Let’s talk about your federal income taxes. Specifically, the more complex tax code you now face and the lack of widespread benefits of the Republican tax cuts that were promised.
Republicans continue to claim that the tax law changes benefit all Americans and boost the broader economy. However, the mounting evidence demonstrates the critics were right all along: the Tax Cuts and Jobs Act (TCJA) is a de facto massive giveaway to large corporations and the top 1%. Economic inequality is one of the defining challenges of our time. And, rather than meet this challenge, this Administration forced a partisan bill through Congress that benefits the wealthy and supercharge wealth inequality.
Democrats in Congress worked tirelessly during debate, and since, to explain the disastrous effects that would come from this tax scam. Likewise, the Nuns on the Bus took on this fight and went on the road to Mar-a-Lago to tell the truth about the TCJA. The unequal distribution of the tax cuts cannot be overstated: low-income and middle-class Americans received a tiny fraction of the benefits of this scam. For example, experts note that taxpayers in the bottom 20% of the income distribution are projected to receive an average tax cut of $60 in 2018. Those in the middle 20% are projected to see an average tax cut of $900. In contrast, those in the top 1% would receive an average tax cut of $51,000. Rich taxpayers also gained significant tax benefits from the TCJA, due to doubling the estate tax exemption, resulting in the TCJA delivering $83 billion of tax cuts to the heirs of the nation’s wealthiest estates.
The reality of the legislation is much different than the rhetoric. Among the many unfulfilled promises of the TCJA, Republicans claimed that the average household would see a $4,000 raise thanks to their “reforms.” Yet, the facts show, even if we credit the TCJA for 100% of the difference in average hourly wages in the last year, the average wage increase would amount to only about $400. The Republicans also hoodwinked Americans into thinking that corporate income tax cuts would benefit all of us. Instead, the TCJA has fueled about $1 trillion in corporate stock buybacks. Corporations are spending their tax savings to purchase their own stock. Some economists and investors argue that using cash to buy up a corporation’s own stock in the open market is the opposite of what companies should be doing. Simply put, the corporate tax savings are not flowing to Americans because they’re not being reinvested in our companies or our workers.
As more middle class and low-income Americans file their taxes, while also having to deal with the impact of the Administration’s tariff and trade wars, it is crystal clear who the TCJA benefits, and it is not the men, women, and children who Jesus championed. For example, Republicans did not, despite then Speaker Paul Ryan’s promises, improve the Earned Income Tax Credit (EITC), which is our nation’s top poverty fighting program. Not only did Republicans miss the opportunity to expand the EITC, by moving to Chained Consumer Price Index (a slower measure of inflation growth), the Republicans reduced the benefit of the maximum benefit of the EITC, slowing the rate of growth of the credit’s maximum value.
The one sure result of the tax cuts that Republicans ignore, is the massive increase of our nation’s deficit by an estimated $1.5 to $2 trillion over the next decade to provide this windfall for large corporations and wealthy taxpayers. And, in a wonderful exercise of hypocrisy, these same Republicans will use those increasing deficits to call for drastic cuts to Medicare, Medicaid, Social Security, and other safety net programs that not only help the most vulnerable among us but support our entire nation. Just look at the President’s FY 2020 budget.
The TCJA violates our shared values. We need a tax policy that serves the common good by being progressive, investing in our shared future, and reversing harmful economic and income inequality in our nation.
And, voters agree. In 2018, the Republicans were voted out of the majority in the House. The TCJA wasted an opportunity to help you and your family while showering that money on the richest among us. We have a chance to fix this. That’s why a Member of Congress and a Catholic Nun have teamed up to champion expanding the Earned Income Tax Credit and Child Tax Credit. Americans need a raise, and these programs are our most effective anti-poverty tools. In Wisconsin alone, expanding these tax credits would benefit almost two million people.
In the coming year, we’ll drive more legislation to undo the damage of the TCJA, and to focus on the vast majority of Americans who were ignored in the TCJA that help the other 99%. Regardless of your political affiliation, every Wisconsin voter deserves better.