If the tax cut passes, it will constitute the largest heist in human history. This is daylight robbery by the super-rich against the rest of society: homeowners, students, the middle class, the young, the poor, indeed everybody who doesn’t own a significant stock portfolio. The result will put America into a tailspin: falling home prices, rising student debts, and a massive mortgage on the future, all because of the insatiable greed of David and Charles Koch, Steve Mnuchin, Gary Cohn, and Donald Trump, and of Wall Street and the C-suites they represent.
The robbery is nearly complete, with just a few more votes needed in the Republican-led Congress. The perpetrators will use corporate media to keep the public distracted. Their well-funded campaign will flood the mass media to assure Americans that up is down, black is white, and that gifts to the super-rich mark a giant stride for workers.
Where does the money come from? Some comes from cancelling longstanding middle-class tax exemptions to pay for cuts for the ultra-rich. Mostly the cuts are a mortgage on the future. The Republicans are hiking the public debt by at least $1.5 trillion over the coming decade, and probably by much more. The transfer of wealth to the super-rich will be paid for by future cuts in government services and infrastructure, as well as by future tax hikes on workers to cover interest payments on the public debt.
The most recent data by the bipartisan Joint Tax Committee suggest that in 2019 the tax cut proposed by the Republican House leaders would cut federal taxes by $192 billion. The top 1 percent of taxpayers, with incomes of around $500,000 and above, would pocket around 28 percent of the overall tax cut. The richest 6 percent of taxpayers, with incomes of around $200,000 and above, would pocket 56 percent of the total tax cut.
These cuts won’t pay for themselves. They won’t even stimulate growth, since any modest incentives for corporate investment will be offset by lower incentives for housing investment, and because of an overall rise in deficits and uncertainty over future policies. Indeed, the Senate Republicans will make the corporate tax cuts temporary, so that their robbery can pass with just 50 votes rather than 60 votes, and so that any positive incentive effects on long-term corporate investment will be given up from the start.
Of course, the tax cuts also won’t boost wages. Construction jobs will decline. Infrastructure spending by the government will become crowded out by the tax cuts. And any new investments in factories are likely to accelerate automation. If the real idea is to boost wages, then the right policy is to expand the Earned Income Tax Credit (EITC), but of course neither Trump nor Cohn nor the other plutocrats would benefit from that pro-worker policy.
The biggest abuse of all in the House plan is the proposed elimination of the estate tax, a tax that is paid only by the super-wealthy. This is Trump and the other plutocrats at their most vulgar, yet even this policy is peddled as a boost for small businesses. One has to marvel at the audacity and mendacity in this messaging, and their confidence in our collective passivity and gullibility.
If the tax cuts pass, America’s decline into a violent, divided, semi-democracy will continue. The super-rich will temporarily augment their wealth while the rest of society will awaken poorer to a country with a fast-deepening financial crisis. The public hate and scorn of the plutocrats will soar. Responsible business leaders will regret that they remained silent while the greediest among them perpetrated this injustice. China’s ascent to world leadership will be boosted by America’s divisions, lack of public investments, and bulging debts.
Now is the time to be counted. If you are a CEO, tell the truth to the public: Your company and your personal bank account do not need this transfer from average Americans. If you are silent, expect to face the future wrath of the public. If you are a Republican politician falling into the party line, good luck and good riddance. Your days are numbered. If you are young, poor, with student debt, or are a new homeowner, or just an average taxpayer who will be called on to pay the interest on the soaring public debt, get ready to get mad. Better yet, raise your voices immediately against the tax cuts as vociferously as you can, so that a united country says no to the plutocracy.
Jeffrey D. Sachs is university professor and director of the Center for Sustainable Development at Columbia University, and author of “The Age of Sustainable Development.”