Opinion: The deep, deep cynicism of ‘tax reform’

(AP)

In a speech in Missouri later today, President Trump will attempt to relaunch his administration’s tax-reform crusade. If you believe what he says, his plan will be the bestest, biggest, boldest tax reform ever devised in the whole history of man.

It will be beautiful; it will be huge, that I can tell you.

However, once you peer inside that nicely wrapped giftbox — when you peel off the gilt-edged rhetoric and the beautifully tied bow — what do you find inside?

You find nothing. The box is empty.

Despite months of promises that it would deliver its tax-reform package in two weeks, or next month, or by the Fourth of July or certainly by Labor Day, the Trump administration has now conceded that it is not capable of producing an actual plan or an actual bill.  Instead, as with the health care debacle, it will punt the drafting of a bill to the sure hands of congressional leaders.

We do, however, have some guidance as to how the White House will attempt to sell this nonexistent plan. It will be described in populist terms, as an effort to “derig” or “unrig” the economy on behalf of the little guy and gal, the American worker, and as an effort to punish the special interests that for too long have held sway in Washington.

One of the administration’s two point men in that effort will be top economics adviser Gary Cohn, who left his job as president and COO of Goldman Sachs, along with a $285 million severance package, to join the Trump administration. The other will be Treasury Secretary Steve Mnuchin, also formerly of Goldman Sachs and currently husband of America’s own Marie Antoinette, the lovely Louise Linton.

I’m sure that both Cohen and Mnuchin — populists through and through — will have the best interests of America’s working people foremost in their minds.

We also have some idea of the basic premises behind this tax-reform effort, thanks to a “senior White House official” who may or may not have been Mnuchin or Cohn.

“The president is going to lay out his vision to bring back Main Street by reducing the crushing tax burden on our companies and our workers and also to restore our competitive advantage by repairing and reforming our badly broken tax code,” this person told the press this week under the cover of anonymity.

So let’s explore the two basic premises underlying that mission statement.

PREMISE No. 1: American companies are suffering under a “crushing tax burden” that makes it impossible to turn a profit and compete internationally.

Is that true?

 

 

Gee, look at that. Contrary to the rhetoric, corporate profits AFTER TAXES are actually at all-time record highs. In the past 15 years, while median household incomes have declined, corporate profits AFTER TAXES have more than tripled. The assertion of the Trump administration and the Republican Party is that tripling isn’t nearly good enough, that corporate AFTER TAX profits will have to rise even farther and faster to help the working people of this country.

Me, I ain’t buying it.

Now, some might argue that the chart above is somehow misleading. So let’s look at it another way, at corporate income taxes as a share of the overall national economy. If corporate tax burdens have indeed soared so high as to become crippling, as the rhetoric would have you believe, then that ought to show in the data, right?

Hmmm. Corporate taxes have bounced around between 2 and 3 percent of the national economy for almost 40 years now — basically since the Reagan era. And as a share of the national economy, today they are roughly half what they were during the post-World War II boom years. Again, Premise No. 1 seems to have no basis in truth. Life has seldom if ever been better for corporate America and Wall Street.

PREMISE No. 2: Because of these allegedly crippling tax burdens, American companies have been unwilling or unable to hire. Lifting that burden will lead to more investment and the creation of millions more jobs, and higher-paying jobs as well.

Right off, we face a basic math problem. The current unemployment rate is 4.3 percent, near the historic low for the past 45 years, and we’ve now recorded 82 consecutive months of job growth, the longest such streak on record. The raw numbers of unemployed today are comparable to the booming late 1990s, when the U.S. population was 50 million smaller. In short, we can’t create millions of new jobs if we don’t have people able to take them.

Then there’s the premise hidden within the premise: If corporate after-tax profits increase still further, will those additional profits be invested into job creation and higher pay, as Trump and others claim, or will those billions be used to further benefit the investing class, compounding the problem of income inequity?

Based on history, they will be used to further benefit the already wealthy.

As we’ve seen above, corporate after-tax profits have more than tripled since 2000. The Dow Jones Industrial Average has doubled in that time frame. Meanwhile, median household income has fallen, and the share of the economy that ends up in the paychecks of workers has declined significantly. Repeat after me: Trickle down does not work.

Writing in the New York Times, Sarah Anderson of the Institute for Policy Studies uses AT&T as an example. Between 2008 and 2015, AT&T paid an effective corporate income tax of 8 percent, far below the draconian rates cited by Republicans. The company did not use its after-tax profits to hire more people; indeed, it produced those profits in part by cutting its payroll by almost 80,000 over that time frame. It also took $134 billion in profits and invested it not in job-creating growth or expansion, but in buying up its own stock, driving its price higher and higher.

And because the stock price rose, AT&T CEO Randall Stephenson was able to collect $124 million in stock options and grants over that time frame.

When President Trump stands before his Missouri audience today and talks of “derigging” the economy, when millions of Americans hear him talk about fighting for the little people, for the hard-working Americans who just want a fair shake, many Americans will hear in those words an implied promise that he has no intention whatsoever of keeping.

Like any good salesman, Trump will be selling them the sizzle, but not the steak. They’ll be able to smell that steak, they’ll be able to hear it cracking and popping in the grill. But the steak itself — think of it as a huge, beautiful well-done Porterhouse, slathered in ketchup as Trump likes it — is being reserved for someone else.

 

 

Reader Comments 0

2293 comments
Jack Warner
Jack Warner

Says the resident liberal who believes it's okay to steal people's hard working money.

Thomas Adams
Thomas Adams

Why is it the AJC never covers the cynicism of the mainstream media? Probably, just not racist enough!

USMC2841
USMC2841

I agree with Jay.  Break up Amazon, Google, Facebook etc.  They swing too much influence with our politicians in an effort to avoid paying taxes and practicing fair hiring policies.

LogicalDude
LogicalDude

td: "Who worked in the chicken plants before the invasion? "



Can you expand what you mean by "invasion"? 

Nick_Danger
Nick_Danger

@LogicalDude 

Does he mean "before the plants lowered their offer price for labor below what the market would bear"?

LogicalDude
LogicalDude

@Nick_Danger @LogicalDude I think he's using the outright racist term "invasion" for when companies openly invited immigrants (documented or not) to come work for subpar wages. 


Mike Pregon
Mike Pregon

Get rid of the current corrupt tax system Fairtax.org

honested
honested

Idiot, pretend Energy Secretary rick perry will be 'realaisng 500k barrels of oil from the Strategic Petroleum Reserve to 'prevent gas prices from spiking'....

Maybe someone should take him aside and show him how this refining thingy works so he knows that OIL IS PILING UP and oil prices have been dropping.


Do we have anyone in the current administration that has half a clue?

stefpe
stefpe

@honested "Do we have anyone in the current administration that has half a clue?"

No.

THBAEOSATSQ.

LogicalDude
LogicalDude

@honested well, I noticed prices have already spiked a little bit. 


But sure.  Release some from the reserves since the distribution pipelines around Houston are shut down. 


See if that actually holds prices down. 


BAHAHAHAHAHAHA

PaulinNH
PaulinNH

@honested  Seriously?  He thinks that the problem with gas prices is a shortage of crude to refine?  And Perry is the guy in charge of nuclear weapons!

USMC2841
USMC2841

@honested I'm certain you know more about oil than the former Governor of Texas.

USMC2841
USMC2841

@PaulinNH @honested The Secretary of Energy does not have access to nuclear weapons.  He does have input on Nuclear Energy policies.

Andy158
Andy158

Come on Tiny, you ducked this. Who is going to work in the chicken processing plants?


"The jobs will sit empty, Sparky. You aren't going to get white Americans to do chicken processing or pick crops. It's been tried."

td1234
td1234

@Andy158 Who worked in the chicken plants before the invasion? 

LogicalDude
LogicalDude

@td1234 @Andy158 "invasion?" 


dude, the employers basically begged for cheap labor, and invited these folks over. 


Please, do not misrepresent an invitation as an "invasion" now. 

honested
honested

@td1234 @Andy158 

The chicken peeling companies could always improve wages, benefits and working hours.

I would gladly pay a fair price for sensibly produced chicken.

Eye wonder
Eye wonder

@LogicalDude @td1234 @Andy158

Maybe by "invasion" he means the time that black people came here in chains and sold themselves into slavery, thereby "invading" the American mainland????


(Just trying to give tiny dog the benefit of the doubt, in case anyone thinks I was trying to be mean.)

USMC2841
USMC2841

@Andy158 Remove the deflated wages caused by a job market intentionally flooded with labor and then remove the incentives to not work.  You'll see a large portion of Americans who have opted not to seek employment need to take the jobs.  


$15/hr and uncontrolled immigration are two conflicting policies.

StraightNoChaser
StraightNoChaser

Typical now td is talking about shot guns like that is suppose to scare someone.  

td1234
td1234

Good man standing up for his fellow citizens and their property against the thugs. 


"HOUSTON, Texas — A man claiming to be an “ex-SWAT deputy” tells would-be looters on camera, “I will cut your [expletive] in half,” while holding a shotgun.

A woman asks the unidentified man about the situation outside the Little York Food Mart located in the flood devastated area of Houston’s east side. “It’s a shame,” the man responds. “We need more real men out here to step up and protect where you live.” Graphic language can be heard in the footage."

honested
honested

@td1234 

Another day were some prove the anti-social sickness that plagues our society.

td1234
td1234

@honested @td1234 Oh so the man should have allowed the looters to go in and take what they wanted. 


Yeah, we see where your beliefs are. 

KUTGF
KUTGF

@td1234  In the meantime, I have a very good female friend who rented a truck and drove a truckload of water and clothes and food to LA.  I helped with cash for the truck.  

Let's talk about who is a good person standing up for their fellow citizens in their time of need.

td1234
td1234

@Eye wonder Watch a video in front of your very eyes and then call it fake. LMAO at the true delusion of the progs. 

td1234
td1234

@KUTGF Not to me but it sure put a lot of egg of the face of a few prog posters. LMAO

td1234
td1234

@Nick_Danger That is the implication of bedwetting eds post. A good citizen with a gun either stops the looters or allow them to loot. 

KUTGF
KUTGF

@td1234 @Nick_Danger  Sweetie, a "good citizen" when people are in need of food and water, gives from their heart and opens the doors to food and water.  

Jesus said "I'll cut you down if you try to take my fish".

HDB0329
HDB0329

@td1234 @KUTGF ...interesting that in most states, looting in a time of natural disaster is NOT illegal.....


"Looting as a form of protest – or survival – is seldom a cause for arrest. Why? Perhaps because the sheer numbers of perpetrators often overwhelm law enforcement's ability to respond. Or, possibly police stand down, because theft is a lesser consequence of civil unrest.

Regardless, looting is not a crime in most states – in fact, only a handful of states have laws on their books specifically addressing the act of looting: Alabama, California, Illinois, Louisiana, Mississippi, North Carolina and South Carolina. And usually these laws are in effect only when a state of emergency has been declared.

Looting in the aftermath of a widespread disaster, as seen in New Orleans following Hurricane Katrina, is widely reported but rarely prosecuted. Such "looting for survival" – gathering water, food and medical supplies from abandoned merchants -- is generally not bound to warrant criminal penalties."


https://www.thestreet.com/story/12851733/1/ferguson-missouri-unrest-why-looting-isnt-illegal.html