“The tax plan will pay for itself with economic growth.”
That’s what Treasury Secretary Steven Mnuchin says about the President’s proposed corporate tax rate cut from 35 percent to 15 percent.
In theory, the cut will convince U.S. companies to bring their worldwide profits back home rather than keeping them abroad to avoid paying U.S. taxes. In theory, those companies will then hire more Americans and invest more in our economy, producing the growth the White House says will pay for its massive tax cut.
But the former chief of staff of the Congressional Joint Committee on Taxation disagrees:
“The administration has embarked in a very dangerous direction. If it is going to rely on the principle that tax cuts can pay for themselves, history has demonstrated that tax policies move the growth needle a bit but no more than that.”
So does the Pavilion Financial Corporation:
“Tax breaks to encourage firms to repatriate their foreign cash holdings have tended to overwhelmingly benefit shareholders, largely through share buybacks. Conversely, these deals have had little impact on long-term investment or employment. Going forward, we question the efficacy of another tax break and think take-up could in fact be low.”
After President Bush signed the American Jobs Creation Act in 2004, U.S. companies brought home about half of their foreign cash holdings to be taxed at 5.25% instead of 35%. But the huge break didn’t increase investment in the economy as President Bush promised. President Trump is making the same promise now. Why should we believe him when history says he’s wrong?
Cutting the corporate tax rate will overwhelmingly benefit corporations and their wealthy shareholders, while doing little for American workers and the American economy overall. But the Trump cuts will do a lot to the deficit. The nonpartisan Tax Policy Center estimates they alone will raise the national debt by $2.4 trillion over the next decade and that Trump’s entire tax cut plan will raise it by $7.2 trillion.
You’ve been a deficit hawk during your quarter century in Congress. Will you demonstrate that your previous fiscal positions have been based on principle and not political convenience by opposing the President’s tax plan now?