The Corporate Tax Cut

After a huge tax cut for the wealthiest veiled as Trumpcare failed again in late September the Republicans, aided by President Trump, immediately shifted their focus to what they call tax reform. Both were smokescreens for a tax cut. Trumpcare had little to do with health care and despite rhetoric to the contrary, Trump’s tax reform proposal has little to do with benefiting the middle class and everything to do with providing a return on investment to Republican financiers. Today I’d like to focus on just one of many fallacies in the “package”. Let’s explore.

One of the main provisions of the incomplete package is a significant lowering of the corporate tax rate. In fact, this provision is so important to Trump and the GOP that it is one of two red lines for Trump. Despite right wing mythology and noise to the contrary it would do nothing to improve the lot of the average American!

Any prudent business investment decision is based on demand or the legitimate projection of an increase in demand. In fact America’s economy is 70% consumer demand. America’s largest corporations are sitting on record amounts of cash and have been for several years now. The right wing proposes a large tax cut to give them more money. It is not lack of cash on hand or the unavailability of loans that is preventing business from hiring and/or expanding; it is the lack of demand. If you are in the widget business and you are already making more than the amount of widgets you can sell and your warehouses are full why would you build another factory or warehouse? The answer is that you wouldn’t. If I put more cash in your checking account will that increase demand? The answer is: it will not.

Economically, we have three types of people in America: the “have a lots”, the “have somes” and the “have nots”. Most Americans fall into the second category, (part of why America IS a great country), but those who control corporate America fall into the first category and they, not the all-important second group are who disproportionately benefit from the Trump tax cut.

The Trump “tax reform” plan is just another attempt to give a giant tax break to Trump and people like him. All it will accomplish is to drastically increase the deficit and national debt without helping the economy. History and managerial ability tell us both. Unfortunately our President doesn’t study history and, if you really look at his record, is a very poor businessperson!

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