Gambling with our future
On Friday, President Donald Trump signed into law the Tax Cuts and Job Acts that was approved by the U.S. House of Representatives and Senate Dec. 20. Trump touts the measure as the largest tax cut in history, though CNN analysts put it at fifth since 1964, with Ronald Reagan being the record-holder on tax cuts.
“It’s been an amazing experience, I have to tell you. Hasn’t been done in 34 years, but actually, really hasn’t been done, because we broke every record. It’s the largest — I always say, the most massive — but it’s the largest tax cut in the history of our country — and reform — but tax cut,” Trump said on the South Lawn of the White House Dec. 20, according to a transcript of his remarks posted on the White House website.
Senate Majority leader Mitch McConnell offered his praise of Trump at the Dec. 20 event, saying this has been an extraordinary year of accomplishment for the president.
“Well, let me just say, Mr. President, you made the case for the tax bill,” McConnell said. “You’ve ended the overregulation of the American economy. And that, coupled with what we did last night and what the House finished this morning, means America is going to start growing again.”
House Speaker Paul Ryan, who visited Chestertown in October to tout the tax reform plan, also singled out Trump for pursuing the effort.
“Something this big, something this generational, something this profound could not have been done without exquisite presidential leadership. Mr. President, thank you for getting us over the finish line. Thank you for getting us where we are,” Ryan said. “The message to the families in America who’ve been struggling, paycheck and paycheck — your tax rates are going down and your paychecks are going up.”
While Trump, McConnell, Ryan and others hail the Tax Cuts and Jobs Act as relief for working class families, we see that only in the short-term, and even then, it may be iffier than most think. The taxes that are really getting cut are for big corporations, and those breaks are expected to add $1.5 trillion to the national debt in 10 years. What Republicans hope is that by cutting the corporate tax rate, businesses will expand like never before, offsetting that revenue loss.
U.S. Sen. Ben Cardin, D-Md., expects the tax reforms to make wealth disparities even more extreme. In comments made Dec. 19 on the Senate floor, he said middle-income taxpayers are going to be the ones “asked to foot the $1.5 trillion bill” that is going to come due.
“The American people understand that this tax bill will hurt middle-income families. They know it will add to the deficit. This bill, which has been advertised as a tax cut, is not good for America. It’s not good for middle-income families and it’s not good for our economy,” Cardin said.
U.S. Sen Chris Van Hollen, D-Md., also opposed the measure, issuing a statement saying that Republicans were supporting special interest groups and corporations over their constituents. He said that in 2019, 11 million families will see their tax bills go up.
“The bottom line is clear: under this bill, millions of middle-class families are going to pay more, while big corporations, rich foreign stockholders, hedge funds, and the top one percent will get a huge windfall,” Van Hollen said. “Despite what Republicans have promised, this legislation will not spur economic growth — but it will cause our national debt to explode and leave working families without a bump in their paychecks.”
U.S. Rep. Andy Harris, R-Md.-1st, who joined Ryan in October on the Chestertown visit, said in a statement that the Tax Cuts and Jobs Act preserves deductions “that workingand middle-class Americans rely on.” He highlighted how it is expected to simplify the tax code and the process for filing returns.
“The Tax Cuts and Jobs Act will support economic growth and stimulate job creation right here in America. Lowering tax rates for small and family-owned businesses and for larger employers will encourage American businesses to reinvest in their own operations, increase their employees’ pay, and make the United States more competitive in the global marketplace,” Harris said.
But if the tax reform plan does all that Republicans say it will, then why did our governor, himself a member of the GOP, announce that he plans to submit legislation to the General Assembly to “mitigate potential negative impacts” of the act.
“It’s clear that some people’s taxes will go down, and some will go up,” Gov. Larry Hogan said in a Dec. 20 statement. “I am announcing today that our administration will submit legislation that will protect our taxpayers, and which will mitigate negative impacts of these changes to state taxes. Our goal will be to leave that money in the pockets of hardworking Marylanders.”
Our tax code is overly complicated and working families do need tax relief. Much of the Republican sales pitch sounds good. But they will need to make up that $1.5 trillion somehow. When he visited Chestertown with Ryan, Harris said cutting spending alone will not reduce the debt. The government is gambling with our future to provide tax cuts now for wealthy corporations.