Published on
by

5 Reasons Why Trump’s Corporate Tax Cut is Appallingly Dumb

What President Trump is proposing as tax policy is 'truly dumb,' writes Reich. (Photo: Scott Olson/Getty)

Trump wants to cut the corporate tax rate from 35 percent to 15 percent, in order to “make the United States more competitive.”

This is truly dumb, for 5 reasons:

1. The White House says the United States has one of the highest corporate tax rates in the world. Baloney. After corporate deductions and tax credits, the typical corporation pays an effective tax rate of 27.9 percent, only a tad higher than the average of 27.7 percent among advanced nations.

2. Trump’s corporate tax cut will will bust the federal budget. According to the Congress’s own Join Committee on Taxation, it will reduce federal revenue by $2 trillion over 10 years. This will either require huge cuts in programs for the poor, or additional tax revenues from the rest of us.

3. The White House says the tax cuts will create a jump in economic growth that will generate enough new revenue to wipe out any increase in the budget deficit. This is supply-side nonsense. The Congressional Research Service reviewed tax cuts since 1945 and found no evidence they generate economic growth. Ronald Reagan and George W. Bush both cut taxes, and both ended their presidencies with huge budget deficits. Bill Clinton raised taxes, and the economy created more jobs than it did under Bush or Reagan.

4. American corporations don’t need a tax cut. They’re already hugely competitive as measured by their profits – which are at near record highs.

5. The White House says corporations will use the extra profits they get from the tax cut to invest in more capacity and jobs. Rubbish. They’re now using a large portion of their profits to buy back their shares of stock and to buy other companies, in order to raise their stock prices. There’s no reason to suppose they’ll do any different with even more profits.

Don’t fall for Trump’s corporate tax giveaway. It will be a huge windfall for corporations and a huge burden on ordinary Americans.

This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do.

Robert Reich

Robert Reich

Robert Reich, is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the the twentieth century. He has written fiften books, including the best-sellers Aftershock, The Work of Nations, Beyond Outrage and, Saving Capitalism. He is also a founding editor of The American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." Reich's newest book is "The Common Good." He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.

 
 

Share This Article