The problem with just cutting taxes is it’s a slow wealth transfer. It takes time to take the government’s money so they got a little smarter in 2017 with cutting the corporate tax rates. Just like selling a business or some revenue stream you get an instant pay out. Where do rich people put their money? A lot of it in public or private companies. By taking a ~$200 Billion revenue stream away from the treasury companies are able to take home 79 cents on the dollar vs 65 cents, an increase of (79-65)/65 = 21.5% so now your company has 21.5% more profits without doing any work and they are all worth 21.5% more!
Everyone enjoyed the stock market going up over 30% in 2017 leading to Trillions in private profits. Unfortunately, the companies have already appreciated in value, the cake has been eaten and that cut doesn’t help stocks go up in the future. Just a $200 Billion hole in tax revenue remains. Trends in US Unemployment didn’t change after the tax cut.
Unemployment Trends Remained Unchanged After the Tax Cut. The downward trend was mostly because interest rates were set near 0 after the housing crisis.
- Donald Trump “I think we can go to 4,5, even 6%” (2017 comment on GDP Growth from the tax bill)
……2 Years Later……
- Federal Open Market Committee projects 2% GDP Growth in 2020 and 1.9% in 2021 as of September 2019, below historical averages (before correction for the coronavirus).
It begins with holding America hostage during the last 6 years of a democratic president
- Shutdown the government
- Use debt ceiling to hold an enemy party president hostage
- Convince the public both sides are to blame
- Crank government cynacim up to 11
Courage/work to discuss pay fors Honest discussion of where the debt came from
Then you need to change the congressional rules for taxing by implementing dynamic scoring which says the economy will grow (we will work harder) if corporations get tax cuts.
Then go for the cookie jar once in power
- The central item of the tax cuts and jobs act is to take a $200 billion revenue stream (decrease corporate taxes from 35% to 21%) away from the treasury and into corporations (like selling a business you trade a revenue stream for a one time payout), artificially increasing their profits and delivering a massive 1 time bump in stock prices.
- Corporate executive pay and buybacks skyrocket. Economic growth not so much. The federal open market committee predicted 2% GDP growth for 2020 and 1.9% for 2021 in the fall of 2019 (before correction for the coronavirus).
Try to pay for it by going after healthcare
- The American Health Care Act Fails to Pass by One Vote (2017)
Don’t share anything with your base
- Individual tax cuts fade out and become tax increases by 2027
- Corporate tax cuts are permanent
Spite the blue states if possible
- State and Local tax deduction capped at 10k hurting high tax (dense population) states
What do you do after raking in trillions you didn’t lift a finger for? Complain on the taxes on these gains of course
After your stocks/bonds/real estate go up from corporate tax cuts you pay capital gains tax on them when you sell them.
- “To Keep the Economy Growing, Index Capital Gains to Inflation” – Article by Ted Cruz, Grover Norquist
- “There is a sore spot” on capital gains – Ryan Ellis
- “Tax Cuts 2.0”
Over 80% of capital gains tax cuts go to the 1%.
Try to get rid of estate taxes to ensure rich estates rule for generations to come
- The Tax Cuts and Jobs Act doubled the exemption for large estates to over $20 million in untaxed estate income for couples
Put millionaires on the honor system for taxes
- Audits of millionaires are down 80% since 2011 (tea party takes over congress) and in line with the audit rate of the poor
(from ProPublica analysis of IRS data)
- The tax gap (uncollected taxes) is estimated to be over $500 Billion per year
(According the IRS analysis of 2008-2010 tax receipts in 2019 dollars)
Give mega corporations tax breaks on overseas cash hordes
“The Tax Cuts and Jobs Act creates a historic opportunity for American companies to bring capital back home from overseas to invest in our domestic economy and create jobs for hardworking Americans” – Steven Mnuchin (Treasury Secretary)
- Tax on overseas earnings decreased to 15.5% on cash or cash equivalents and 8% on the remainder
- In 2004 President George W. Bush allowed corporate cash hordes back with a low tax rate of around 5.25%
- Corporations are well trained now to horde overseas cash and wait for the next republican takeover to cash out
Relish in the positive asset “Business News”
(For a year anyway)
Then decide you are going to grade yourself based on how the stock market does as a result of taking money from the treasury
Steve Mnuchin: We “absolutely” view the stock market as a report card (US Treasury Secretary)
Long Term Thinking Middle Class Incomes Increase Economic Output
- Short term asset pumps ü
- Take credit for existing unemployment trends ü
If you lose in 2020 Rinse and Repeat
U.S. Bureau of Labor Statistics. Databases, Tables & Calculators by Subject. (SEAS) Unemployment Rate. More Formatting Options. All years, All time periods. https://data.bls.gov/timeseries/LNS14000000. Accessed June 20, 2020. (Numbered 3 in figure above)