Michael Battalio

Saturday, December 09, 2017

The Cut Cut Cut Act Letter to congressmen

I write to you about the tax proposals by both the House and particularly the Senate.  I find it astonishing that after eight years of Republicans criticizing the Democratic administration about deficits that the GOP would propose a cut that is not paid for in either reductions in spending or increased revenue elsewhere.  As it usually is in Washington, deficits have become a case of “it’s okay only when we do it.”  As evidenced by the dismal approval rating of both parties and of congress in general, we are tired of it.  If it isn’t okay for the Democrats to run up deficits by increasing spending, then it also isn’t okay for the GOP to do it by cutting taxes.  I realize that some of the GOP’s “math” is based on the trope that tax cuts will stimulate the economy and offset the reduction in revenue.  That’s nonsense, and you know it.  It has never worked.  The annual growth rate to offset the $1.5 T proposed by the Senate’s cuts is unattainable even in the short term – more than double what it is now.  That’s unrealistic.  We are a developed economy.  We cannot expect growth like that of China.

Let me now address where these cuts are going.  Agency after agency has stated that after a few years the middle class will be paying more in taxes.  I’ve heard GOP members explain that’s because a family tax credit must be allowed to expire to let the bill though, but it will be renewed eventually.  I think the last year has proven that only a fool would count on a future congress being more productive than the current one.  

The vast, vast majority of the cuts will go to the wealthy and corporations.  Contrary to the lies peddled by the President, the US does not have the highest tax rate in the world.  Far from it.  Even presently there are companies that pay $0 tax.  They don’t need a cut.  If this cut were accompanied by closing the loopholes that forced all companies to pay reasonable rates, then we could talk about lowering the nominal corporate rate.  That’s not what you’re doing though.  You’re just slashing it for everyone.  That’s irresponsible.  You’re sacrificing long term growth and stability for short term warm feelings (and campaign contributions).  I invite you in the strongest possible terms to revisit your stance on these misguided tax policies.  Instead close loopholes that the ultra-wealthy and Wall Street use to circumvent the spirit of the law in a shared society.  Make them pay what they are supposed to.  They derive an outsized share of the benefits of living in and doing business in America (well-developed infrastructure, a stable government, a safe country backed by a large military, etc.), and they have generated enormous sums of wealth for it; they should pay the majority of the taxes.

Finally, the Estate Tax must not be repealed or reduced.  It was established to prevent the development of a wealthy overclass with unchecked power.  The middle class needs that protection now more than ever.  The three wealthiest individuals in the country have a larger net worth than the bottom 150 million Americans.  You want to cut their tax rate and eliminate the Estate Tax.  I won’t hyperbolically call it un-American, but the stripping of power from poorer voters to the wealthy the way this bill proposes violates the spirit of our democracy.  Their wealth buys them a disproportionate amount of power already.  More wealth gives them more power.  It’s wrong.   (It is also deeply disturbing that the President is advocating for a bill that will apparently generate a giant windfall for his family.)  It is no surprise that the “Cut Cut Cut” Act is so unpopular.  The President is promising some nice platitudes, but you’re delivering the opposite.  If this bill passes, you may get a lot of campaign contributions, but the public will hate you even more.  Decide carefully.  We watch with great interest.

Thank you.

Michael Battalio

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