A little more than a year after President Donald Trump and his fellow Republicans enacted their tax cut costing $1.9 trillion, all of the bad outcomes critics predicted from the law are coming true: Benefits are flowing disproportionately to the wealthy and big corporations while working families are paying the price. But as we unhappily mark the law's first anniversary, a further, unanticipated consequence has emerged that threatens the health care of tens of millions of Americans.
Just as we warned, the so-called Tax Cut and Jobs Act has exploded the deficit, giving the GOP an excuse to slash crucial services like Social Security, Medicare and Medicaid to pay for it. Corporations are using their tax-cut windfall to splurge on stock buybacks that only further enrich their CEOs and wealthy shareholders instead of giving their workers a raise or investing in new plants and equipment. And multinational corporations like General Motors and Harley Davidson are responding to the law's perverse incentives by outsourcing jobs.
If all that wasn't bad enough, a federal judge in Texas last month ruled that the tax law's weakening of one portion of the Affordable Care Act (ACA) invalidates the entire law. If the decision is upheld, it could mean more than two million New York residents enrolled in Medicaid under the ACA and more than eight million residents with pre-existing conditions could lose coverage. The gratuitous attack on the ACA reduced the tax law's cost by $300 billion, which effectively was used to finance tax cuts for drug companies, health insurers and other giant corporations.
The biggest winners from the law were corporations, who had their tax rate cut by 40 percent.
What more evidence do we need that the Trump-GOP tax cuts are bad law—for the economy, for working families, and for the health and well-being of millions of Americans?
But for anyone needing more convincing, there's plenty more data. It's estimated that in the first year, 21 percent of the tax cuts went to the richest 1 percent. Here in New York, that means 96,000 of the state's wealthiest residents will get an average tax cut of nearly $30,000. That's a tax cut bigger than the whole annual income of a New York family of three that qualifies for Medicaid.
The biggest winners from the law were corporations, who had their tax rate cut by 40 percent. Contrary to fantastical Republican claims that cutting taxes would somehow raise revenue, the predictable happened instead: Corporate tax revenue fell by almost a third last year.
Where's the money going instead? Not in any significant way into the paychecks of workers. Only 4 percent of employees have gotten any kind of bonus or raise because of the tax law, according to a tally maintained by Americans for Tax Fairness.
And even in those rare instances in which workers got something, corporate CEOs and wealthy shareholders got much more. New York pharmaceutical giant Pfizer is a good example. The maker of Lyrica and Viagra, among many other top-selling drugs, proudly announced $100 million in one-time bonuses to employees soon after the law passed. But that figure pales in comparison to the total of $20 billion — 200 times more — the company has announced in stock buybacks, beginning just before the law passed and continuing through the year's end.
Completely ignored by Pfizer are its consumers, who've suffered from the firm's constant price gouging, including average price hikes of 30 percent in the past two years. Not a dime of the company's tax cut has gone to lowering drug costs.
Meanwhile, Pfizer's tax cut this year is estimated to be $1 billion and will eventually be another $25 billion on its nearly $200 billion in untaxed profits held offshore.
Voters intuitively understood the inequities in the Trump-GOP tax law when they went to the polls in November and turned out House Republicans who supported this travesty, including four members of the tax-writing House Ways and Means Committee, the key architects of the tax cut law, and John Faso of Kinderhook.
Now with a threat to working families' health care thrown into the mix, it's up to the new Congress to listen to the voters and correct this mistake. The wealthy and Wall Street lobbyists might have made an anniversary toast to the tax law. But with a new year and a new Congress, the rest of us can celebrate our new opportunity to roll back the damaging tax cuts for the rich and corporations.