PRESIDENT Donald Trump has been in office for almost a year now but has yet to score a legislative victory. This is why he has been so adamant in getting his Republican legislators to pass the GOP tax bill before Christmas.
However, even his party mates have aired their concerns about the tax bill, especially after the nonpartisan Congressional Budget Office and the Joint Committee on Taxation studies reveal that such bill cutting taxes favors the richest of the rich Americans which is forecasted to increase the country’s debt and budget deficit by $1.4 trillion.
The studies further revealed that “starting in 2021, a year after the next election, Americans earning $10,000 to $30,000 a year or less would pay higher taxes if the bill passes thanks to plans to repeal a core element of Obama’s Affordable Care Act. The JCT also calculates that most Americans earning $75,000 or less would be paying higher taxes by 2027.”
“The middle class, especially those living in high-tax states, who deduct their local property, income and sales taxes from their tax due could lose out from the complete or partial repeal of the deductions. Moreover, about 13 million Americans could lose health insurance coverage over 10 years under the Senate bill. Add to these will be the social services that benefit the poor, the vulnerable and the middle class which are always the ones slashed to spend money.”
Trump has been claiming that this tax-reform legislation will protect low- and middle-income households, “not the wealthy and well connected.” He even said, “This is going to cost me a fortune…This is not good for me.”
Kababayans who are not fans of Trump shared these comments:
“The Trump/Republican tax bill is another form of supply side or trickle down economics made popular during the Reagan administration. The general premise is by cutting taxes on the very wealthy and big corporations, the amount of money they will save will be used to fund investments that would benefit the entire economy and trickle down to the rest of us. Hence, the term trickle down.
“Cutting taxes will increase the budget deficit. However, proponents argue that increased investments will stimulate the economy which will lead to more jobs and income for everyone else. A growing economy with more jobs and income available for most of the population will increase tax revenues for the government. Thereby offsetting the increase in budget deficits brought about by cutting taxes for the very wealthy and big corporations.
“That’s how it should work in theory. But theory and reality are two different things. First of all the very wealthy and big corporations are not obligated to use the money they save by not paying taxes for investments. They will only invest in the real economy by expanding the business if they think such expansion will reasonably result in profits. Otherwise, they will just put the money in the financial markets such as stocks and bonds. Doing so will not benefit the real economy. Big corporations can use the money saved by not paying taxes not for investments but for buying their own share with an aim to boost short-term share prices.
“If the very wealthy and big corporations do not increase investments in the real economy that will boost tax revenues for the government, how would the government fund these tax cuts? The government can do a lot of things to address this. However, none of which will benefit the middle class and the poor. First, they increase taxes on the rest of us to offset the tax cuts for the wealthy and big corporations. Second, to prevent the budget deficit from further ballooning, the government will cut or decrease funding for social programs that benefit the middle class and the poor such as healthcare and education. Third, the government can borrow and/or print more money.
“These are the possible effects if the government do the things I mentioned above. The US government should implement a progressive tax system. This means that those who can bear the burden of taxation more such as the very wealthy and big corporations should be the ones to pay more in taxes. By doing the opposite, the U.S. government has made the tax system more regressive harming the middle class and the poor more. If taxes are to be cut, it should be done by reducing taxes on the middle class and the poor. This will have an effect on increasing disposable income. An increase in disposable income means consumers will have more money to spend. Remember that the U.S. economy is at least 67 percent driven by consumer spending. The middle class with its dwindling resources and the poor with very few resources are the ones that will suffer great harm if funding for vital social programs such as healthcare and education. The U.S. has the highest healthcare cost in the world and it keeps rising. How can ordinary citizens pay for the exorbitant costs of healthcare on their own? If the government decides to print more money it may risk increasing inflation. Runway inflation will be detrimental to the middle class and the poor who have dwindling purchasing power brought about by stagnating incomes and wages. And if the U.S. government decides to borrow money by issuing U.S. Treasuries, the very wealthy and big corporations can use the money they saved by not paying taxes to purchase these securities. In turn by they earn interest by lending money to the U.S. government.
“The worst thing that this Trump/Republican tax plan will do is further worsen the ever-widening income and wealth inequality here in the US. In short, this will only make the fat cats fatter at the expense of everyone else. Let’s not forget Donald Trump and his family will be a big beneficiary of this tax plan.” — Mike Bertuben
“CBO is an economic body that calls a spade a spade and work[s] for the country, not a party.
“America cannot afford a $5 trillion tax cut. Based on what I’ve read on the details of what has been put forward by the Trump Administration so far, debt could rise to 111 percent of GDP by 2027 – a new historical record. In dollar terms under this estimate, debt held by the public would total $31 trillion in 2027 and gross debt would total $36 trillion. Simply put, growth can’t pay for this tax cut. Generations of Americans, including my children, will be saddled with more taxes to pay for Trump’s give away to the richest.
Call your representatives in Congress and tell them the trump tax bill helps the rich by screwing you. Tel no. (202) 224-3121.” —Oj Jorge
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Gel Santos Relos is the anchor of TFC’s “Balitang America.” Views and opinions expressed by the author in this column are solely those of the author and not of Asian Journal and ABS-CBN-TFC. For comments, go to www.TheFil-AmPerspective.com, https://www.facebook.com/Gel.Santos.Relos