Zirpoli: Why do we need tax cuts for business if economy is great?

Step one in the Republican plan to Make America Great Again is almost complete. Cut taxes for corporations and the rich. Pay for some of the tax cuts by raising taxes on some middle class families, college students and people who have a lot of medical bills. Then, just add the balance of the bill, about $1 trillion over 10 years, to the national debt. Done!

Now that we gave corporations and the rich a 10-year $1.5 trillion tax cut, step two of their plan is to claim poverty and call for additional cuts to social services (including Medicare and Medicaid), education for our kids and health insurance for the sick. After all, we just don’t have the money and the deficit is growing, they will claim.


It is the old one-two punch that Republicans have been playing for years. It is as predictable as global warming and rising oceans.

Interestingly, step two of their plan calls into question their justification and reasoning behind their tax cuts in step one. You can’t argue in step one that massive tax cuts will stimulate the economy and grow tax revenue to pay for the tax cuts, and then also argue that the tax cuts depleted our nation’s revenue and now there is no money for anything else.

Funding for the Children’s Health Insurance Program that provides health care to 9 million poor children lapsed in October 2017. Utah Sen. Orrin Hatch, bullish on tax cuts for the rich, now says that continued funding for CHIP is in danger because “we don’t have money anymore.” Hatch didn’t worry about not having the money anymore when he gave corporations and billionaires a tax cut. But now that we are talking about providing health care for children, the money has disappeared.

The last time our nation had a budget surplus was after President Bill Clinton increased taxes on the top 1.2 percent of wage earners. As a result, during the last four budgets of his administration (1998-2001), America had budget surpluses. In 2000, the budget surplus hit a high of $236 billion. Then, President George W. Bush cut taxes (twice) and budget surpluses turned to deficits, and economic growth turned into the Great Recession of 2008.

President Donald Trump likes to brag about the growing stock market and the low unemployment during his presidency. The economy, he says, is doing great! Unless, of course, when he needs to justify a tax cut for corporations and the rich. Then, he says, American corporations are stymied by high taxes. But, if American corporations are stymied, why are their stock prices at record levels?

Trump can’t have it both ways. He can’t say the economy under his administration is doing great (which it is), but that American corporations are not doing well, so we need to give them a 43 percent tax cut (35 to 20 percent).

Also, it has been well-documented that while corporate tax rates are at 35 percent, American corporations have so many loop holes that they actually pay far less than that. According to the Economic Policy Institute, “Corporations pay between 13 and 19 percent in federal taxes — far less that the 35 percent statutory tax rate.” Trump stated that he would make corporations pay their fair share by forcing them to bring their off-shore profits home and pay taxes on that money. Neither the House or Senate bills mandate such a requirement. Writing for the Economic Snapshot, Hunter Blair believes that “Real tax reform would ensure that large multinational corporations cannot continue to dodge the taxes they owe.”

As stated by Ronald Brownstein, writing for The Atlantic, there are additional ways rich people will benefit from the Republican’s tax bill at the expense of ordinary Americans. For example, the Senate version of the bill gives a tax break to parents who send their children to private schools. Yet, it cuts state and local tax deductions, the very taxes that support local public schools where a majority of American children are educated.

The rich have been doing great since the end of the Great Recession of 2008. Under President Barack Obama, stocks went up 90 percent between 2008 and 2016. Stocks have continued to go up another 25 percent since Trump took office. These stock prices reflect the growing wealth of America’s corporations. Instead of helping American corporations when they are doing well and posting record stock prices, we should be investing in our nation’s infrastructure, health care system, education system and, yes, paying down our debt.

These are the investments that will keep America strong for our children and grandchildren.