Republicans Are Pushing Dangerous Banana Republic-Type Tax Reform

Republicans Are Pushing Dangerous Banana Republic-Type Tax Reform

I was a lifelong Republican prior to Trump. But, I have resolved now never to vote Republican again.

As an American (neither Democrat nor Republican), I am outraged by the Republican dismissal of Russian interference and their turning a “blind-eye” to the clear deficiencies of the commander-in-chief. It is unconscionable to put party over country.

But, still more unconscionable is to convert our country from one that is fair and compassionate to one which is operated by and for a small minority of billionaires. Yet, that is so clearly what is happening with this new tax system. Essentially, the Republican Congress – even Bob Corker and Jeff Flake – are now prepared to pass legislation that will turn the US into a banana republic.

I wrote earlier that the proposed tax changes were so ridiculous that the only element that I could see passing involved provisions allowing multinationals to repatriate cash held outside the US. I hold this position even though I further noted that such provisions could ultimately benefit only a handful of companies - Apple, Microsoft, Gilead, Qualcomm and Cisco – and would have very little positive impact on the US economy.

Unfortunately, the Republican Congress now seems prepared to do much more damage. Using voodoo economics and the incredibly popular tagline that our tax code needs to be simplified, the Republicans now want to reduce corporate taxes, even though effective US corporate tax rates are below the UK and just above Germany, according to the US Congressional Budget Office. These reductions risk exploding an already large federal budget deficit and exacerbating already extraordinary and unprecedented inequity in our system. The absurdity of the proposal is that the US economy is now growing exceptionally fast (over 3%) and most economists agree that faster growth is not sustainable. The idea that a tax cut that benefits very few companies results in some sort of sustained trickle down benefit to an economy that is already booming is both absurd and patently false.

Especially absurd is where the increased revenues to fund these corporate tax cuts are going to be coming from. Removing the federal tax deductions for state and local taxes forces California and New York (and other states) to cut essential services in order to reduce taxes and keep industry from leaving for lower tax states. It, more than likely, will totally bankrupts Illinois and Connecticut. Removing the mortgage interest deduction causes a compressing of real estate values across the country. As we learned in 2008 and 2009, a dramatic fall in real estate values can impact the pocketbooks of so much of the middle class as to cause a recession. Playing with the 401(k) deductions that are so vital to the majority of the working classes is equally absurd.

A President who occupies the office both to satisfy his own narcissism and to financially enrich his cabinet is a very dangerous monarchy. The Republican Party has already decided not to hold the government in check, but for it now to join in, and to wage war against the American public is beyond unconscionable.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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