Tax on Future

OF ALL the lies Republican lawmakers and President Trump tell about their tax bills, the biggest whopper is that these windfall tax cuts for corporations and the wealthy would generate so much growth that they would pay for themselves.

In other words, Republican leaders aren’t just trying to transfer money from current middle-class and poor Americans to corporations and the very wealthy. They are also trying to transfer money from future middle-class and poor Americans to corporations and the very wealthy.

At the heart of these bills is a cut in the corporate tax rate to 20 percent, from 35 percent, that the administration and congressional leaders argue will encourage businesses to invest, hire more people and give workers raises. They base this claim on cherry-picked studies finding that countries with lower corporate tax rates have had higher wage growth, while ignoring evidence that past cuts to the corporate tax rate in the United States and Britain did not lead to economic booms or higher incomes.

“From real world experience I can tell you that tax rates literally never came up in any discussion about hiring or pay levels,” David Mendels, a former top executive at Brightcove and Adobe, wrote on LinkedIn recently. Companies invest more when they anticipate greater demand for their goods and services. With the economy close to full employment and corporate profits at record levels, it is hard to see a tax cut doing much to stimulate investment.

Republicans appear to be hoping that Americans would be so happy with temporary tax cuts that would kick in next year that they would look for someone other than Mr Trump or Mr Ryan to blame when things didn’t work out as promised.

At least three Republican senators need to vote no to stop that from happening. Surely there are three such lawmakers with the integrity and decency to stop this boondoggle.