Taxpayers, you’ve been scammed
So you go out for dinner with a wealthy acquaintance. "I'll take care of everything," he says, and orders you a hamburger. Then he orders himself an expensive steak and a bottle of wine, which he doesn't share. And when the waiter comes with the check, he points at you and says, "Charge it to his credit card."
Now you understand the essence of the Trump tax cut, signed into law a little over two months ago.
The key thing you need to know is that right now the
Why? The federal government, as an old line says, is a giant insurance company with an army. Most of its costs come from
Meanwhile, about your companion's steak dinner: Most of the tax cut actually consisted of huge tax breaks for corporations, which is in effect a big tax cut for stockholders. And while many Americans own a bit of stock via their retirement accounts, even if you include these indirect holdings, more than 80 percent of stocks are owned by the wealthiest 10 percent of the population. On the face of it, the wealthy are giving themselves a big gift, and sending the bill to the middle class.
Now, the tax cut's defenders insist that it won't really work that way, that the benefits of lower corporate taxes will trickle down to workers instead. How's that supposed to happen?
Well, the theory is that lower corporate taxes will draw in lots of money from overseas, which corporations will invest in new plants and equipment, which will drive up the demand for labor, which will raise wages. And to be fair, there's probably something to this theory-something, but not very much
First of all, even if the process were to work as advertised, it would take a long time-probably decades.
Second, the story relies on a long chain of events with multiple weak links. For example, corporations with monopoly power won't see lower taxes as a reason to invest more; they'll just take the money.
But wait-weren't there a lot of stories about companies using the tax cut to give their workers bonuses? Yes, there were-but only because the news media let themselves get played. Most of those bonuses would have happened anyway: In an economy with low unemployment, there are always some companies deciding to pay a bit more to attract workers. But companies had every incentive to pretend that the tax cut was responsible, if only to curry favor with the Trump administration.
And in any case the bonus hype was out of all proportion to the reality. So far, we've seen about
So the message to middleclass taxpayers is, if you think you were helped by the tax cut, think again.
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