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Wednesday, 13 December 2017 16:13

Tax cut is ill-conceived

Written by 

To the Editor:

I’m confused! The stock market is at all-time high and unemployment is lower than we have seen in decades. More wealth is concentrated in the hands of a few individuals than any time since the years leading up to the Great Depression. Major corporations have excellent profits with large amounts available for investment.  he effective corporate tax rate (what they actually pay) averages below 25 percent and many pay no federal taxes at all.

The source of my confusion is why Republicans are ramming through a major revision of the tax code that primarily benefits those who already have most of the money. Normally, a country will implement tax cuts in response to economic distress. Such was the intent of the Reagan and the Obama tax cuts.

The initial Reagan tax cut was based on “Trickle Down” theory, was targeted to the same wealthy population that the proposed cuts benefit, didn’t work very well and was followed by multiple tax increases as record deficits occurred. In contrast, the Obama tax cuts were modest, targeted to those who pay the payroll tax (i.e. Social Security tax) and was coupled with a spending package that kept millions of middle class citizens out of unemployment.

So here we are. The economy is growing. Unemployment is low. Corporate profits are strong and wealth continues to accumulate at the top at the highest rate in almost 100 years. What has not happened is the increase in wages to match the increases in the stock market and the overall economy. Nor have the strong corporate profits resulted in significant investment in high-wage jobs.

Think about it. If I have a business and my customers’ wage increases have not kept pace with their increases in rent, utilities, food and a host of other costs, they don’t have the extra cash to spend on my product. I’m certainly not going to spend large amounts of money for a factory to make more of that product. Corporate executives recently told the White House just that. They would use their tax cut to buy back stock and increase dividends to their investors.

This tax bill is not about creating jobs. This effort should be retitled the “Our Big Donors Appreciation Bill of 2017” and then killed before it creates a trillion-dollar hole in the economy.

John Gladden


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