“Once you realize that trickle-down economics does not work, you will see the excessive tax cuts for the rich as what they are – a simple upward redistribution of income, rather than a way to make all of us richer, as we were told.” -Ha-Joon Chang, economist and author
Taxpayers in Newnan are busy doing their taxes.
Many are angry that the promised cornucopia of tax benefits has not positively affected them. And, they should be given what was promised by our Congressman, Drew Ferguson.
After the GOP Tax Cut for the Wealthy Act – officially mistitled the Tax Cuts and Jobs Act, TCJA – passed in Dec. 2017, Rep. Ferguson indicated that it would be “once in a generation tax reform for American families and businesses alike.” He was wrong about the “reform” part, but right about it being once in a generation. Since the TCJA will directly increase our national deficit by nearly $2 trillion over the next ten years (Tax Policy Center ,12-18), more than one such law would bankrupt the nation.
Ferguson wrote about this bill being an alternative to sending “hard-earned money to a wasteful bureaucracy” in Washington. Yet, you and your GOP colleagues controlling Congress managed to cut taxes while significantly increasing spending – especially military. As any Accounting 101 student can tell you, if you cut revenue and increase expenses, you create debt. And, that is exactly what you have done. Our annual deficit has gone up significantly in recent years under a supposedly conservative Republican Congress and is projected to reach $984 billion by the end of this year, over double the $438 billion figure in 2015.
Ferguson also indicated that the TCJA would create “higher wages for our friends and neighbors.” Again, unless you live in a neighborhood of millionaires, that is not entirely accurate. Wealthy taxpayers with incomes in the top 1 percent got an average annual tax cut of 3.4 percent, $51,000. Those with incomes of less than $25,000 only got $60, less than one half of 1 percent. Middle income families only received a tax cut of $900, 1.6 percent.
Rep. Ferguson also writes about how small business would be helped by the TCJA. Specifically, he was pleased because the original act as approved by the GOP House would “eliminate the death tax” on small-business owners.
What he did not say was how he defined small businesses and their owners. Prior to the TCJA, the estate tax only affected wealthy business owners who left estates of more than $5,490,000… and double that for a couple. The final TCJA as signed by Trump gives a full exemption of $22,360,000 for a couple… not exactly the small businessman you were led to believe would benefit. The TCJA is set up to help doctors, lawyers and business chiefs… not the little guy with a landscaping business.
As for corporations, the TCJA reduced the corporate rate from 35 percent to 21 percent, the lowest since 1939. Supposedly, a large proportion of the additional profits were going to rank and file employees, but in most cases that did not happen. Since the passage of TCJA, there have been a record number of mergers. Corporations are increasing dividends to shareholders – wealthier Americans – and doing stock buybacks, none of which help the hourly worker.
The TCJA was just a continuation of “voo doo economics” to use Bush 41's term. Supply-side economics – Reaganomics – has been thoroughly discredited. Tax cuts in the long run don’t pay for themselves, as any decent economist will tell you. When Reagan tried it, he ended up raising taxes multiple times to offset his earlier cuts. Bush 41 raised taxes further to attempt to balance an out of whack budget deficit caused by the Reagan tax cuts.
You would have thought that the GOP would have learned, but obviously they did not. What ever happened to the fiscal conservatives in the Republican Party?
Jack Bernard of Fayette County, a retired corporate executive, was a two-term county commissioner and former county Republican Party chairman in Jasper County.