elizabeth warren tax reform

Elizabeth Warren Eviscerates GOP Tax Plan: ‘American Families Are On The Ropes’

" Stock ownership is highly concentrated among the wealthiest 1 percent of Americans - and half of all Americans don't own a single share of stock - so the Republican plan will be a bonanza for America's richest."

By Elizabeth Warren

The Republican leadership has outsourced its economic agenda to a handful of billionaires and corporate donors. From attempting to kick millions off of health insurance to rolling back rules protecting worker health and safety, Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Paul D. Ryan (R-Wis.) have relentlessly pursued their donors’ interests at the expense of working families. The Republican tax plan unveiled Thursday is the latest example.

American families are already on the ropes. Booming corporate profits have not translated to higher wages for workers. The result is a middle-class squeeze: Most workers barely make more than what they did 30 years ago, while the costs of necessities such as housing, transportation, health care and education have risen sharply. If Congress tackled the middle-class squeeze head-on, it could provide more financial security for America’s families and produce faster economic growth.

But the Republican Party’s rich donors want tax giveaways, and the party is happy to oblige. According to estimates based on the original outline of the Republican tax plan, it showers $2.5 trillion on big corporations. Fewer than 10 years after sparking a devastating financial crisis and receiving billions of dollars in taxpayer bailouts, big banks would reap billions from the Republican plan. Wells Fargo is projected to receive a bigger tax handout than any other U.S. company.

Wealthy foreign investors also win big. By slashing the corporate tax rate, the Republican plan could put as much as $700 billion in the pockets of the foreign investors who now hold nearly 35 percent of the stock in U.S. companies. Is that what President Trump means by America first?

Multinational corporations are big winners, too, with a giveaway that establishes a lower tax on money earned abroad than money earned here at home. That makes it even harder for small U.S. businesses without overseas operations to compete with the giants. It also creates a powerful incentive for U.S. multinationals to shift investments – and jobs – abroad. Fewer investments in America will mean even lower wages for American workers.

But the GOP plan isn’t all giveaways. The Republicans have thrown a lot of working families under the bus. The Republican plan imposes a double tax on millions of families who pay state and local income and sales taxes. The plan also makes home ownership more expensive by nullifying the benefit of the mortgage interest deduction for many families.

It’s hard to sell a plan that imposes new taxes on millions of working families while shoveling money to big banks, multinational corporations and wealthy foreign investors. That’s why Republicans are pushing two big lies about their plan instead.

The first big lie is that the plan will “supercharge” economic growth, creating a rising tide that would lift all boats. Despite Republicans’ wild claims, independent analysts agree: The corporate tax cut at the center of the Republican plan will have a negligible or even a negative impact on economic growth.

The second big lie is that corporations will pass along their tax giveaways to workers in the form of higher wages. When multinational companies got a huge tax break under President George W. Bush, corporate profits shot up and shareholders grabbed nearly all the gains. When the United Kingdom cut its corporate tax rate by 11 percent, wages went down. Republicans know the facts aren’t with them, which is why Treasury Secretary Steven Mnuchin tried to bury Treasury’s own report showing that wealthy shareholders would be the overwhelming beneficiaries of a massive corporate tax giveaway.

In fact, corporate executives are already telling their investors that tax giveaways from the Republican plan will be passed not to workers but to shareholders, through bigger dividends and more stock buybacks. Stock ownership is highly concentrated among the wealthiest 1 percent of Americans – and half of all Americans don’t own a single share of stock – so the Republican plan will be a bonanza for America’s richest.

Meanwhile, the Republican plan will make the middle-class squeeze worse. As the government collects trillions less in corporate taxes in coming years, the national debt will explode. After voting over their careers to add more than $3 trillion to the debt through tax giveaways to the rich and the Wall Street bailout, Ryan and McConnell will suddenly rediscover their concern over the debt. They have already shown their hand, promising to pursue deficit reduction next year with trillions in cuts to Medicare, Medicaid, housing and infrastructure programs on tap. If Republicans push through those cuts to address the very debt they created, that means higher health-care, transportation and housing costs for many working families.

The GOP tax plan lays bare the corporate priorities of the Republican Party. The trillions that Republicans hand over to corporations could go to rebuilding our roads and bridges and energy grid, creating millions of high-paying jobs and a stronger economy. Or that money could raise millions of American children out of poverty. But jobs and children aren’t priorities for today’s Republican Party. Instead, it grovels before wealthy corporate donors who want tax giveaways – and want them now.

We can build an economy that grows faster and provides every American family with basic economic security. That work starts by shutting down the McConnell-Ryan $2.5 trillion corporate giveaway.


4 comments on “Elizabeth Warren Eviscerates GOP Tax Plan: ‘American Families Are On The Ropes’

  1. Republicans…whatever that means….better hope Lizzie takes up golf…fanatically…otherwise she might kick serious Presidential election ass in 2020.
    Better hide Trumpster….she’s not Hillary….

  2. Jesus… Liz should absolutely run for President. She is easily becoming one of my favorite US politicians.

    She’s absolutely right. Increasing wages would achieve the best and fastest growth. More spending would translate into more money being funneled into the system. I guess we’ve reached the inflection point where the top 0.1% realize they will get more money not by investing in new growth, but by consolidating asset ownership and profits from already established enterprises. (or it’s just way easier..)

    The US system is so unbelievably messed up. If there’s one thing Trump did [gasp] well, it was to bring these issues right front and center, even if he’s on the wrong side of things. It’s now really fucking clear just how sideways-fucked the whole system is.

  3. Reducing the corporate tax rate, which is the percentage of pre-tax income that must be paid, all else equal, would not increase economic activity. If a profit-maximizing rational corporation is charging $10 for an item, that is because it is more profitable to charge $10 than $9.99 or $10.01 taking into account market demand and competitive pressures. Thus, $10 is the price at which pre-tax profits are maximized. If a corporate income tax is levied or changed as a percent of pre-tax profits, $10 is still the price that maximizes both pre-tax and after-tax profits. Thus, the tax change can not cause any change in the price and is not passed on to consumers. The same applies to a corporation that is paying a wage that maximized its pretax profits, which is also the wage that maximizes its after-tax profits. Likewise, the level of output or number of employees that maximizes pretax profits is also the level of output or number of employees that maximize after-tax profits. However, that does not mean that changing corporate taxes other than the rate cannot impact economic activity.

    Allowing immediate expensing of capital expenditures or even just allowing vastly increased accelerated depreciation could bring forward capital expenditures that would have otherwise have taken place in the future. This would be particularly powerful if the immediate expensing or extra accelerated depreciation was set to only last for a specified period. Allowing immediate expensing of capital expenditures could even cause projects that would otherwise be not accepted on a net-present value analysis, be undertaken as a result of now having expected internal rates of return exceeding the hurdle rate…”

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