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Robert Reich: A Guide To Why Trump-Republican Tax Plan Is A Disgrace – OpEd

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Here are the 3 main Republican arguments in favor of the Republican tax plan, followed by the truth.

1. It will make American corporations competitive with foreign corporations, which are taxed at a lower rate.

Rubbish.

(1) American corporations now pay an effective rate (after taking deductions and tax credits) that’s just about the same as most foreign based corporations pay.

(2) Most of these other countries also impose a “Value Added Tax” on top of the corporate tax.

(3) When we cut our corporate rate from 35% to 20%, other nations will cut their corporate rates in order to be competitive with us – so we gain nothing anyway.

(4) Most big American corporations who benefit most from the Republican tax plan aren’t even “American.” Over 35 percent of their shareholders are foreign (which means that by cutting corporate taxes we’re giving a big tax cut to those foreign shareholders). 20 percent of their employees are foreign, while many Americans work for foreign-based corporations.

(5) The “competitiveness” of America depends on American workers, not on “American” corporations. But this tax plan will make it harder to finance public investments in education, health, and infrastructure, on which the future competitiveness of American workers depends.

(6) American corporations already have more money than they know what to do with. Their profits are at record levels. They’re using them to buy back their shares of stock, and raise executive pay. That’s what they’ll do with the additional $1 trillion they’ll receive in this tax cut.

***

2. With the tax cut, big corporations and the rich will invest and create more jobs.

Baloney.

(1) Job creation doesn’t trickle down. After Ronald Reagan and George W. Bush cut taxes on the top, few jobs and little growth resulted. America cut taxes on corporations in 2004 in an attempt to get them to bring their profits home from abroad, and what happened? They didn’t invest. They just bought up more shares of their own stock, and increased executive pay.

(2) Companies expand and create jobs when there’s more demand for their goods and services. That demand comes from customers who have the money to buy what companies sell. Those customers are primarily the middle class and poor, who spend far more of their incomes than the rich. But this tax bill mostly benefits the rich.

(3) At a time when the richest 1 percent already have 40 percent of all the wealth in the country, it’s immoral to give them even more – especially when financed partly by 13 million low-income Americans who will lose their health coverage as a result of this tax plan (according to the Congressional Budget Office), and by subsequent cuts in safety-net programs necessitated by increasing the deficit by $1.5 trillion.

***

3. It will give small businesses an incentive to invest and create more jobs.

Untrue.

(1) At least 85 percent of small businesses earn so little they already pay the lowest corporate tax rate, which this plan doesn’t change.

(2) In fact, because the tax plan bestows much larger rewards on big businesses, they’ll have more ability to use predatory tactics to squeeze small firms and force them out of business.

***

Don’t let your Uncle Bob be fooled: Republicans are voting for this because their wealthy patrons demand it. Their tax plan will weaken our economy for years – reducing demand, widening inequality, and increasing the national debt by at least $1.5 trillion over the next decade.

Shame on the greedy Republican backers who have engineered this. Shame on Trump and the Republicans who have lied to the public about its consequences.


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Robert Reich

Robert Reich

Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fifteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "The Common Good," which is available in bookstores now. He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.

5 thoughts on “Robert Reich: A Guide To Why Trump-Republican Tax Plan Is A Disgrace – OpEd

  • December 17, 2017 at 3:35 pm
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    so this Republican is voting Demoncratic at every opportunity..Ihope it’s not too late

    Reply
  • December 17, 2017 at 6:01 pm
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    Lord Kelvin plainly stated, and I paraphrase, ‘if you can’t describe it in numbers, you don’t know anything about it.’ It has also been said that ‘figures don’t lie, but liars figure.’ Ignorant of the sagacity of the elders, Dummycrap Reich starts out blowing hot and cold citing vague unsubstattiated quantities right and left with nary a number in sight. Then, of a sudden, he echoes the draft tax bill: the reduction of the corporate rate from 35% to 20%. Since the reduction is 35% to 21%, Robby Boy’s essay was probably written at the time the tax bill was introduced; his failure to revise is telling.
    Once in the realm of numbers he becomes full retard bolstering his fictional argument with 35% of this and 20 percent of that is what is. Reminds me of Euler, who after a convoluted formula and explanation to match stated, ‘Therefore God exists.’
    The tax plan is then blamed for reducing government spending on “education, health and infrastructure (Dummycrap for funding indigence)” and thus somehow the competitiveness of the American worker.
    Directly from the Dummycrap playbook, Rabid Robert turns attacking Reagan and Bush, authors of significant periods of prosperity and disparages the idea of trickle-down economics.
    With a quick recitative of the old saw, Robby reminds us that 1 percent own 40 percent of the wealth. And remembering that 35 percent of stock owned by foreigners he cited earlier. Gosh, using Robby’s calculus this means 75 percent have everything and the worker are left noncompetitive, impoverished, unhealthy and without infrastructure.
    As you said, Bobby, rubbish.
    You lost, and we won: grow up.

    Reply
    • December 18, 2017 at 2:08 am
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      I like Buffet’s solution on this. He was on CNBC and wants everyone to make their voices heard particularly thru the internet. Use people pressure.

      The salaries of Congress are all in the high 6 figures FOR LIFE but the average salary of a teacher is $40,065 and that of a deployed soldier is $38,000. Following is where cuts should be made:

      He could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of congress are ineligible for re-election.

      1. No tenure/no pension. A congressman/woman collects a salary while in office and receives no pay when they’re out of office.
      2. Congress (past. present and future) participates in the Social Security system.
      3. Congress can purchase their own retirement plan just as all Americans do.
      4. Congress all no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI
      or 3%
      5. Congress loses their current health care system and participates in the same health care system
      as the American people.
      6. Congress must equally abide by all laws they impose on the American people.
      7. All contracts with past and present congressmen/women are void effective ____________. The
      American people did not make this contract with Congressmen/women.
      Congress made all these contracts for themselves. Serving in Congress is an honor not a career. The Founding Fathers envisioned citizens legislators so ours should serve their term(s) then go home and go back to work.

      Each person should send this to a minimum of twenty people, it’s time!

      Reply
  • December 17, 2017 at 7:37 pm
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    Gee Mr. Kountz, the only numbers I see in your response are those took from Professor Reich’s article. What would Lord Kelvin think? And calling the professor names (dummycrap – 3 times, retard, Rabid Robert, Bobby – 2 times) sure strengthens your argument. My seventh grade teacher had a word for those who used such tactics.

    Reply
  • December 17, 2017 at 9:40 pm
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    How is that an intelligent response when you resort to name calling. You are the child here, John Kountz. You need to grow up and realize that you are, in fact wrong.

    Reply

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