Frank Clemente and William Rice from Americans for Tax Fairness issued a scathing editorial in the Los Angeles Times Wednesday about the failed Republican tax bill that not only left the middle-class behind it has failed in nearly everything promised.
Jan. 1, 2020, marks the two-year anniversary of the enacting of the GOP tax cut, and there is plenty of data showing the impact didn’t meet the promises made by the president.
“Rushed through Congress by a Republican majority, the Trump-GOP tax cuts were promoted as a boon for the middle class,” wrote Clemente and Rice. “Yet in 2020, according to the Institute on Taxation and Economic Policy, the richest 1% of taxpayers will get an average tax cut of around $50,000, 75 times more than the average cut for the bottom 80 percent.”
One significant reason the law helped the wealthy so much more is that it employed the tired Republican idea of “trickle-down economics,” which gives hefty tax breaks to the wealthy and corporations saying that it will filter down to workers and filter through the economy. The reality is that corporations chose not to invest in employees but stock buy-backs and other corporate benefits.
To make matters worse, the law created so many tax loopholes that tax collection from corporations collapsed. With fewer revenues coming into the federal government, the deficit Republicans once claimed was too high, has ballooned to the highest ever.
“ITEP found that the effective corporate tax rate for 379 profitable Fortune 500 corporations was just 11.3 percent last year,” wrote Clemente and Rice. “That’s about half the rate Trump’s new law established, which slashed the previous rate by 40 percent. More than 90 corporate titans — including Amazon, Chevron, FedEx, IBM, General Motors and Netflix — paid zero in federal income taxes last year.”
They called the claim that the tax cuts would benefit the middle class “phony.” Trump even claimed that the new law would “cost me a fortune,” as a wealthy taxpayer. One of the greatest pieces of evidence that it was all a lie came from Trump’s last-minute promise before the 2018 election that he was working on a “middle-class tax cut.”
“It’s going to be a tax reduction of 10 percent for the middle class,” Trump told reporters in the Oval Office Oct. 23, 2018. “Business will not enter into it, and this will be on top of the tax reduction that the middle class has already gotten, and we’re putting in a resolution probably this week.”
Over a year later, neither Trump nor Republicans have proposed such a tax cut.
“Trump and his family have undoubtedly benefited by millions of dollars from at least five features of the law, ranging from lower top tax rates to a weakened estate tax,” wrote Clemente and Rice. “Of course, we can’t be sure exactly how much they’ve saved because Trump refuses to release his tax returns.”
Trump promised his corporate tax cuts would result in an average pay raise of $4,000 for working families. His economic advisers claimed $9,000. Their report also said that wages would increase as a result of the tax cuts. All three of the claims were false.
“Census data show that median family income instead grew by about $500 in the first year after the tax cuts, the smallest annual increase in five years,” Clemente and Rice said. “A close look at [the] Bureau of Labor Statistics figures shows that the growth rate in wages was just 0.4 percent in the two years since the tax cut. Compare that with wage growth of 0.7 percent in the last two years of President Obama’s administration.”
Meanwhile, the wealthy scored big. “In 2018, owners of the elite group of non-corporate businesses that earned more than $1 million received nearly half the benefits from the part of the law touted as a small-business tax cut,” the report said.
Still, Trump intends to run his 2020 campaign touting his economic success. Clearly, that success was only isolated to a few.