American families are already on the ropes. Booming corporate profits have not translated to higher wages for workers. The result is a middle-class squeeze: Most workers barely make more than what they did 30 years ago, while the costs of necessities such as housing, transportation, health care and education have risen sharply. If Congress tackled the middle-class squeeze head-on, it could provide more financial security for America’s families and produce faster economic growth.
But the Republican Party’s rich donors want tax giveaways, and the party is happy to oblige. According to estimates based on the original outline of the Republican tax plan, it showers $2.5 trillion on big corporations. Fewer than 10 years after sparking a devastating financial crisis and receiving billions of dollars in taxpayer bailouts, big banks would reap billions from the Republican plan. Wells Fargo is projected to receive a bigger tax handout than any other U.S. company.
Wealthy foreign investors also win big. By slashing the corporate tax rate, the Republican plan could put as much as $700 billion in the pockets of the foreign investors who now hold nearly 35 percent of the stock in U.S. companies. Is that what President Donald Trump means by America first?
Multinational corporations are big winners, too, with a giveaway that establishes a lower tax on money earned abroad than money earned here at home. That makes it even harder for small U.S. businesses without overseas operations to compete with the giants. It also creates a powerful incentive for U.S. multinationals to shift investments - and jobs - abroad. Fewer investments in America will mean even lower wages for American workers.
But the GOP plan isn’t all giveaways. The Republicans have thrown a lot of working families under the bus. The Republican plan imposes a double tax on millions of families who pay state and local income and sales taxes. The plan also makes home ownership more expensive by nullifying the benefit of the mortgage interest deduction for many families.
It’s hard to sell a plan that imposes new taxes on millions of working families while shoveling money to big banks, multinational corporations and wealthy foreign investors. That’s why Republicans are pushing two big lies about their plan instead.
The first big lie is that the plan will "supercharge" economic growth, creating a rising tide that would lift all boats. Despite Republicans’ wild claims, independent analysts agree: The corporate tax cut at the center of the Republican plan will have a negligible or even a negative impact on economic growth.
The second big lie is that corporations will pass along their tax giveaways to workers in the form of higher wages. When multinational companies got a huge tax break under President George W. Bush, corporate profits shot up and shareholders grabbed nearly all the gains. When the United Kingdom cut its corporate tax rate by 11 percent, wages went down. Republicans know the facts aren’t with them, which is why Treasury Secretary Steven Mnuchin tried to bury Treasury’s own report showing that wealthy shareholders would be the overwhelming beneficiaries of a massive corporate tax giveaway.
In fact, corporate executives are already telling their investors that tax giveaways from the Republican plan will be passed not to workers but to shareholders, through bigger dividends and more stock buybacks. Stock ownership is highly concentrated among the wealthiest 1 percent of Americans - and half of all Americans don’t own a single share of stock - so the Republican plan will be a bonanza for America’s richest.
Meanwhile, the Republican plan will make the middle-class squeeze worse. As the government collects trillions less in corporate taxes in coming years, the national debt will explode. After voting over their careers to add more than $3 trillion to the debt through tax giveaways to the rich and the Wall Street bailout, Ryan and McConnell will suddenly rediscover their concern over the debt. They have already shown their hand, promising to pursue deficit reduction next year with trillions in cuts to Medicare, Medicaid, housing and infrastructure programs on tap. If Republicans push through those cuts to address the very debt they created, that means higher health-care, transportation and housing costs for many working families.
The GOP tax plan lays bare the corporate priorities of the Republican Party. The trillions that Republicans hand over to corporations could go to rebuilding our roads and bridges and energy grid, creating millions of high-paying jobs and a stronger economy. Or that money could raise millions of American children out of poverty. But jobs and children aren’t priorities for today’s Republican Party. Instead, it grovels before wealthy corporate donors who want tax giveaways - and want them now.
We can build an economy that grows faster and provides every American family with basic economic security. That work starts by shutting down the McConnell-Ryan $2.5 trillion corporate giveaway.
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Warren, a Democrat, represents Massachusetts in the U.S. Senate.
