The Tax Cuts and Jobs Act (Tax Act) was passed in December 2017. It promised to provide a healthy cut in taxes for all citizens and to make U.S. corporations more competitive internationally by correcting alleged inequities in taxation. The impact of this Act was projected by the CBO to increase the national debt above the previously-projected debt levels by $2.3 trillion over 10 years.
What’s really happened since then? I am a middle class tax payer with a consistent income. My income tax has been reduced by only half of 1% as a result of the Tax Act. The Tax Act changes for me will expire in 2027. Corporations have reaped a windfall with the majority of this windfall going to stock buy-backs and dividends benefitting stockholders. The Tax Act changes for them are permanent. Corporate tax payments have lagged below projections by 40%, which will drastically increase debt above that originally projected. Of the 36 countries in the Organization for Economic Cooperation and Development (OECD) 35 of those countries get more corporate tax revenue as a percentage of GDP than the U.S. Part of the justification for the Tax Act was that corporate tax loopholes would be closed. Yeah, right. Once again we get the bone and the wealthiest get the gold.
How will we pay this debt back? Some may deny it but the targets are U.S. entitlement programs – Social Security, Medicare, Medicaid. The Trump administration’s 2021 budget proposes cuts of $1.67 trillion in health spending – including $457 billion less for Medicare. The president has, by executive order, suspended payroll taxes on those earning less than $100,000 as a COVID-19 relief. Payroll taxes fund 90% of Social Security costs. This executive order is clear evidence of attack on Social Security.
Charles Davis II
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