Opinion: Pay attention to the tax scam

Trump economic adviser Gary Cohn, left, and Treasury Secretary Steve Mnuchin are both former executives with Goldman Sachs, and together are heading up the Trump administration’s supposedly “populist” tax reform plan. (AP)

When he’s not using Twitter to call a Gold Star widow a liar or to attack NFL players as traitors, Donald Trump likes to tweet about the rise in the stock market, for which he takes enormous credit.

Of course, that steady rise in the Dow is a continuation of an economic recovery that began eight years ago now, under the presidency of He Who Must Not Be Named. However, rather than get distracted into a Trumpian contest of whose Dow is bigger, I thought it might be nice to hearken back to the days of yore and attempt to discuss actual policy choices, using these outmoded things once called “facts.” Wanna give it a try?

For example, here’s a fact:

While Trump brags about the record-high stock market and low jobless rate, he is simultaneously attempting to make the case that corporate taxes are so high that they are crippling economic growth, making it impossible for U.S. companies to compete and costing us jobs.  Both things cannot be true at the same time.

If U.S. corporations are finding it impossible to compete internationally and impossible to make a decent profit because of high taxes, then it cannot also be true that corporate after-tax profits and the stock market are at all-time record highs. Yet as Trump himself reminds us, there they are.

Here’s another fact: Thirty years ago, corporate after-tax profits accounted for 4.1 percent of the nation’s gross domestic product. This year, corporate profit — again, AFTER taxes — accounts for 9.2 percent of GDP, more than twice as high as in 1987.  Yet the poor, underfunded, unrewarded corporate sector still insists that it is being treated and taxed unfairly.

Here’s yet another fact: The Republican “tax reform” plan, which is being sold as a “huge” middle-class tax cut, is instead a huge tax cut for the top 1 percent of U.S. households, leaving everyone else fighting over the crumbs. Every single nonpartisan analysis of the plan reports that same finding, over and over again.

So how do you sell that proposal to a public that is strongly opposed to tax breaks for the wealthy and for corporations? How do you sweeten the pot? Well, you make up facts. In this case, the Trump administration has  fabricated a claim that reducing the corporate income tax will somehow result in an income increase of $4,000 to $9,000 for the average U.S. household. And they’re already inviting the American public to fantasize about how they’ll spend all that extra cash:

In truth, Sanders might as well be asking what Americans would do with the new unicorn that they’ll also be getting, because that’s just as likely to happen as that magical increase in income.

The White House argument is the familiar trickle-down argument: By making the rich much richer, the wealthy will have more money to invest, and more investment will produce more jobs, and more jobs will produce higher pay. That theory has been tested a number of times in a number of places, with repeated failure. It was tried in Kansas, with completely disastrous results. It was tried under President George W. Bush, who pushed through two major tax cuts early in his term, but by the end was presiding over the greatest economic collapse in 80 years.

Another example also occurred under President Bush, with passage of the Homeland Investment Act in 2004. That law gave corporations the one-time chance to take hundreds of billions of dollars in profits that they had stashed overseas and bring them back here to the United States, where they would be taxed at the very low rate of 5.2 percent. The corporations lobbying for that bill promised that they would use the money to create some 500,000 new jobs and to invest heavily in research and development. They also promised that they would not use the bonanza to simply reward their own shareholders.

In fact, the law expressly forbid companies from using the repatriated profits to pay dividends to their stockholders or to buy back shares in their own company. And you know what? They did it anyway.

According to one later study published by the National Bureau of Economic Research, corporations did not “boost domestic investment, employment, or R&D,” as promised. Instead, “every extra dollar of repatriated cash was associated with an increase of $0.92 in payouts to shareholders, largely in the form of share repurchases.”

Eight cents for thee, 92 for me. Trickle trickle trickle….

 

Reader Comments 0

2004 comments
DecaturDramaQueen
DecaturDramaQueen

The GOP civil war, with Democrats united, will hopefully tank this nasty tax scheme. It robs us of healthcare to give handouts to the wealthiest 1% in order to keep stock market from tanking. Everybody knows it (except dimwits who still think Trump is MAGA) 

Sam Coley
Sam Coley

During Obama, the GDP never grew above 3%...worse of any President economy ever. With Trump its already grew above that, simply by him creating a better business atmosphere and perception. Just like illegal immigration---he talked tough and that was enough to give the perception that things are actually going to get done on the border...and illegal immigration is WAY down. Trump is proposing cutting business taxes for the creation of jobs. From the starting line, Trump was already ahead of Obama from the beginning simply by him stating he believed in America first, the middle class...and loving this country and believes in its ideals. Obama missed the mark on everyone of those points....

David Radzieta
David Radzieta

Yep he did absolutely nothing but embarrass America.

Andy Smith
Andy Smith

Jay on economics, what a joke! Job killing regulations dropping like flies and the market likes what it sees. After years in mud, American economy is reawaking under Trump!

Summer Smith
Summer Smith

The AJC and Jay Bookman are so laughable. Anything they post or print is just anti-American communist propaganda. Stop supporting the AJC and their advertisers.

Nicole Queenof Herown
Nicole Queenof Herown

Trump only picked up from where Obama had already began cleaning up the mess that was left behind by Bush. A little like finishing the puzzle someone else started. When people start seeing beyond the tone of one's skin and focus more on what's best for America, a conclusion that None of the Presidents did what they promised. I didn't care for Obama as president and I don't care for Trump as president. Bill Clinton is by far the best president America has had.

Gerald Miller
Gerald Miller

If Obama was in there it would still be below 2.0

Glen Wollerson
Glen Wollerson

Unfollow the divisive AJC. It's all yellow journalism and no Constitution

Mark A. Walker
Mark A. Walker

Donald Trump is so dumb. He actually wipes his nose with his adult diaper. smh "What's that smell?" "It wasn't there before?" "Why are my eyes watering?" "Oh, wait!" "I got to blow my nose again!" "Big blow!" "Really big blow!" :D

Shelly Fear Robison
Shelly Fear Robison

As he should! If it was tanking he would get the blame! Cant have it both ways! Stop making something out of nothing! Do you not have something better to do!

Ryland Crider
Ryland Crider

Who else would get it it didn’t rise until trump got in office

Patricia Young
Patricia Young

Um, trying to repair the recession that was created by Bush may have hindered that a smidge!

Jan Jackovitz Ferrara
Jan Jackovitz Ferrara

The president has very little to do with the economy or the stock market. That's not how our government is set up.

Steven Bosarge
Steven Bosarge

Sure he does, how many times did the stock market break records under Odumbass? That's because Obama's policies led to uncertainty and investors sat on their money! Trump is the man!

Patricia Young
Patricia Young

Um,thee great recession could've caused that,thank bush?

Sean Chatham
Sean Chatham

What a joke. If HRC was in the White House, she would get ALL of the credit. You lost, folks. At some point, you’re going to HAVE to get over it.

David Anderson
David Anderson

If HRC were president, would you feel the same about the current conditions?

Sean Chatham
Sean Chatham

David Anderson If HRC was President, I would get out of the way and let her lead. Did it for 8 years. Really not that tough.

Amy Parks
Amy Parks

Big stocks means companies are making $ already, so where are the jobs? ?? Oh, I forgot, they need tax cuts b4 they can hire more people. ..lmfao baaaaaahhhhhhhh if you believe that I have a bridge in Brooklyn I will sell you ;-)

Lynda Dial
Lynda Dial

I DON'T EVER RECALL THE STOCK MARKET GOING THIS HIGH WHEN OBOZO THE CLOWN WAS IN OFFICE........OH...THATS RIGHT.....IT DIDN'T.

David Anderson
David Anderson

You do realize Obama had quite a few record closes as well. But then again, your use of "Obozo" makes it clear you're not interested in reality.

Patricia Young
Patricia Young

Well,If Obama wasn't trying to bail us out of the great recession that Bush created then maybe he could've!

Lindon Hooper
Lindon Hooper

He made it all happen. When he took office we was at an old time low.

John Gilbert Colgan
John Gilbert Colgan

In 9 months the working man's 401ks has increased in value as much as the previous 8 years. You aren't a smart man, but even Forest Gump gets it and gets your bs propiganda

Anthony Humble Albert
Anthony Humble Albert

That's what white people invest their whole life into an when it crash they become serial killers or commit suicide

Marc Chessler
Marc Chessler

Rev Farrakhan called...he says you are doing good work

Amy Parks
Amy Parks

Marc Chessler David duke said the same about you.

Alan Hall
Alan Hall

It's only a scam if it comes from a Dem

Buddy Hart
Buddy Hart

From the minute he was elected the stock market took off plus building, our economy and jobs. You say?

John Webb
John Webb

Well its never been this high before, and unemployment is the lowest it's been in a longbtime.

Amy Parks
Amy Parks

They have both been on a steady increase for years now. This didn't happen over night & definitely not in 9 months.

Katherine Hunt Arabis
Katherine Hunt Arabis

If you honestly believe these people care about the middle class, I've got nothing. Nothing at all for you.

Kenny Jordan
Kenny Jordan

The sun shines brighter, birds are singing, fish are jumping higher in the brook. Trump is the poster child for Self Admiration. What a clown.

Max Brill
Max Brill

All of the media said the market would tank once trump was elected. Was that a lie, or just the media has no clue? Explain it without a left or right spin.

Amy Parks
Amy Parks

The stocks always react to a "change " after the election, they did go down, until trump said they are getting tax cuts...then they exploded.. my question is since the stocks are so good companies are making money where are the jobs why do corporations needs tax cuts to hire more people if they are already making money?? Short answer is, they don't, but would love a tax cut anyways...of coarse.

David Anderson
David Anderson

Max, you're already imposing a left/right spin. You discount Fox News and all those talk radio spinners from being part of the media. As for the market, give it another six months, then we'll talk. It's a lot of talk and promises boosting confidence in the market.

Max Brill
Max Brill

Perhaps. But my point is the market exploded while mainstream media said the opposite . That is a fact. A lie, or the mainstream is clueless .

Patricia Young
Patricia Young

Give it time.When the deficit gets bigger,companies keep the savings for stockholders and there's not enough money to keep up the government then you'll are that crash!

Max Brill
Max Brill

That is not the point. The media lied or didn’t know what they were talking about. Of course there will be a correction.

Stephen Scruggs
Stephen Scruggs

Trump brought confidence, the stock market reacts adding 5 trillion . Unemployment down at a 16 year low. Are you so stupid you credit this to the past incompetent president? Ahahaha and ahahaha

Shawn Q. Ouroboros
Shawn Q. Ouroboros

If you refuse to read, you should refuse to participate. It's like watching a toddler pretend they know about advanced quantum physics and will tell you all about it.

William Waugh
William Waugh

Read a book about the economy and thank Obama for saving our behinds. Trump can try to take credit when his first budget comes together.

Bobbi Liptrap
Bobbi Liptrap

The stock market will take a tumble. Only a fool would believe otherwise.

Diane Lequia Mahoney
Diane Lequia Mahoney

Oh wait....weren't the stock markets supposed to CRASH when Trump took office? Who is changing their stories now?

Patricia Young
Patricia Young

Yep,Trump is riding on Obamas coattails alright.Give it time,Crash!

Michael Ludin
Michael Ludin

Stephen , has the village idiot died and in all Darwin’s wisdom you took over as the village idiot

Quinn Floyd
Quinn Floyd

You T folks are telling me that he who has accomplished nothing except executive orders, can cause all of this stock market influx in 9 months. REALLY! You believe that? He did this all by himself? Really?