Government Shutdown On-going: Trump 2017 Tax Cut in Place But Not as Promised

Another Typical GOP Trickle Down Tax Cut Law 

(As usual for the Very Top) 

One Possible Another good part 

(Wait and see re: health care)

Good part for small select category

One good part (Time will tell for future application)

Two words come to mind when assessing Trump (actually a lot of words come to mind, but these two seen to be mainstream): Serial Liar…

[I have never in my life called any president a liar – many have told lies, yes; but Trump lies 24/7 and always for his own benefit and glorification and self-promotion].

Case in the point and the subject for this post a CBS news analysis of the Trump-GOP 2017 tax cut:

Trump made some bold promises last year when he signed the Tax Cuts and Jobs Act (the TCJA) into law on December 22, 2017. Among the boldest promises: That middle-class workers would see a pay increase of $4,000 to $9,000 and that “the richest Americans wouldn't gain at all.”

By those measures, the tax reform package has fallen short, some experts say. Wage growth remains modest, and most middle-class taxpayers have seen only a middling financial boost from lower tax rates, which declined by about 1 percent to 4 percent. 

William G. Gale, the co-director of the Urban-Brookings Tax Policy Center, in a recent article for the Brookings Institution wrote: “[… the biggest benefits went to the rich and increased the inequality of income. The tax cuts are unlikely to boost long-term growth and could mire the economy in debt…].”

Gale also wrote regarding the CBO’s projected deficit $1.9 trillion over the next 10 years that: “It is unclear how the TCJA will eventually be financed, but in the most likely scenarios, most households will end up worse off than had the TCJA never passed. In short, the TCJA likely made the current generation of high-income households better off at the expense of lower-income households and future generations.”

(I note: This outcome is precisely how most DEMS predicted would be the impact of that tax cut. Further, most DEMS still do not believe or trust the GOP’s “Bible version of Trickle down: Give tax cuts to the top and they will help everyone else.” That continues to be the myth and it likewise continues to fail and quite frankly it has since the Reagan days).

So, to be more precise and as the tax law turns one-year old, here's a look at the biggest winners and losers from the landmark measure.

Winners: Corporations

Corporations are now taxed at a 21 percent rate instead of the previous 35 percent. That reduction was framed as a way to allow companies to keep more profits, which they would (Trump and the GOP professed) give increased working wages, thus leading to that promised $4,000 to $9,000 pay increase. (You might want to insert a Rick Perry “oops” here).

In reality, Corporations are diverting much of those proceeds to investors, not to workers. Only 6 percent of tax cut-related savings have gone to workers, according to Just Capital, a nonprofit advocacy group. By contrast, about 56 percent of those savings have been funneled to investors in the form of buybacks and dividends.

Through mid-December, U.S. companies spent a record $1 trillion this year on buying back their own stock, which props up their value.

Winners: The rich

The rich are getting richer thanks to the tax bill; even faster than before. 

The top 20 percent of earners around the country have seen a nearly 3 percent gain in after-tax income since the tax cut bill was passed (according to the Tax Policy Center). That means a typical household in that group, which has annual income of roughly $348,000, will enjoy a boost of about $10,000. 

Meanwhile, income for the lowest 20 percent of earners rose only 0.4 percent after the tax bill – and that amounts to a benefit of a mere $56.00.

After-tax income for middle-class Americans – those in the middle 60 percent increased between 1.2 and 1.9 percent this year.

Winners: Some small businesses and freelancers

Some small businesses and freelancers are benefiting from the tax law's more favorable treatment of the so-called “pass-through entities, such as sole proprietorships and partnerships.”

The TCJA lets them deduct 20 percent of their earnings from taxable income. That means a freelancer earning $100,000 will only pay taxes on $80,000 of income, effectively allowing them to enjoy $20,000 in income tax-free. But, there are some limitations.

Significant: Taxpayers who earn more than $157,500 for single filers, or $315,000 for joint filers may not qualify for the pass-through deduction, for example. 

(I note: So, I guess Trump considers them “rich.” Thus reflecting back on his aforementioned promise: “The richest Americans wouldn't gain at all.” Again “serial liar” strikes home).

Losers: Taxpayers in high-tax states

In some cases, taxpayers will end up owing more next April, especially those who live in high-tax states. That's because the TCJA caps the state and local tax (SALT) deduction at $10,000. For example, in New York State where income and property taxes tend to be high, residents will pay an additional $14.3 billion in taxes in 2018, said AG Barbara Underwood earlier this year. 

The IRS warned this week that some taxpayers who expected refunds may actually end up owing due to the new tax law. That includes people who also live in high-tax states. 

Losers: Future taxpayers

Although the tax cuts put more money in people's pockets, one day they will have to be paid for, and that tab is going to be mammoth. The law right now as it stands projects an increase in deficit by $1.9 trillion over the next 10 years (that according to the CBO).  

My 2 cents: This whole bill is a huge wait and see law.

Thanks for stopping by.