Why can’t Republicans just be honest about their massive tax cuts? They want to give the bulk of their massive tax cuts to the richest Americans and profitable corporations while claiming their cuts benefit middle class Americans. They allege that their proposal to slash the corporate tax rate from 35% to 20%, an enormous 42% cut, will benefit the middle class. Various tax policy research groups have analyzed the Republicans’ claims and agree the biggest winners are the richest Americans and the most profitable companies, not the middle class. The nonpartisan Tax Policy Center reports that, “higher-income households would get the largest cuts — both in terms of dollar amounts and as a percentage of after-tax income.”
Republicans attempting to sell their massive corporate tax cut dishonestly claim these companies need this tax saving to create jobs. Here’s the catch with their ridiculous claim: American companies are sitting on unprecedented piles of cash or other liquid assets, yet they haven’t used that money to create jobs or hire more workers. According to Business Insider, hardly a flaming liberal publication, American companies are hoarding nearly 2 trillion dollars in cash.
“The top 24 of the largest American companies are holding on to a whopping $1.01 trillion in cash reserves, up 1.63% from the first quarter, according to analysis of second quarter earnings reports by Bank of America.”
If American companies have vast amounts of cash on hand, why aren’t they investing and creating more jobs? The simple answer is that companies don’t create jobs. Increased consumer spending creates more demand and companies respond to increased demand by expanding production and hiring workers. It’s estimated that 68.8% of the American economy is dependent on consumer spending according to the Bureau of Labor Statistics, August 29, 2017. The American economy is driven by consumers that must have increasing discretionary income in order buy company’s goods and services. The biggest stimulus to grow the economy is consumer spending.
Republicans assert that cutting taxes for wealthy Americans and corporations will stimulate the economy, their totally debunked trickle-down economic theory. They continue to peddle this economic fantasy that cutting taxes for the rich will result in economic growth. They are counting on 3-4% growth rate to pay for the tax cuts.
Economic experts argue that increasing wages, increasing savings and decreasing debt for consumers is the most effective driver of economic growth. Based on that premise, the most effective way to grow the economy is to put more money in the hands of these consumers. Rather than cut taxes for the wealthy, the focus should be on increasing lower and middle class incomes. Therefore, any tax cuts should be weighted to the middle class not rich Americans or profitable companies.
The Republicans need to come clean on their giveaway to the rich. They can’t claim they are cutting taxes to benefit the middle class by shoveling tax cuts to the rich. If they are really interested in helping the middle class, give them tax relief, not rich Americans that don’t need them.
by Rick Smith