Commentary: Republicans in the Senate have passed their version of the tax bill and now it must be reconciled with the House bill. I don’t know how they can say with a straight face that these tax cuts for the investor class will help the wage earner. The big winners are shareholders and CEO’s in large corporations.
Supporters keep saying that economic growth will cover the deficits — without any evidence that will be the case. Wasn’t true with either Reagan or Bush Jr. tax cuts and it won’t be the case now. We are currently at essentially full employment (4.1%) and wages are still not going up. They haven’t for 40 years—so why would they now? If they did go up companies would either move their operations overseas or put more robots to work in the manufacturing process.
The few tidbits for wage earners go away in 10 years, but not the cuts for businesses. In anticipation of this legislation passing—the stock market is going up even more. That doesn’t help the hard-working middle class, because the wealthiest 10% owns 81% of the stocks in the country. The vast majority (80%) own only 8% of these stocks. Wall Street likes to talk about the wealth effect of a healthy stock market—but it doesn’t trickle down.
The real reason Republicans are passing this tax law is to satisfy the donors who put them in office. Senator Lindsey Graham (R-SC) said that “financial contributions will stop if GOP doesn’t pass tax reform. The party will fracture, and most incumbents will get a severe primary challenge and a lot of them will lose.” GOP needs the Koch brothers and other like-minded supporters.