Point/Counterpoint: Will corporate tax cut benefit middle class or the rich?
Doug LambornThe greatest change to the U.S. tax code in over 30 years, which I strongly supported, was signed into law last month. Yet its impact is already being felt – companies are hiring, employment is up, take home pay for working families has increased, junior employees are receiving end-of-year bonuses, the stock market soars and the list goes on.
Individuals, families and employers all get a tax break. According to the Brookings Institute, 81 percent of taxpayers will see a tax cut, averaging $2,000 annually. (The few who will not pay less in taxes tend to be wealthier individuals in high tax states like California and New York.)
On top of tax cuts, all workers and employers will benefit from a climate of increased job creation and corporate investment. Corporate investment and entrepreneurial ventures fuel our economy. This is how jobs are created and businesses grow. The American Enterprise Institute found that cutting corporate tax rates nets more for individual workers than cutting individual tax rates.
Despite these facts, naysayers remain starkly opposed to this historic legislation and claim only the wealthy benefit. “Crumbs” is what Nancy Pelosi called the bonuses and wage increases more than 2.6 million Americans have received in just the four weeks since the Tax Cuts and Jobs Act was signed into law.
Mrs. Pelosi is simply out of touch. For families who are living paycheck-to-paycheck, an increase in take-home-pay and a $1,000 bonus to start out the new year is the difference between fixing the car, getting dental work for the kids, taking a vacation, or just doing without.
Companies big and small, including Walmart – the largest private-sector employer in the United States – have also announced plans because of the tax cut to expand employee benefits, like 401k matching and maternity leave. Some businesses have reversed previous plans to leave the United States. Even utility companies are passing on tax savings to consumers. These benefits are for everybody, not just “the rich.”According to a National Association of Manufacturers survey of their member companies, nearly 54% of respondents said they would hire more people because of the tax cut.In Colorado alone, various companies are paying the tax cuts forward. The CEO of Canary LLC, Dan Eberhart, told Fox Business Network, “There are two components. One is ordering more capital equipment, which is what the expensing provision of the new tax reform bill allows us to do. And the second leg of that is hiring more people which we are furiously working on right now.”
The Bank of Colorado and the National Bank Holdings Corp are handing out bonuses to all employees. President of Bank of Colorado, Shawn Osthoff, said in a letter to me, “We feel strongly that the message should be loud and clear that this tax cut will benefit all Americans.” Bank of Colorado has 641 associates in Colorado and New Mexico.While the largest tax cuts in the bill are permanent, Congress will next seek to go even further by making all tax cuts across the board permanent. This will spur even more American prosperity for businesses, families and individuals alike.
Doug Lamborn represents Colorado’s Fifth Congressional District in the United States Congress.
Roger ButtsPerhaps the corporate tax cut from 35 percent to 21 percent will help all of us. I hope so. Regardless of our differences, I believe that all of us – liberals, conservatives, independents – want America to flourish.Recently, Wal-Mart and Apple announced they are raising minimum wages and creating new jobs because of the corporate tax cuts. Maybe this will be a trend.
I have doubts. After all, this is the third year that Wal-Mart has raised its minimum wage in order to rehabilitate its image as an unethical employer. The raises likely would have happened anyway. And Apple held an astonishing $252 billion in overseas cash. If they had paid what they really owed, they would have paid something like $88 billion. They will now pay $38 billion instead. They used that overseas cash as a leverage to push for corporate tax cuts, and they have effectively managed to avoid $50 billion in taxes.
I have concerns. Only 10 companies in the S&P 100 contacted by CNBC said they have specific plans to use some of the money saved from the corporate tax cuts to boost worker pay or invest in facilities or charitable causes.
The studies I’ve read suggest that the windfall from this tax cut will be passed through to shareholders in the form of dividends and share buy-backs. When this bill was being promoted, Gary Cohn, one of Trump’s economic advisers, asked a group of CEOs at a Wall Street Journal conference to raise their hands if they planned to raise capital expenditures upon passage of the corporate tax cut. Few hands went up. “Why aren’t the other hands up?” Cohn asked, embarrassed. They knew better. Studies consistently show that between 31 percent and 47 percent of benefits of this corporate tax cut go to people in the top 1 percent.
My biggest concern involves Kansas. The GOP claims tax cuts will usher in an era of unprecedented growth. Sam Brownback pursued this small-tax utopia in Kansas. Disaster followed. Schools and infrastructure were decimated. It will take a generation to clean up. Moderate Republicans had to raise taxes to save the state. Paul Ryan and Mitch McConnell and Donald Trump are Kansasing America. We will all pay.
The tax cuts add $2.2 trillion to the debt and by 2020 $1.5 trillion to the deficit. Paul Ryan will likely next say: The deficit is out of control. We must do something. And what will he and his Ayn Rand worshipping comrades do? Cut the safety net that protects our most vulnerable population: the children and the elderly.
In all of this debate, we have forgotten about the poor. Catholic bishops remind us: the moral measure of any economy is how the poor and vulnerable are faring. The poor are under attack. And we are failing by any moral measure.
This massive tax cut I fear is the first round of gunfire in an ever-expanding war on the poor. When the GOP goes after Social Security, Medicare and welfare, we will all suffer and the America that cares for its most vulnerable will be at grave risk. We can do better.
Roger Butts is 1st vice president of the local branch, 4001, of the NAACP.