Five Big Lies About Trump’s So-Called Tax Reform

by Sally Herrin

How do you engineer the creation of a Third World Country? You colonize a previously sustainable society, concentrate its resources and means of production into the hands of a few of your friends, and create the kind of chaos that keeps the mass of people taking their grief out on one another. Trump and his cohort are intent on breaking this country down, then parceling it out as further chaos ensues. This is the Great Truth, manifest to anyone paying attention. And as always, selling out a society begins with an official narrative based on Big Lies.

The GOP has a tremendous amount at stake on tax reform legislation. Republicans risk ending the year with nothing much accomplished but utter failure on health care reform. And just because Trump’s tax reform package is awful and unfair doesn’t mean it can’t pass. So far the right-wing hardliners who helped sink ACA repeal (because it did not go far enough) have not indicated they have any problem with letting the foxes party in the hen house.

I searched “Big Lie” and “Tax Reform” and my browser delivered a half dozen articles from the Washington Post, Slate, Forbes, USA Today, CNN, and Pulitzer Prize-winner PolitiFact. Here are the top five Big Lies the GOP and Trump are using to sell Americans on their “United Framework for Fixing the Broken Tax Code.”

Big Lie #1: @realDonaldTrump
…we are the highest taxed nation in the world.

The U.S. is by no means the highest-taxed nation and certainly not among the 34 industrialized nations which make up the Organization for Economic Cooperation and Development. As of 2014, the U.S. actually ranks on the low end for tax revenue, with countries like Norway, Sweden, Denmark and Belgium on the high end, as a percentage of Gross Domestic Product. The U.S. is 31st at about 76 percent of the OECD average. Only Korea, Chile and Mexico tax less by revenue as a percentage of GDP. In corporate tax revenue as a percentage of GDP, the U.S. ranks 17th, just points under the OECD average of 2.9 percent. Likewise, U.S. per capita tax revenue of $14,204 is just under the OECD average of $14,923.

While the U.S. has one of the highest top marginal tax rates in world in statute, deductions and exclusions mean companies pay less in practice. This top corporate tax is the tax Trump has in mind in his Tweet above. Only the wealthiest are touched by this tax. The facts in this case are more difficult to nail down, but in 2011, the Congressional Research Service concluded the effective U.S. rate was 27.1 percent, just under the OECD average of 27.7 percent. In 2014, the World Bank and the International Finance Commission ranked the U.S. second highest after New Zealand in the OECD and 15th among a total of 189 countries measured.

According to PolitiFact, “The World Bank’s data for 2012—the last year for which it has complete figures—also placed the United States near the bottom in tax revenue as a percentage of GDP. Nations with lower percentages were two OECD members (Japan and Spain), a couple of oil-rich countries (Oman and Kuwait) and few impoverished states (like Afghanistan and the Central African Republic).” In 2016 the World Bank and Price Waterhouse Cooper assessed the total tax burden for a case study company in various countries around the world. The total tax rate, including income taxes, labor taxes, property taxes, profit taxes, etc., is expressed as a percentage over the total profit. “By this metric, the company would have a total tax rate of 43.9 percent in the United States, placing it at No. 64 out of 189 countries.”

Fact: The U.S. is not the highest-taxed nation in the world.


Big Lie #2:
It’s a middle class tax cut.

The non-partisan Tax Policy Center found that after the tax plan has taken full effect in 2027, 80 percent of the benefits will go to the top 1 percent. “When it comes to tax cuts, the top 1 percent will get an average cut of $1,022,120, while the middle 20 percent will get an average cut of $420,” Rebekah Entralgo reported on 10.27.17 at ThinkProgress.

The choir is singing just one note. Ivanka Trump Tweeted the tax plan would provide “much needed relief to middle-income American Families.” From Steve Mnuchin, “This is about giving people a middle-income tax cut.” From Sarah Huckabee Sanders, “The ‘focus’ and ‘priority’ of the tax plan is on the middle class.” Her quotation marks. Most feelingly of all, Mike Pence said, “This is a middle-class miracle.”

Fact: Saying it over and over does not make it so. UFFBTC is not a middle class tax cut, and may cause some in middle brackets to pay more.


Big Lie #3:
The cuts will pay for themselves.

The Republican article of faith, that tax increases always crash the economy, is just wrong: Witness the aftermath when Clinton raised taxes in 1993 and Obama did likewise in 2013. In both cases, the economy prospered. As reported on Slate, September 29, 2017, the nonpartisan “Committee for a Responsible Federal Budget” predicts this tax reform plan would actually reduce revenue by $2.2 trillion over a decade. Slate noted,“The last round of major tax cuts, in 2001 and 2003 under President George W. Bush, were a key driver of public debt for the decade that followed.”

A study by the “Economic Policy Institute” found that cutting taxes for corporations does not boost wages, calling the claim “clearly wrong.” Trump has asserted, “It’ll be revenue neutral when you add growth… I think we’re going to rock it in terms of GDP.” Even conservatives raise their eyebrows at that claim, a blogger on Quartz noted. “The right-wing National Review began a piece titled ‘An Anti Growth Tax Cut’ with the line: ‘Republicans want to cut taxes by $1.5 trillion—while the government already is running a deficit—and they propose to offset those cuts with wishful thinking.’”

The GOP never gives up on ‘trickle-down economics’ to con Americans into believing that giving tax cuts to businesses and the ultra-wealthy will benefit everyone else. Trump tax reform will help global and specialized corporations that do not need our help. “And trillions that are sitting offshore will stay there and not create a single job in the Heartland,” wrote John Wasik in Forbes, September 29, 2017.

Fact: The cuts will not pay for themselves and will increase the deficit.


Big Lie #4:
Simplifying the bracket system and tax preparation is a big deal.

House Speaker Paul Ryan likes to say that tax simplification would give U.S. taxpayers the ability to file taxes on a postcard. Ryan’s mock-up is a gimmick and looks very much like Form 1040EZ.

Fact: Consolidating seven brackets into three does not make filing taxes any simpler.

 

Big Lie #5:
Trump: I don’t benefit.

In Harrisburg, Pennsylvania, on October 1, 2017, “I’ve had rich friends of mine come up to me and say, Donald, you’re doing this tax plan. We don’t want anything. We don’t. Now, they gain when the economy gains. They gain when companies get better. They gain in lots of different ways. But they don’t want that so many people have come up to me and say give it to the middle class. Give it to people that need it. Give it to people who want to spend it. You’d be surprised.”

Urban-Brookings “Tax Policy Center’s” senior fellow Steven Rosenthal found that foreign investors own about 35 percent of U.S. corporate stock. Cutting the corporate tax to 20 percent means a tax cut for these foreign investors worth $70 billion—fully three times the tax break for middle income households under Trump’s tax plan.

“The Individual rate cuts, repeal of the Alternative Minimum Tax and the estate tax, and preservation of tax preferences for charitable giving, mortgage interest, and retirement savings all primarily benefit those with high-incomes,” said Howard Gleckman, also of the TPC.

More than two thirds of income earned by so-called ‘pass-through’ businesses goes to the top 1 percent of Americans who file taxes, including Trump; most of his, Ivanka’s and Jared Kushner’s businesses are organized as pass-throughs. Gleckman called this tax cut “an outright giveaway to the wealthy.” Trump plans to end taxes on estates of more than $5.5 million for individuals (and $11 million for couples), creating a huge windfall for Trump heirs. Likewise, Trump would end the Alternative Minimum Tax—the reason why, Bouie noted on Slate, in 2005, Trump paid a tax rate of 24 percent on $150 million of income, “instead of the 4 percent he would have paid based on his many deductions.”

Fact: Trump and his fellows of the 1 percent don’t just benefit from this tax reform package, they will positively thrive, burgeon, flourish—mushroom even—like the cancers they are.

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