The week before Thanksgiving, Nov. 13 and 14 to be exact, a meeting of “the world’s most ambitious and influential businesses leaders … that employ more than 8 million people, generate $2.6 trillion plus in annual revenue and represent 21 countries in a wide cross-section of industries” were gathered in Washington, D.C. The occasion? The Wall Street Journal’s CEO Council meeting.
This 10th annual assemblage of the world’s top chief executives was held at the very luxurious Four Seasons Hotel, and one of the speakers for the event was Gary Cohn, assistant to the president for economic policy and director of the National Economic Council.
Tax policy came up as Cohn was on stage and one of the Wall Street Journal’s editors posed a question to the CEOs gathered in the room. He asked them to raise their hands if their company is planning to put more money into purchasing additional equipment, building new factories and expanding job opportunities if the tax reform plan being crafted in Congress passes. Not many hands went up.
According to the popular narrative, the outcome of the 2016 presidential election was all about the forgotten Americans. The economically marginalized who have come out on the losing side of the paradigm shift that has taken place in the American economy over the past several decades.
We’ve been told that to a great extent, the election of Donald Trump was an expression of the collective voice of these forgotten Americans desiring to have the ship of economic opportunity righted in their favor.
Donald Trump was seen as the person who could take on the business and political elite, forcing them to acquiesce to policies that would better the interests of average Americans. The privileged class would have their privileges curtailed. The forgotten would be forgotten no longer.
But, using Congressional tax reform efforts as an indicator, it seems like the ship of opportunity is destined to keep on sailing by many Americans in favor of those who have for some time prospered handsomely in this new economy. The privileged keep on getting their privileges.
Without a doubt average Americans are being told that at its core, this tax reform is about tax relief for the common folk. House Speaker Paul Ryan stated, “the focus is on middle class tax relief. The focus is on directing that tax relief to the people in the middle and the people who are trying to get there. And that is why we put our emphasis on that tax relief for those people who are in the middle.” Likewise, President Trump declared, “it’s a tax bill for the middle class; it’s a tax bill for jobs … ”
Yet for all this talk of middle class tax relief and the chorus of voices in the administration and Congress reassuring the American people that this reform is all about helping them, the majority of Americans don’t seem to be buying it. As poll after poll shows, skepticism is high. It seems Americans have good reason to be skeptical.
The nonpartisan Congressional Budget Office recently released its analysis of the Senate’s tax bill. Which groups would be hit the hardest? The middle class and the poor.
Although the Senate bill would make permanent cuts to the corporate tax rate, it only temporarily reduces individual rates. According to the CBO, by 2019, those income groups making under $30,000 would be hit with a bigger tax burden.
By 2027, as individual tax reductions expire, that will be the case for all income groups under $75,000. With the median household income being around $45,000 in the state of Alabama, that’s troubling news.
Congress’ official estimator of tax legislation, the Joint Committee on Taxation (JCT) has come to similar conclusions noting that by 2025 high income households would see the largest tax cuts as a share of after-tax income. The JCT also adds that due to its large tax cuts for high income households and corporations, the Senate’s tax bill will add a whopping $1.5 trillion to the deficit.
Much lip service has been paid to the forgotten Americans. Much rhetoric has been spouted about how middle class and lower class Americans will finally see policies that prioritize their interests — not the interests of the moneyed and political class.
Alabamians have even been told by President Trump and his surrogates that one reason they should vote for Roy Moore is so he can ensure the passage of tax reform and other such measures destined to make their financial futures and life overall better.
Yet, a federal tax reform plan that by 2027 will cut taxes by $103 million for the richest 1 percent in Alabama, while increasing taxes that same year for Alabamians making less than $80,000 each year is not an effort prioritizing the poor and middle class in this state. Whether in Alabama or some other state, it only reaffirms that they are still forgotten.