 years?” Because us and Sea Ray do not see it at all. Unless you are the 1% then understandable.
Bc. says
Harry Allan what the hell does this have to do with the tax cut?????
Mike B says
Go Trump Go!!!!!!
Richard says
@gmath55 – The over 20 trillion dollar debt can be reduced IF our government will stop wasting money on STUPID stuff like useless research, programs that are not needed AND wasteful spending. PLUS reduce the number of employees doing NOTHING for the benefit of the American people and our government by wasting more money for their self righteous salaries and benefits. The difference between having an established politician for our president or a time proven multi-billionaire businessman is whether the deficit increases or decreases during their term(s). We will see what happens with our current POTUS but I am betting that it will go down versus what happened to the deficit under the previous POTUS. Oh, BTW, with all due respect but you haven’t done any research as to how this tax cut is going to be funded otherwise you would already know.
Bc. says
Palmcoaster. No I am not a 1% maybe 25%. But I can tell you my 401 is up about 36k all my family have jobs interest rates are down people seem more secure than ever more people are traveling than ever before I can go on and on. Sometimes people will never be happy and also enjoy your tax break I no I will merry Xmas. MAGA🇺🇸
Rose Roales says
To all you liberal bashers of the esteemed Prof Robert Reich:
“Liberalism is trust of the People tempered by prudence.
Conservatism is distrust of the People tempered by fear.”
It is quite evident from your posts what drives your hatred of liberals and draws you to demagogic leaders and the 1%
ENOUGH SAID.
smarterthanmost says
@palmcoaster
” We didn’t recall this many sad sights even about 15 years ago…”
You do realize Obama ran this country 8 of those 15 years.
“…and Sea-Ray is being sold….(simply because they see the writing in the wall)”
What “writing” is that? Nothing in the article stated specifically why, and could it be
because they are treated so badly by local government.
“…I believe with the current tax reform will just get worst. What an deceivingt, damaging, selfish, self
serving legislation.”
If you are not happy with any form of tax relief, then by all means, continue to contribute at
the previous rate. Many of us won’t mind, and you will feel better about your situation.
jibjab says
All I see is my stagnant salary. Grocery bill rising. Fuel prices rising. Insurance costs rising. Utility costs rising. Education costs through the roof. Housing costs hardly manageable. Virtually zero interest received on savings while the banks charge fees for everything. Taxes, taxes, taxes! OH, but wait, they are going to throw me a bone to show me that they really care. BULLSHIT!! It’s all about greed and we working-class Americans are THEIR golden chalice. It’s politics, corrupt politics..PERIOD!!
Richard says
It is amazing how these “crumbs” from the GOP Tax Bill are now helping Americans all over this country. Way to go Democrats for NOT voting for it!