The Hidden Hazards of GOP’s Tax-Cut Plan

Though sold as a pain-free tax cut for most Americans, the Republican plans favor the rich and carry hidden dangers for Social Security, Medicare and other key social programs, as Dennis J Bernstein describes.

 

By Dennis J Bernstein

The Democrats and the entire progressive community are up in arms about the Republican tax-cut plans, which budget experts say will shower the wealthy with tax breaks while raising taxes on some middle- and working-class families. The plans also could flood the federal debt with another $1.5 trillion in red ink over the next decade.

President Donald Trump participates in a tax reform kickoff event at the Loren Cook Company, Wednesday, August 30, 2017, in Springfield, Missouri. (Official White House Photo by Joyce N. Boghosian)

The legislation is now in the hands of the U.S. Senate where some modifications are expected in order to bring onboard a few Republican holdouts, but the Senate version does not play well either with critics alarmed about the potential debt-induced raid on Social Security and other key social programs.

Rep. Ro Khanna, D-California, put it this way: “Not only would the GOP tax plan blow a hole in the deficit, but as a result, it would trigger major cuts to programs that many Americans depend on, including a $25 billion cut to Medicare. This plan is a disaster for the middle class….[It] clearly demonstrates that they think it’s better to serve the interests of the very wealthy than everyday people. Shareholders and corporate executives do not need any more favors handed to them.”

What follows is an in-depth primer, from a progressive perspective, on the tax cut legislation. I spoke about it with Josh Hoxie on Nov. 21 in Boston. Hoxie has studied the proposal extensively and written about it as well. He is the Co-Editor of Inequality.org, based at the Institute for Policy Studies in Boston.

Dennis Bernstein:  Let’s start with some background on the Estate Tax. What is the estate tax and how was it established?

Josh Hoxie: About 100 years ago, Teddy Roosevelt and a few others saw that wealth was concentrating in fewer and fewer hands.  We had a funneling of wealth up to the upper class and the rest of the country was struggling.  They decided that we ought to have a levy on the inter-generational transfer of immense wealth.  When so much money concentrates in so few hands, it is bad for everyone.

Today this tax is levied on wealth dynasties of $7 million for married couples or $5.5 million for individuals.  It is probably the most progressive aspect of our tax code.  It is incredibly important, not just for raising revenue, but for controlling the runaway inequality we are witnessing in America today.

Dennis Bernstein: Does the estate tax actually deal with the issue of inequality?

Josh Hoxie: If you have a fortune and can do whatever you want with that fortune when you die, you should think about how your money was made.  I can guarantee that every great fortune in the United States was in some way enabled by the public sector: the roads you drove on, the schools that educated your workforce, the intellectual property rights that protected your intellectual property, and so on down the line.

One way we think of the estate tax is as “economic opportunity recycling.”  Paying forward the benefits that you had to create your fortune to the next generation so that they can get ahead too.  Without an estate tax, the only people who benefit from your fortune are the genetic lottery winners who happen to be born to multi-millionaire and billionaire parents.  With an estate tax, that opportunity gets spread around a little bit.

Dennis Bernstein: Trump says that eliminating the estate tax is going to bring money to the middle class.  You say it is ultimately going to cost all of us $260 billion in inequality.  How do you come to that figure?

Josh Hoxie: The Senate Joint Committee on Taxation came to that figure.  If we get rid of that tax, that is how much won’t be raised.  So it comes out of the public coffers and into the hands of the wealthiest people in this country.  The most regressive thing you can do is take money away from the Program for Women and Infant Children (WIC)–which half of the children in this country rely on for basic nutrition–and give that money to the wealthiest people who need it the least.

Dennis Bernstein: You wrote a piece that appeared recently in The Las Vegas Sun.  Can you say more about how this would significantly widen the racial wealth divide?

Josh Hoxie: When we look at who has the wealth in this country, we find that it is incredibly concentrated by race.  Essentially, White families have hundreds of thousands of dollars in assets, while the median Black family has a few thousand.  So we are talking about a hundred-to-one ratio.  And it is similar for Whites-to-Latinos.

When you look at who pays the estate tax, it is proportionately White folks who have tons of money but the money is held in disproportionately White hands.  That is the result of a legacy of racist public policy that goes back to red-lining in our cities, the legacy of slavery, and income disparities that extend to today.

Dennis Bernstein: How would you critique the focus of this new tax plan?

The U.S. Capitol. (Photo credit: Architect of the Capitol)

Josh Hoxie: It is hard to criticize strongly enough the Trump tax cuts.  They could mean irreparable damage for generations to come.  This is a money grab.  This is done on party lines, jammed through Congress, backed by multi-millionaires and billionaires for their exclusive benefit.

It is bad economics but more than that it is morally reprehensible.  In an age where one in five children is food insecure, we are going to cut basic public programs in order to give this tax break to people who need it the least in this country!

We have the first billionaire president and the wealthiest cabinet in history.  And we have never had so much money in our campaign finance system.  So this is not being done for congressional constituents, it is being done for wealthy billionaire donors.

Dennis Bernstein: What programs are going to be cut, who is going to suffer?

Josh Hoxie: The Trump tax cuts will create such a major hole in the federal budget that they will preempt mandatory spending cuts in Social Security, Medicare and Medicaid.  They are bringing back something called “chained CPI” which translates to less money for seniors.  Social Security is the most successful anti-poverty program in American history.  Before Social Security came around, half of people over 65 lived in poverty.  Now it is less than 10 percent, largely thanks to Social Security.

I think it is just now coming out, all the insidious ways that this wealth grab is going to affect all the non-wealthy people in this country.  A lot of people will see their taxes go up.  Graduate students are going to see their costs go up fivefold.  This is just mean on its face.

Dennis Bernstein: Are corporations and the wealthy spending a lot of money to make sure this goes through?  And how will the Trump family make out?

Josh Hoxie: Donald Trump likes to claim that he is worth $10 billion.  If we take him at his word, eliminating the estate tax would mean $4 billion for his kids.  The Walton family stands to benefit enormously, as do the beneficiaries of the Koch brothers.  There is a carve-out in the Trump tax cuts for private jet owners and alongside it is a fee increase for ordinary commercial flight passengers!  That is indicative of who is in the room when these things are decided.

Dennis Bernstein: What did we learn about these people from the Panama Papers?

Josh Hoxie:  Two major leaks have come out regarding offshore tax shelters: The Panama Papers came out last year and The Paradise Papers came out this year.  Essentially, we know that there is an untold amount of money hiding in offshore tax shelters.  We still don’t know how much money is concentrated at the very top.  We do know that it is not small businesses who are putting away money in these tax havens.  It is corporate CEO’s, corporations themselves, shady entities.

The whole premise of trickle-down economics is that if you give money to the top they will spend it and it will benefit everyone else.  That has never happened, but even if you took them at their word, if the money is hiding in an offshore tax shelter, how is that ever going to benefit anyone else?

It is hard to overstate what happens when so much money concentrates in so few hands.  Basically, we are seeing our politics, our civil society, our philanthropy dominated by the very rich, who care about no one but themselves and their country club friends.

Dennis J Bernstein is a host of “Flashpoints” on the Pacifica radio network and the author of Special Ed: Voices from a Hidden Classroom. You can access the audio archives at www.flashpoints.net.

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15 comments for “The Hidden Hazards of GOP’s Tax-Cut Plan

  1. Mild-ly - Facetious
    December 2, 2017 at 11:34

    The Talmud is a compendium of high degree filth as is the philosophy of Objectivism and the tyrannical suggestion “There’s no such thing as Society”. (Margret Thatcher -c.1987)

    Read, if you will, Alvin Toffler’s interview of Ms. Rand. I’m sure you’ll find agreement with much of her motives and intent, Evangelista.

    http://www.playboy.com/articles/playboy-interview-ayn-rand

    • Mild-ly - Facetious
      December 4, 2017 at 13:01

      Speaker Paul Ryan? Here’s what you need to know about his biggest influence — the lunatic Ayn Rand

      https://www.alternet.org/news-amp-politics/paul-ryans-biggest-influence-10-things-you-should-know-about-lunatic-ayn-rand

      Ayn Rand’s books are a big driver in the long-term right-wing campaign to delude millions of people into believing that there’s no such thing as society — that everyone must look out only for themselves. Lately, Rand’s work has enjoyed a major revival of interest.

      AlterNet has kept the pace with Rand’s resurgence, doing our best to educate people about what a nutcase she was and how harmful her ideas are. These 10 articles, previously published on AlterNet, shed light on why Rand’s influence on Ryan is so dangerous.

      1. How Ayn Rand Seduced Generations of Young Men and Helped Make the U.S. Into a Selfish, Greedy Nation

      “When I was a kid,” AlterNet contribuer Bruce Levine writes, “my reading included comic books and Rand’s The Fountainhead and Atlas Shrugged. There wasn’t much difference between the comic books and Rand’s novels in terms of the simplicity of the heroes. What was different was that unlike Superman or Batman, Rand made selfishness heroic, and she made caring about others weakness.”
      Bruce Levine’s explanation of how Rand has captured the minds of so many is a must-read. “While Harriet Beecher Stowe shamed Americans about the United State’s dehumanization of African Americans and slavery, Ayn Rand removed Americans’ guilt for being selfish and uncaring about anyone except themselves. Not only did Rand make it ‘moral’ for the wealthy not to pay their fair share of taxes, she ‘liberated’ millions of other Americans from caring about the suffering of others, even the suffering of their own children.”

      2. Rand’s Philosophy in a Nutshell

      The bloggers at ThinkProgress explain that the philosophy Ayn Rand laid out in her novels and essays was, “a frightful concoction of hyper-egotism, power-worship and anarcho-capitalism. She opposed all forms of welfare, unemployment insurance, support for the poor and middle-class, regulation of industry and government provision for roads or other infrastructure. She also insisted that law enforcement, defense and the courts were the only appropriate arenas for government, and that all taxation should be purely voluntary. Her view of economics starkly divided the world into a contest between ‘moochers’ and ‘producers,’ with the small group making up the latter generally composed of the spectacularly wealthy, the successful, and the titans of industry.”

      3. Ayn Rand Railed Against Government Benefits, But Grabbed Social Security and Medicare When She Needed Them

      AlterNet’s Joshua Holland has the goods: “Her books provided wide-ranging parables of ‘parasites,’ ‘looters’ and ‘moochers’ using the levers of government to steal the fruits of her heroes’ labor. In the real world, however, Rand herself received Social Security payments and Medicare benefits under the name of Ann O’Connor (her husband was Frank O’Connor).

      4. Rand Worked on a Movie Script Glorifying the Atomic Bomb

      According to author Greg Mitchell, Rand called the nuclear weapon capable of incinerating entire cities “an eloquent example of, argument for and tribute to free enterprise.”

      5. Billionaires and Corporations Use Rand’s Writings To Brainwash College Students

      Pam Martens reported that Charles Koch, who pushes “millions of dollars through his foundation into economic programs at public universities and mandating approval of faculty and curriculum in some instances,” partnered with the “southern banking giant BB&T … mandating that Ayn Rand’s book Atlas Shrugged is taught and distributed to students.”

      6. How Rand Became the Libertarians’ Favorite Philosopher

      Author Gary Weiss explains how the “Rand movement, which was little more than a cult when the Atlas Shrugged author died 30 years ago, has effectively merged with the vastly larger libertarian movement. While many differences are likely to remain … this means that Objectivism, Rand’s quasi-religious philosophy, is going to permeate the political process more than ever before.”

      10. We’ve Already Had a Randian in High Office (Alan Greenspan), and It Was Devastating to the Middle Class

      “The most devoted member of [Rand’s] inner circle,” George Monbiot writes, “was Alan Greenspan, former head of the US Federal Reserve. Among the essays he wrote for Rand were those published in a book he co-edited with her called Capitalism: The Unknown Ideal. Here, starkly explained, you’ll find the philosophy he brought into government. There is no need for the regulation of business – even builders or Big Pharma – he argued, as ‘the “greed” of the businessman or, more appropriately, his profit-seeking … is the unexcelled protector of the consumer.’ As for bankers, their need to win the trust of their clients guarantees that they will act with honour and integrity. Unregulated capitalism, he maintains, is a ‘superlatively moral system.’”

  2. Evangelista
    November 29, 2017 at 21:56

    An interesting question that appears to have not yet been addressed is in regard to Congressional acts, Representative presentation of and approval of, and Senate confirmation of, a bill adjusting taxing structure for The People of the United States that, by the structuring of the taxing structuring proposal imposes a deficit, and for that in-the-legislated proposal imposed deficit will require The People of the United States to assume a second taxation obligation, legislatively imposed, to pay private-assessment taxation to private investor-lenders, in the form of ‘interest’ payment imposts that the tax-legislation will, for the legislation’s structuring, require, and impose, on The People.

    That the money that will be lent at interest to The People to make up the deficit will be provided to the investor-lenders by the taxing-proposal legislation, itself, is another interesting potential conflict…

    • Mild-ly - Facetious
      November 30, 2017 at 14:45

      Rep.Paul Ryan achieves his life long personal nirvana with this United States passage into the cult of INDIVIDUALISM or Ayn Rand’s ‘Every Man For Himself’.

      RE: The Talmudic Individualism and Anarchy of Alisa Rosenbaum – AKA Ayn Rand

      https://wideawakegentile.wordpress.com/2016/07/26/the-talmudic-individualism-of-alisa-rosenbaum-aka-ayn-rand/

      • Evangelista
        November 30, 2017 at 21:38

        Mild-ly – Facetious,

        I don’t find the sense, or meaning, of your comment. But then, I am unable to make sense of, or find in Ayn Rand, root for any kind of “cult of INDIVIDUALISM”. Nor do I find any kind of Jewish, Talmudic or evan anarchic messaging in Ayn Rand. Her books are science-fiction romance genre literature, her writing reasonably well done, her plottings pretty mjuch pure romance romance, meaning hero-heroine stuff. Her “individualist” protagonists are objective oriented, self-reliant and self-assured, but not objective, or individualist. They are certainly not loners; if you read her books carefully and associate their contents’ to the descriptions of actions and events in them you can recognize HUGE organizations underlying every featured action, apart from individual heroes working as individuals at tasks that are individual (e.g., the stone-cutting activities by the reduced-to-roots architect in “Fountainhead”) but all the developments are in social interaction organizations (e.g., the building of the hero’s architectural visions), with individuals interacting to achieve the common achievement result (a building) instead of to manipulate and rob achievement from others (as the villains, game-playing famous-critics, employee-user sycophant-partners, manipulators of government power to inveigle control bureaucrats (“Atlas Shrugged”) and so forth, essentially all parasitic non-achievers (For great fun review her Utopian scenes in “Atlas Shrugged”, where Galt et al live in their Paradise, hidden from ‘Hell’ by its sci-fi shimmer, where all the CEOs have ‘make-work’ jobs and carry lunch-boxes amidst grand achievements that none of them could have built alone – they exported all the good workers, who worked for achievement and were competent, from ‘Hell’, you may recall, leaving a junkyard of abandoned trains and other vehicles in ‘Hell’. Rand did not concern herself with where those workers were, or lived, or had families, you may also recall; her works being one-woman romance fantasies her focus was not to those details). How any could work out any kind of ‘philosophy’ of selfish-individualism from her writings is an interesting example of human-psychological-self-delusional-fantasizing. That Ms. Rand accepted the bloom of the bizarre phenomenon and surfed its wave, to keep herself in bucks and her books in print and her royalties rolling, to me, only indicates she had her practical side along with her romantic.

        As for Talmudic connection, and to individualism (which doesn’t seem to be a part of Judaism, which is a membership religion), I think all scholars of Talmudic interpreting, both antagonistic and sympathetic, Jew and non-Jew, would shake their heads and say, “Oy, Vey!”

  3. geeyp
    November 29, 2017 at 10:28

    Josh Hoxie: “the intellectual property rights that protected your intellectual property” paid for with funds from the people? “Essentially white families have hundreds of thousands of dollars in assets”? Perhaps the rest of this piece has accurate statements; those two comments are curiously not accurate.

  4. Al Pinto
    November 29, 2017 at 07:55

    “The whole premise of trickle-down economics is that if you give money to the top they will spend it and it will benefit everyone else. That has never happened, but even if you took them at their word, if the money is hiding in an offshore tax shelter, how is that ever going to benefit anyone else?”

    The more appropriate definition for this type of economy would be “tinkle-down” economy.

    Supporters of the tax-plan state that cutting the corporate tax rate will encourage investment. This argument does not hold water, as the CEOs had shown:

    https://twitter.com/TimJHanrahan/status/930481095988170757/video/1

    Corporations already have plenty of cash for investing and they could also get loans at historically low rate, if the investment is profitable. The more likely outcome on the short term is large increase in stock price and dividend, in another word, the tax savings will be transferred to stock holders. The CEOs have a financial stake in making this decision, their bonuses will increase substantially to compensate for the increased stock price and dividend.

    The CEOs, who will actually use the tax saving for investment will not raise wages/benefits for the workers. They could have done it already, if they wanted to. They’ll rather look for investing in automation and robots. People greatly underestimate the size of the oncoming wave in automation. We are being tickled a little now with things like hamburger kiosks and self-driving cars, but all of this is just the beginning. If corporations spend to increase production, they most likely will spend it to automate at the expense of workers. This will mean fewer people will be able to afford their products, leading to lower corporate profits and stock sales by investors. The chances are that there will be another economic crash in the future, bailout for corporations by the government that will last for awhile. After that, wash, rinse and repeat…

  5. Annie
    November 29, 2017 at 01:10

    Zakery,
    You point out some dems are getting on the bandwagon to approve this tax bill, so let me ask you, are you surprised by that? Obama bailed out the banksters, drove up the deficit, and the top 10% got most of the money from the so called recovery after the financial crisis. When it comes to enriching the rich both parties are culpable. The democratic base is the top 10% in this country, which means people who make more then 200 thousand a year. Do you really think they care that Trump wants to cut into medicare, or social security? We’ll get no where if we don’t realize that both parties are out to enrich the rich, and are beholden to corporate interests. If you brought back Teddy or Franklin Roosevelt from the grave don’t you think they would realize their party isn’t what it use to be, but now the party of the rich?

    • Virginia
      November 30, 2017 at 15:42

      No, Annie, Zach’s probably not surprised. If DEMs had the majority, they’d be working on the same/similar deal (as in the past as you pointed out). Now they must be trying to figure out how many DEMs will have to peel off to vote for it to get it passed in order to keep their seats come election time.

    • Zachary Smith
      November 30, 2017 at 15:59

      As Virginia says, I’m not surprised. But I am very disgusted.

  6. Zachary Smith
    November 29, 2017 at 00:14

    The whole premise of trickle-down economics is that if you give money to the top they will spend it and it will benefit everyone else. That has never happened, but even if you took them at their word, if the money is hiding in an offshore tax shelter, how is that ever going to benefit anyone else?

    It is hard to overstate what happens when so much money concentrates in so few hands. Basically, we are seeing our politics, our civil society, our philanthropy dominated by the very rich, who care about no one but themselves and their country club friends.

    Excellent stuff. This is a major disaster unfolding. And there are Democrats quivering to get on the bandwagon.

    Already a handful of vulnerable Democrats in the House and Senate say they remain open to whatever tax legislation is ultimately produced. And while progressive groups and lawmakers are deploying plans to rev up the base, it’s not clear taxes will energize people outside the Beltway as the more visceral topic of health care does.
    .
    .
    .

    Even so, some moderate and conservative Democrats haven’t ruled out backing the Republican plan, saying there’s a lot in there to like, including a lower corporate tax rate.

    “I have to sit down and review it, but I certainly want to take a look at it,” said Rep. Henry Cuellar (D-Texas), co-chairman of the centrist House Blue Dog Coalition, adding that other members of his group are doing the same thing.
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    Cuellar and other conservative Democrats were courted by the White House on taxes earlier this year but were excluded from House Republicans’ bill writing process.

    In the Senate, red-state Democrats up for reelection like Joe Manchin of West Virginia, Heidi Heitkamp of North Dakota, and Joe Donnelly of Indiana are considered gettable for Republicans on an upper-chamber tax bill that’s expected to come out next week.

    Notice still another reference to Joe “republican-in-drag” Donnelly. He voted for Trump’s Supreme Court Justice. He wants to throw me in prison for avoiding getting blood on my hands with Israel. Now he is “gettable”! Like that’s something new for Round Heels Joe D. (D-Israel, Heritage Foundation, and Super-Rich Bastards)

    h**ps://www.politico.com/story/2017/11/04/trump-gop-tax-bill-democrats-244529

  7. Annie
    November 28, 2017 at 23:07

    On a Facebook page I found this message with a picture of Trump, “Only Fake “Christians” could vote for a man who lies, steals, commits adultery, covets the success of others,and worships money as his God.” She also wants Michele Obama to run in 2020. On Timelines there are articles, about Ivanka Trump’s much criticized dress code, and on others, chit chats about sexual misconduct by various politicians and Hollywood stars. Each side gloating, depending on their political persuasion, when a dem is outed, or a republican. All a diversion from the hard core issues like Trump’s tax plan which will no doubt screw the very one’s who are heavily engaged in their continuous preoccupation with sex, clothes, and hate, which emanates from both sides of the Isle. The same is true for the mass media that continually covers the issues listed above in agonizing detail, or gives their own slant on political issues depending on who is lining their pockets. Divide and conquer, and keep the populace ignorant and engaged in issues that don’t impact their lives. One could also say under the Obama administration people didn’t fair well economically after the financial crisis when most of the money went to the top 10%. Both parties are equally culpable in enriching the rich and ignoring the needs of most of the people, but the Republicans certainly do it better.

  8. November 28, 2017 at 22:39

    During the 2016 campaign, Donald Trump was happy to claim that he will only pay little for his campaign, if he even pays anything. This alone shows how wealth controls our Democracy. The super-rich are buying up media, magazines like TIME to project their false narratives on the American electorate. Over time our Democratic values will become even more difficult to fight for. It will basically be run by an oligarchy.

  9. stan
    November 28, 2017 at 20:47

    Your heart’s in the right place, but you have not identified the key issue.

    If you want to help the middle and lower classes, delete line 7 from the IRS 1040 Federal Income Tax Form.

    Line 7 is where you enter your employment wages, salaries, and tips. There is no good reason for us to pay this tax. All other taxes on the form can stay as is. This will leave the money in our pockets and take away the tax on jobs which is putting American workers at a disadvantage compared to machines and foreign labor.

    Delete it! Destroy it! And then stomp on it! Get rid of this tax and quit re-arranging deck chairs!

    Delete line 7. Because a tax on jobs kills jobs.

  10. Al Pinto
    November 28, 2017 at 16:21

    “It is hard to overstate what happens when so much money concentrates in so few hands.”

    That started during Reagen era and completed during Obama era. The new tax plan, that attacks the middle-class, is just a continuation of transferring public funds to the very rich.

    Nothing to see here, much less doing something about the tax plan passing the congress…

Comments are closed.