By Don McIntosh
For four decades, while wages have stagnated for American working people, the incomes and accumulated wealth of the top 1 percent — and the top tenth of 1 percent — have become so untethered from the rest of the country that America is today witnessing the birth of a new aristocracy of inherited wealth. What do Republicans in Congress propose to do about that? Abolish the estate tax on the estates of the wealthy, and cut taxes massively on the rich and corporations.
For now, details of the still-evolving tax-cutting plan are being kept secret even from fellow Republicans in Congress. But based on the GOP framework released Sept. 27, 80 percent of the tax cuts would go to the top 1 percent of income taxpayers, and the top tenth of a percent would get an average tax cut of over $1 million a year. Meanwhile, nearly one third of households earning between $50,000 and $150,000 would see a tax increase due to the repeal of personal exemptions and deductions.
In an Oct. 26 speech in the Senate, Oregon’s Ron Wyden, ranking Democrat on the tax-writing Senate Finance Committee, called it “a feast for the ultra-wealthy” in which the middle class is on the menu.
“This debate is coming,” Wyden warned. “It’s going to happen at the speed of light. The whole process could be over before anybody has put a dent in their holiday shopping, but that’s what the [Republican] majority is counting on. They are rushing their tax giveaway to big corporations and the wealthy through the Congress so quickly that nobody catches on.”
The framework announced Sept. 27 would lower the top federal income tax rate from 39.6 percent to 35 percent on the highest incomes. It would slash the corporate tax rate from 35 percent to 20 percent.
It would also cut or eliminate the taxes multinational corporations pay on their offshore profits. American multinational corporations hold an estimated $2.6 trillion offshore, and have resisted bringing those profits home because they would be taxed in the U.S. at standard corporate rates. Advocates of giving corporations a “repatriation” tax holiday argue that the money, once returned, would be invested and put Americans to work. That’s pure fantasy: Almost all the companies with overseas cash hoards already have cash hoards in the United States that they have chosen not to invest.
The GOP also wants to end the estate tax, which has been around since 1916. Today’s estate tax affects only a few thousand wealthy estates each year: Those over $5.49 million per person. The tax is set at 40 percent of estates above that threshold.
Initially, at least, GOP leaders were set to eliminate the federal income tax deduction for state and local taxes — a deduction claimed by 44 million Americans (though corporations would get to keep that deduction). But so great was the backlash against it that Republican leaders are reportedly backtracking, leaving in place the deduction for property taxes, but not for state income taxes.
Republican leaders were set to reveal specific details of their tax plan Nov. 1, the Day of the Dead.