WASHINGTON – Democratic lawmakers are railing against the Republicans’ proposed tax cuts, contending that lowering the high corporate tax rate will hurt the lower and middle classes.
But an economic analyst believes Democrats know their accusations are false, and they are using class-warfare tactics to to galvanize Americans against the Trump administration and win back control of Capitol Hill.
Heritage Foundation tax policy and federal budget analyst Adam Michel told WND that not only will the GOP tax plan provide relief to the middle class, it is inherently advantageous for the poorest Americans.
“It will help the poor; these are the folks that are detached to the labor market. They will benefit the most from additional jobs and higher wages. These reforms aren’t ‘trickle down’ – it’s a bottom-up economic growth,” he said. “Business investment hires workers, and that is the foundation of this plan.”
The average American household income could increase between $4,000 and $9,000 a year in wages and salary alone if the tax cut gets signed into law, Michel said.
“It will allow business owners to hire additional workers at all levels, but the folks that need it the most are the ones that are unemployed,” he continued. “The corporate tax rate reduced to 20 percent will be a significant benefit for all working Americans. The estimates are that it could provide the average American family with an additional $4,000 or more in their pocket after several years because wages will be increased. Businesses will be investing and growing here in America.
“The main mechanism is that businesses need to invest and grow their businesses in order to raise wages and hire more people,” he said.
“Our uncompetitively high corporate income tax rate is keeping businesses from doing that activity here in America. We’ve seen this happen in Canada just across the border. Over the last decade or so, they’ve consistently lowered their corporate tax rate and wage growth in Canada has been higher than other neighboring and comparable countries around the world. There is very strong evidence for the fact that this won’t just give boosts to the rich or the corporations.”
News headlines echoed the Democrats’ claim that the Republican tax plan is designed to enrich corporations and the wealthy.
“GOP tax plan may offer little aid for many in middle class,” said the Chicago Tribune.
The Democratic National Committee declared in an editorial published by NPR “Trump Tax Plan Hurts Working Families.”
House Minority Leader Rep. Nancy Pelosi, D-Calif., blasted the tax proposal on Twitter, writing: “Republicans’ #BillionairesFirst tax plan is an unconscionable attack on working families.”
— Nancy Pelosi (@NancyPelosi) November 2, 2017
Pelosi claimed earlier at a press conference that Republicans are “deceptively, misleadingly say[ing] to the American people” that “cutting the taxes of corporate America is going to produce such growth that it will eliminate that increase in the debt.”
Senate Minority Leader Chuck Schumer bashed the Republican tax plan.
“GOP argues their plan gives the middle class a tax break. What they won’t tell you is many middle class families will see their taxes go up,” Schumer tweeted Tuesday. “House GOP tax plan puts a burden that ought to be on the backs of the wealthy & big corps & drops it square on the back of the middle class.”
House GOP tax plan puts a burden that ought to be on the backs of the wealthy & big corps & drops it square on the back of the middle class.
— Chuck Schumer (@SenSchumer) November 2, 2017
GOP argues their plan gives the middle class a tax break. What they wont tell you is many middle class families will see their taxes go up.
— Chuck Schumer (@SenSchumer) November 2, 2017
Michel said the notion that the tax plan will hurt minorities and women is not true.
“On the individual side, there are tax cuts for middle class families, for most Americans, with the exception for the top end, they don’t lower the top marginal income tax rate,” he said. “There’s doubling of standard deductions, so more of your initial income is exempt from tax.”
Michel noted there’s a significant increase in the child tax credit, which is “directly against that narrative that the tax cuts will hurt women and children – it’s for working families.”
“Deep and thorough academic literature on this topic shows large vast majority of the literature shows that when corporate taxes go down, workers wagers go up, across countries, across states, Canadian provinces, German municipalities,” he said.
Michel said Democrats are playing politics with a tax proposal they know will economically benefit all Americans because they supported similar measures proposed by President Obama to drastically and permanently cutting the corporate tax rate.
Obama proposed cutting the corporate tax rate for U.S. manufacturers to 25 percent in 2012, 2013, 2014, 2015 and 2016, arguing lowering the rate was necessary for “putting the United States in line with major competitor countries and encouraging greater investment here at home.”
“One of the big things that was pushed during the Obama administration was lowering the corporate tax rate. Obama, Nancy Pelosi, Chuck Schumer, all said that we have the highest corporate tax rate in the world, we’re uncompetitive, it’s hurting workers – it needs to be lowered,” he said. “This moves in that direction, it cuts the corporate tax rate just like all those folks have been calling for many years.”
Democrats should be proponents of the measures they supported throughout the Obama presidency, Michel argued.
As Michel noted, the same Democratic leaders in Congress who are excoriating Republicans for allegedly disparaging the poor with tax cuts also supported cutting and reforming corporate taxes when they were in power on Capitol Hill.
Just a year ago, Schumer argued in a committee hearing that he strongly supported cutting corporate taxes.
“I’m game to do it because I think it’s really important for American competitiveness,” the high-ranking Democrat said.
Pelosi issued a press release in 2016 that urging congressional action, saying, “It is long past time for tax reform that would lower the corporate rate.”
Trump said he is “honored to work with my fellow Republicans.’
“I think we are going to honestly have some Democrat support,” he said. “I think it’s going to be very, very hard for them not to support it. There was a certain newspaper that wrote today that your competition was out there trying to say ‘it’s for the rich, it’s for the rich’ – which they of course say routinely.”
The president said it “turned out that they weren’t telling the truth and the paper actually called them on it, which was shocking to me, shocking.”
“But they were called, they said that were not telling the truth because this is a middle-income tax reduction and it’s a very big one. It will be the biggest tax reduction in the history of our country.”
— ABC News (@ABC) November 2, 2017
A summary of the Tax Cuts and Jobs Act says it would lower the corporate tax rate to 20 percent and limit home interest deduction on loans up to $500,000.
There are tax rates of 12 percent, 25 percent, 35 percent and 39.6 percent, and the standard deduction rises to $12,000 from $6,350 for individuals, and from $12,700 to $24,000 for married couples.