Frank Clemente: GOP tax bill is creating jobs -- abroad

1909 painting “The Worship of Mammon,’’ by Evelyn De Morgan.

Via OtherWords.org

We should have told them to be more specific. When President Trump and his fellow Republicans in Congress called their massive tax overhaul last year the “Tax Cuts and Jobs Act,” most of us assumed the jobs would be in the United States.

Now we know better.

Yes, unemployment in this country is low, but there’s no evidence it’s because of last year’s GOP tax cuts. More likely it’s simply a continuation of an eight-year trend of steady job growth that began under President Obama.

On the other hand, we can reasonably connect specific losses in U.S. employment to the Trump-GOP tax law. For instance, last summer General Motors decided to build its Chevrolet Blazer in Mexico rather than the United States.

Then this November, it announced plans to close five North American assembly plants and lay off nearly 15,000 workers in such states as Ohio, Michigan and Maryland.

The Republican tax law encourages that kind outsourcing because it charges corporations just half the tax rate on foreign profits that it charges on domestic earnings. It’s hard to imagine a stronger lure for corporations to pack up their plant and equipment and ship them offshore.

But you don’t have to imagine, because it’s right there in another part of the law: The more U.S. corporations shift factories and other sources of production overseas, the lower the U.S. taxes are on their foreign profits.

It’s almost as if the GOP law was designed to promote outsourcing.

It certainly isn’t doing much for American workers, despite all the hype and promises from President Trump and other Republicans. Trump claimed his giant corporate tax cut would result in employers giving every working family a $4,000 raise.

Workers are still waiting.

Almost a year after the law was enacted, only 4 percent of them have gotten a raise or even a one-time bonus tied to the tax cuts. Where the tax-cut money is really going — as many of us predicted — is into the bank accounts of CEOs and other senior executives and rich shareholders.

Since Trump’s tax cuts, corporations have announced 117 times more in stock buybacks ($832 billion) than they’ve spent on worker pay hikes ($7 billion). Buybacks pump up the price of shares, further enriching stockholders, including company execs, much of whose compensation is in company stock.

GM is a perfect example. It got a tax cut this year of over $150 million, with more to come in future years. That’s on top of a one-time tax cut probably worth hundreds of millions on the $6.5 billion in profits it stashed offshore.

GM used that money to buy back $100 million of its own shares. It gave nothing to its workers — unless you count pink slips.

And it will undoubtedly continue to lavish its top executives with huge pay packages, such as the $22 million in total compensation chief executive Mary Barra received last year. That’s almost 300 times more than the average GM employee makes.

All this demonstrates a simple truth: Tax cuts for the wealthy and corporations help the wealthy and corporations, not American workers. In fact, those high-end tax giveaways wind up hurting working families and their communities.

Damage doesn’t just come from outsourcing and layoffs. The Republican tax law will eventually cost $1.9 trillion. That digs a deep debt hole that GOP leaders have already admitted they plan to fill with money taken from Social Security, Medicare, Medicaid and other services that the American people rely on.

If we really want to help the laid-off GM workers and towns facing empty factories, we need to reverse the tax cuts for the rich and corporations. We also need to stop the offshoring of American jobs by passing the “No Tax Breaks for Outsourcing Act” now before Congress.

The next time Republicans claim a tax cut slanted towards the wealthy will create jobs, we’ll make sure to ask: Where?

Frank Clemente is executive director of Americans for Tax Fairness.

Frank Clemente: House GOP pushes through another deficit-exploding tax cut for the rich

“Avarice,’’ by Jesus Solana.

From OtherWords.org

While Americans were transfixed by Senate hearings over Brett Kavanaugh’s alleged sexual assaults, House Republicans quietly passed another enormous tax handout for the wealthiest Americans.

Round one of this giveaway cost $2 trillion. Round two is even bigger — it would explode the deficit by more than $3 trillion. And once again, it’s largely a giveaway to the wealthiest Americans — and could mean devastating service cuts for ordinary people.

President Trump claimed the first tax plan would be “rocket fuel” for the economy, but there’s no evidence it’s done anything to improve the economic wellbeing of working families.

The centerpiece of the first plan was a massive tax cut for corporations. The corporate tax rate was reduced by 40 percent, plus a $400 billion tax break for multinational corporations on their trillions in accumulated offshore profits.

So it’s not surprising corporate profits leaped by over 16 percent in the second quarter of this year compared to the same three months last year — the best showing in six years. Meanwhile corporate tax payments are on schedule to come in $120 billion lower than in 2017.

But corporations aren’t sharing their winnings.

Trump guaranteed working families a $4,000 raise if corporate taxes were cut. Yet average real wages have been stagnant for the past year. Only 4 percent of American workers have gotten any kind of payout related to the corporate tax cuts, and most of those have been one-time bonuses, not permanent raises.

There’s no sign tax cuts have spurred hiring. Job growth under President Trump is merely a continuation of six years of job growth under President Obama — and Obama created more jobs in his last 19 months than Trump has in his first 19 months.

Cutting business taxes was supposed to cause an explosion of investment. Yet business investment has increased at a slower rate this year than at several periods during the Obama recovery.

Instead of investing in workers or equipment, companies are mostly buying back their own stock, a maneuver that artificially inflates the share price and rewards CEOs and wealthy investors. Corporations have announced $733 billion worth of stock buybacks since the Trump-GOP tax law was enacted — 103 times more than the $7 billion workers have gotten in bonuses and raises.

For the money McDonald’s spent on stock buybacks, it could’ve given every one of its 2 million employees that $4,000 raisePresident Trump promised them. But they didn’t.

The economic miracle envisaged by the tax plan’s backers hasn’t materialized. But the dire consequences predicted by the plan’s opponents certainly have. To cover the deficits created by their own tax cuts, Republicans want to cut trillions of dollars from essential public services.

Despite promising never to touch Medicare or Medicaid, President Trump is seeking $1.3 trillion in cuts to those programs and to the Affordable Care Act (ACA). The House GOP wants to cut a total of $5 trillion, including $2 trillion from health care. Trump and House Republicans would also slash funding for students in school and college, among many other service cuts.

Round two of the Trump-GOP tax cuts would only repeat the same destructive pattern: huge handouts to the rich, huge deficits, and huge service cuts for working families. The big difference is that the budget hole created would be much deeper this time, making the resulting cuts to services that much more severe.

No wonder they did it while Americans were distracted.

The sane policy would be to repeal the existing tax cuts for the wealthy and corporations and use the money raised to strengthen Medicare, Medicaid, and other essential services the American people rely on.

Frank Clemente is the executive director of Americans for Tax Fairness.