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The Republican tax plan
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
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For seven years the Republicans voted to get rid of Obamacare, without having a plan to replace it.
Finally, they offered the America Health Care Act (AHCA), a plan of such monumental idiocy — it denied 24 million people their health care — that only two people on earth supported it: President Donald Trump (who had no idea what was in it, but loved it) and House Speaker Paul Ryan (who knew what was in it, but cared nothing about those 24 million people).
Fresh from that victorious demonstration of incompetence, the Republicans now are developing a tax plan. Based on the right-wing’s history of governance, one only can pray it takes at least another 7 years — better yet, 70 years — to develop this plan (by which time Justice Neil Gorsuch will have led the court in denying all rights to females, non-whites, and anyone earning less than $1 billion a year).
Here are a few excerpts from an article in the March 27, 2017, TIME Magazine:
Will the BAT Be the Tax That Changes Everything?
Haley Sweetland EdwardsThere are lots of reasons for California Representative Devin Nunes to be excited about his job these days. As chairman of the House Intelligence Committee, he is leading a classified investigation into Russian interference in U.S. elections, and as a member of President Trump’s transition team, he played a key role in staffing the new Administration.
Yes, that Devin Nunes, the guy who was supposed to lead an investigation of a possible Russia-Republican joint effort to elect Trump, but who instead worked with Trump and the Republicans to undercut the investigation.
He’s the one to trust with a tax plan.
Nunes is one of the most vocal champions of the central, mind-bending provision of the House Republican plan to overhaul the corporate tax code. It would lower the corporate tax rate to 20%, from 35%, eliminate levies on all U.S. exports and impose a 20% tax on imports.
Said another way, it is a system designed to cause a trade war between the United States and the rest of the world.
The combination of the import tax together with the retaliatory taxes other nations would apply, dramatically would raise the cost of all our imports, which amount to 13% of our entire Gross Domestic Product.
“Why,” you might ask, “would the Republicans offer yet another, blatantly wrong plan?”
It’s a mix that is expected to raise an estimated $1 trillion in federal revenue over a decade, according to the Tax Foundation, making it the linchpin for passing any comprehensive tax-reform bill this term.
“It’s a really, really big deal,” Nunes says of the proposal that House Republicans hope Trump will formally embrace in the coming weeks.
Yes, indeed, it is a “really, really big deal” to take $1 trillion out of our economy, for that is exactly what a $1 trillion increase in federal revenue does.
It has the same effect as charging each man, woman, and child in America, an additional $3 thousand apiece in taxes.
The proposed plan would cost an average family of 4 and extra $12,000.
But the tax has also earned really, really big enemies, igniting something of a conservative civil war in Washington, with House Republican leadership lining up in favor and deep-pocketed activists and lobbyists vehemently opposed.
The BAT, opponents say, would force big-box stores out of business, drive up the cost of everything from baby formula to avocados and potentially spark a devastating trade war. “I think we need to be realistic about what a huge risk this is for our economy,” says David French, the top lobbyist for the National Retail Federation.
Sound familiar? Like the AHCA, here is yet another nutty Republican plan to reward the rich and screw the rest, so ill-conceived that even many Republicans can’t stomach it.
Proponents of the plan–which Trump hinted at in his address to Congress–say it is bold and revolutionary at a time when the country is clamoring for big changes that would curtail corporate taxes and encourage more U.S. manufacturing. The BAT is not just a new tax rate, after all. It would burn down the current tax code and replace it with something entirely new.
To Republicans, “bold and revolutionary” plans require that, for instance, instead of remodeling your house, you burn it down and build a — what? A shed? An outhouse? Apparently, it doesn’t matter, so long as the plan is “bold and revolutionary.”
Liberals, conservatives and every President from Bill Clinton to Donald Trump agree that the corporate tax is broken, ineffective and needs to be fixed.
The problem, in a nutshell, is that the 35% corporate tax rate is among the highest in the developed world. But because of loopholes, it produces less federal revenue, as a percentage of GDP, than most other countries’.
See the confusion? Which is the problem — a tax plan that collects too much because the rate is too high or one that collects too little because of loopholes? They are opposites.
So exactly what needs fixing? And why?
This is how it would work: if a company makes a T-shirt in Oklahoma and sells it in California, it deducts its capital and labor expenses, and then pays a 20% tax on what it made from that T-shirt.
If a company imports a T-shirt from China and sells it in California, then it doesn’t get to deduct the cost of the T-shirt, but it still pays 20% on what it makes selling it.
If a company makes a T-shirt in Oklahoma and sells it in France, it pays no U.S. corporate tax on its sales at all.
Read the above description again, then please tell me: What economic problem is this “plan” supposed to solve?
The whole thing boils down to an import tax. And who pays import taxes? You do.
The greater the percentage of your income spent on manufactured goods, the more your income is absorbed by taxes.
And who spends a greater percentage of income on goods, the rich or the rest? Right, the rest of us spend vastly more of our income on goods than do the rich.
Thus, this latest plan, like all Republican plans, is designed to tax the rich less and to tax the poor more.
On paper, it’s pretty clear to see why companies that are primarily exporters, like Boeing and Dow Chemical, stand to gain from the tax–and why companies that are primarily importers, such as Walmart and Target, are nervous.
Walmart and Target won’t pay the additional import tax. Customers of Walmart and Target will. And who are those customers who will pay higher prices? Mr. & Mrs. Middle America, not the Trumps, the Kushners, or Trump’s Goldman Sachs multi-millionaires.
John Connaughton, a University of North Carolina at Charlotte professor of financial economics, predicts that other countries will file legal challenges “out the wazoo” at the World Trade Organization, demanding that it declare the BAT a violation of international trade laws.
For Trump, who reportedly is involved in 3,500 lawsuits, the reputation of America may be of little concern.
In a normal year, with less mercurial politics and a more predictable White House, the BAT would be dead in the water. There are too many short-term losers, too much opposition from powerful industry actors and too little consensus among Republicans.
Who gets hurt doesn’t matter to Trump, so long as it isn’t Trump getting hurt.
As usual, whatever plan put forth will ignore Monetary Sovereignty (the absolute fact that federal taxes pay for nothing).
Looking for a good tax plan? How about this: Eliminate FICA.
In one quick stroke, Congress and the President could do more for the economy and for the middle classes, than anything that has been proposed so far.
Rodger Malcolm Mitchell
Monetary Sovereignty
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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
MONETARY SOVEREIGNTY
