Update: In the early hours of Saturday morning, Senate Republicans passed the tax overhaul.
By this point we’ve all heard about the cartoonish immorality of the GOP tax plan — raising taxes on the working poor while cutting taxes for the super-rich.
But setting aside these moral considerations, the Republican tax reform package is also a catastrophe as economic policy. As designed, it will super-charge trends that have stalled growth and wages in the United States for the last four decades. Neither the House nor the Senate plan will do anything to spur investment and both will bolster a tax code that incentivizes short-term speculation and the squeezing of workers, supply chains and consumers.
Our economy has plenty of problems, but too little cash at the top is not one of them. Tax cuts for corporations and the rich — along with a suite of policies pushed over 40 years — have shifted how, when and where corporations and individuals decide to invest, spend and save.
Today, corporations are not investing because shareholders pressure managers to deliver immediate returns and because industries are so consolidated that dominant firms don’t actually need to invest or innovate to remain competitive. Private investors are not putting their money into productive new enterprises, but rather are earning their returns from the sky-rocketing value of assets — stocks, financial products, real estate, art — that can be passed down to future generations.
What this means is that businesses have plenty of profits, but they’re not using those funds to do things that actually create jobs or grow the economy. Instead of funding new research to create better products, expanding operations to boost jobs or increasing wages, these businesses are instead choosing to give money to shareholders — a practice that benefits short-term investors but not the workers who make the company run. A massive tax cut to corporate profits will increase that pool of available money, while also increasing the returns to short-term investors now tempted by an even bigger potential payout.
When not rewarding shareholders directly, businesses have been busy buying up other firms. By providing companies more cash on hand, the GOP tax bill would likely mean even more mergers, which frequently result in cuts to jobs, the erection of barriers for small business and the curbing of consumer benefits. Activist investors will have greater incentive to push for such mergers as the super-rich see a chance to pass un-taxed estates on to the next generation.
The GOP tax plan will exacerbate these trends, increasing shareholder payouts at the expense of creating jobs. As a result, middle-class Americans will face both tax increases and a weaker safety net.
Under the Senate tax plan, almost everyone loses. On average, the bottom three-fifths of income earners would see a tax increase, according to analysis from the Institute on Taxation and Economic Policy. As a result of the individual mandate repeal, 13 million Americans could lose health insurance by 2027, according to the CBO. New methods for calculating the Earned Income Tax Credit will result in lower payouts to the working poor. The loss in government revenue forecloses the possibility of job-creating public investment in infrastructure, education and care work.
All of this is unfair, but it’s also bad economics. Too often, progressives cede economic arguments to the Right, but we should not hesitate to combat the tax plan over the issues of jobs and growth. By further consolidating wealth and power in the hands of the very few, the GOP tax plan is designed to double down on the same strategy that has failed working Americans for decades.
We’re not backing down in the face of Trump’s threats.
As Donald Trump is inaugurated a second time, independent media organizations are faced with urgent mandates: Tell the truth more loudly than ever before. Do that work even as our standard modes of distribution (such as social media platforms) are being manipulated and curtailed by forces of fascist repression and ruthless capitalism. Do that work even as journalism and journalists face targeted attacks, including from the government itself. And do that work in community, never forgetting that we’re not shouting into a faceless void – we’re reaching out to real people amid a life-threatening political climate.
Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.
As a dizzying number of corporate news organizations – either through need or greed – rush to implement new ways to further monetize their content, and others acquiesce to Trump’s wishes, now is a time for movement media-makers to double down on community-first models.
At Truthout, we are reaffirming our commitments on this front: We won’t run ads or have a paywall because we believe that everyone should have access to information, and that access should exist without barriers and free of distractions from craven corporate interests. We recognize the implications for democracy when information-seekers click a link only to find the article trapped behind a paywall or buried on a page with dozens of invasive ads. The laws of capitalism dictate an unending increase in monetization, and much of the media simply follows those laws. Truthout and many of our peers are dedicating ourselves to following other paths – a commitment which feels vital in a moment when corporations are evermore overtly embedded in government.
Over 80 percent of Truthout‘s funding comes from small individual donations from our community of readers, and the remaining 20 percent comes from a handful of social justice-oriented foundations. Over a third of our total budget is supported by recurring monthly donors, many of whom give because they want to help us keep Truthout barrier-free for everyone.
You can help by giving today. Whether you can make a small monthly donation or a larger gift, Truthout only works with your support.