When I first read the provisions of the Republican tax plan, I thought “well, they could have done worse”. I was not happy about the Corporate tax rate staying at 20% when the top individual tax rate was over 39%, but I was relieved that they finally decided not to mess with 401(K)s (this time).
The interest deduction on homes would only apply to homes under $500K rather than homes under $1 million. Californians and people in New York City should be unhappy about that because even modest homes cost more than $500,000 there. I am unhappy about it for their sakes- my wife has a relative who is an elderly widow. Her middle-class Bay Area home would list for over $2 million. She stands to lose a huge amount of home value when this goes through. For most of the rest of the country though, if you live in a million dollar home you probably should be able to pay cash for it.
One thing we are still not sure of is what happens to the “SALT” deduction, that is, the deduction for state and local taxes. Arkansas is a high-tax state so if they do away with or reduce that deduction it will have a disproportionate negative impact on us. Eliminating this deduction would be a straight-up tax increase on the middle class, the upper middle class, and what I call “the barely rich”.
The child tax credit is being raised to a maximum of $1,600 on a sliding income scale. For households that make above $140,000 a year that dwindles down to nothing though, and I consider that to still be middle class. By far the biggest beneficiaries of this massive increase will be lower middle class, working class, and the poor. A person with minimal income and five children would get $8,000 a year from “the government”. Where are they getting the money to pay for this “generosity”? Well, it looks like they are going to borrow it, and that leads to my point about why this “tax cut” is terrible.
Some of you will think its great that your children get you an extra $600 in “credits” each year, but since they are just borrowing the money to give you that “credit” the bill for it is going to be sent to them later, with interest. To be fair to them, you should take the money from that “credit” and invest it in something for them, so that when they get hit with the bill for what the government “gave” you they will have something to pay it with.
If you zoom out and look at the big picture, this tax cut is just more class warfare of the ruling elites against the middle class, with bribes to the lower class to enlist them in the plan. This is more of the same that we have had over the last thirty years. If you go through what I have said above, especially if they do away with SALT deductions, this is not a tax cut for the middle class, the upper middle class, or the “barely rich.” It is a tax cut for giant global corporations. For the poor and the working class with children it is not a “tax cut” either- because it is giving them money that they did not even pay in taxes. It is a straight-up income transfer. It is being transferred to their pockets from…..whose?
That’s the thing, without spending cuts the government is really not cutting taxes long term. It is just reducing taxes now by doing things that guarantee they must increase in the future. To find out who really wins and who loses with any plan that depends on more debt you must ask yourself this question: When it is time to pay the debt who is going to get stuck with the tab?
(article continues below video)
So who is going to get stuck with the tab when it comes time to pay the debt incurred by this tax cut to global corporations and transfer payments to the poor? Well, its not going to be the poor, because they won’t have it. Its not going to be the super-rich or global corporations. They can just leave if the burden gets too high, or hire lawyers, accountants, and lobbyists to protect their interest. Its going to be the middle class, the upper middle class, and the barely rich. You are the ones with assets to loot yet your assets are not so vast as to be able to protect yourself from the looters. If the can-kicking continues until you die then maybe it will be your children and grand-children that are stuck with it but that’s the best you can hope for if you stick with the present political establishment, Republican or Democrat.
Ironically, many of you in that class are the staunchest supporters of the way the system is now, because you think you are doing OK. The truth is your wealth is the target of those who run the current two party system. Watch the video above for more details. And when you realize the truth, I ask you to do one more thing. Click this link and send us one petition, just one, to get Neighbors on the ballot just for 2018 in Arkansas.