Robert Reich: 5 Reasons Why Trump’s Corporate Tax Cut Is Appallingly Dumb – OpEd

Donald Trump wants to cut the corporate tax rate from 35 percent to 15 percent, in order to “make the United States more competitive.”

This is truly dumb, for 5 reasons:

1. The White House says the United States has one of the highest corporate tax rates in the world. Baloney. After corporate deductions and tax credits, the typical corporation pays an effective tax rate of 27.9 percent, only a tad higher than the average of 27.7 percent among advanced nations.

2. Trump’s corporate tax cut will will bust the federal budget. According to the Congress’s own Join Committee on Taxation, it will reduce federal revenue by $2 trillion over 10 years. This will either require huge cuts in programs for the poor, or additional tax revenues from the rest of us.

3. The White House says the tax cuts will create a jump in economic growth that will generate enough new revenue to wipe out any increase in the budget deficit. This is supply-side nonsense. The Congressional Research Service reviewed tax cuts since 1945 and found no evidence they generate economic growth. Ronald Reagan and George W. Bush both cut taxes, and both ended their presidencies with huge budget deficits. Bill Clinton raised taxes, and the economy created more jobs than it did under Bush or Reagan.

4. American corporations don’t need a tax cut. They’re already hugely competitive as measured by their profits – which are at near record highs.

5. The White House says corporations will use the extra profits they get from the tax cut to invest in more capacity and jobs. Rubbish. They’re now using a large portion of their profits to buy back their shares of stock and to buy other companies, in order to raise their stock prices. There’s no reason to suppose they’ll do any different with even more profits.

Don’t fall for Trump’s corporate tax giveaway. It will be a huge windfall for corporations and a huge burden on ordinary Americans.


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Robert Reich

Robert Reich

Robert B. Reich is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, and Time magazine named him one of the 10 most effective cabinet secretaries of the 20th century. He has written 14 books, including the best-sellers Aftershock, The Work of Nations, Beyond Outrage and, most recently, Saving Capitalism. 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.

One thought on “Robert Reich: 5 Reasons Why Trump’s Corporate Tax Cut Is Appallingly Dumb – OpEd

  • April 26, 2017 at 11:29 pm
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    Even commenting in an area he supposedly has a modicum of exposure to, the Malicious Midget stumbles on his own assumptions.
    Come on Robbie, your 5 reasons are cut whole cloth from Dummycrud propaganda.
    In fact I’m amazed you didn’t accuse POTUS Trump of feathering his own nest as a recipient of the proposed tax cuts.
    You make up for this omission by contradicting yourself. “Baloney. . . . the typical (United States ?) corporation . . . 27.9 percent …” is indeed higher the “average 27.7 percent.” Of course the 0.2 points don’t count in your world of higher buffoonery.
    Your source, the New York Times, fails to cite your putative ’27.7percent’ preferring to stay with the current 35 percent which by all measures is significantly higher than your ’27.7 percent.’
    Insofar as the remainder of your droolings, piffle I say.
    American corporate profits are, again by your weasel wordings of ‘near’ have yet to broach records levels.
    Emboldened by your vapid assertions you continue to confuse good management with that of brave new worlders. Buying stock and enlarging corporate interests leads to more jobs and has no relationship to stock prices. In a jumble of irrelevancies you discover (obviously spurred by the New Times article cited earlier) the (unnamed) panel’s disagreement concerning the consequences of the proposed tax cuts.
    Gosh, Robbie, the pressure to publish or perish has pushed you into a state of dementia.
    We won: your guys lost: Get over it.

    Reply

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