From Robert Reich Blog
Tax cuts for the rich and tax hikes for everyone else are dangerously close to becoming law.
(Image by YouTube, Channel: The Young Turks) Permission Details DMCA
Here are the three main Republican arguments in favor of the Republican tax plan, followed by the truth.
1. It will make American corporations competitive with foreign corporations, which are taxed at a lower rate.
(1) American corporations now pay an effective rate (after taking deductions and tax credits) that's just about the same as most foreign based corporations pay.
(2) Most of these other countries also impose a "Value Added Tax" on top of the corporate tax.
(3) When we cut our corporate rate from 35% to 20%, other nations will cut their corporate rates in order to be competitive with us -- so we gain nothing anyway.
(4) Most big American corporations who benefit most from the Republican tax plan aren't even "American." Over 35 percent of their shareholders are foreign (which means that by cutting corporate taxes we're giving a big tax cut to those foreign shareholders). 20 percent of their employees are foreign, while many Americans work for foreign-based corporations.
(5) The "competitiveness" of America depends on American workers, not on "American" corporations. But this tax plan will make it harder to finance public investments in education, health, and infrastructure, on which the future competitiveness of American workers depends.
(6) American corporations already have more money than they know what to do with. Their profits are at record levels. They're using them to buy back their shares of stock, and raise executive pay. That's what they'll do with the additional $1 trillion they'll receive in this tax cut.
2. With the tax cut, big corporations and the rich will invest and create more jobs.
(1) Job creation doesn't trickle down. After Ronald Reagan and George W. Bush cut taxes on the top, few jobs and little growth resulted. America cut taxes on corporations in 2004 in an attempt to get them to bring their profits home from abroad, and what happened? They didn't invest. They just bought up more shares of their own stock, and increased executive pay.
(2) Companies expand and create jobs when there's more demand for their goods and services. That demand comes from customers who have the money to buy what companies sell. Those customers are primarily the middle class and poor, who spend far more of their incomes than the rich. But this tax bill mostly benefits the rich.