The tax bills now careening through Congress are a very bad
joke.
What the Republican leadership is calling “tax reform” is
nothing but an ideologically driven plan to lower the taxes of wealthy
Americans, myself included. To finance
the cut, they propose to add a trillion and a half dollars to the national debt
and impose higher taxes on an uninformed and largely unsuspecting electorate.
America’s middle class is falling behind. In 1971, the middle class earned 62% of aggregate
income; by 2015, that percentage had fallen to 43%. In inflation adjusted terms, real average
hourly wages for non-supervisory workers have fallen in the years since 1973. The middle class is hurting, yet the proposed
“reform” would raise taxes on many middle-class families immediately and far
more as deferred provisions of the “reform” take effect. Having America’ s middle class pay higher
taxes so that a retired CEO – like me – can pay less makes no sense.
Meanwhile, the top 1%, which has done incredibly well
financially, will benefit enormously from the proposed “reform”. The share of
total income earned by the top 1% has reached nearly 20%, up from about 10% in
the early 1970’s. Despite this groups prosperity, the Tax
Policy Center calculates that this
“reform” will generate an average tax
cut of $35,000 for the top 1% and $85,000 for the top 0.1% in 2019. And both the 1% and the 0.1% will get larger
savings in later years, when middle class taxes would go up rather than down.
Nor do the several arguments advocating lower corporate tax
rates hold water. As every CEO worth his or her salt knows, most U. S.
corporations pay nothing like the statutory tax rate, and some pay no taxes at
all. During recent decades, wages have
not kept pace with productivity and as a result, profits have increased as a
share of GDP while wage income has decreased.
America’s corporations are doing just fine.
“Reform” proponents argue that their proposals will
lead to more investment. It’s hard to
see why. American is capital rich, and
the notion that capital shortages are hampering investment just does not
compute.
Proponents also argue that repatriating offshore
cash will drive investment. Good luck. America
has tried this before, to its sorrow. In
2004, Congress passed legislation allowing corporations to repatriate foreign
earnings at a lower tax rate in hopes of stimulating investment. But instead of leading to investment and
jobs, repatriated funds were used to buy back shares, thus transforming the
program into a windfall for shareholders – and making the already rich still
richer.
Albert Einstein is credited with saying “The
definition of insanity is doing the same thing over and over and hoping for a
different result”. For decades,
Republicans have told us that cutting taxes will facilitate solving our
problems. In fact, since we began
cutting taxes in the mid-80’s, we have denied our government the resources
needed to sustain the activities which support middle class life and have
fallen steadily behind other countries, who have raised taxes to expand the security network they offer
citizens and have improved or sustained
their infrastructures.
We need to get America growing again, but to do so,
we need to use common sense, not the snake oil of more tax cuts. To
make America more competitive, reduce income inequality and revitalize the
middle class, we need to invest in the
things that made America a world leader from the middle to the end of the 20th
Century.
We need to invest in our future by rebuilding our roads,
bridges, water systems, sewage system, ports, railroads and airports. We need
to be sure every kid gets a great education. We need to rebuild the energy grid
and reclaim leadership in the search for non-polluting energy sources. We need to do the research needed to cure
cancer and stop Alzheimer’s. And we need
to fund these investments with taxes, not with borrowed money.
This tax “reform” is worse than a bad joke – it’s a
refutation of the common- sense steps which are clearly needed to reclaim
American exceptionalism.
Ronald Reagan called America “A shining city on a hill”, a
vision of our country that reflects the opinions and hopes of most Americans.
Before committing themselves to embracing this nonsensical “tax reform”,
Republican leaders ought to ask themselves whether they believe it will help our
country shine as brightly in the future as it has in the past.
Yep, that says it perfectly!
ReplyDeleteWow! Common sense from someone I thought would be gloating about the tax cut! Thanks for your insight on this.
ReplyDeleteP.S. I think you still helped put my employer, Braniff International, out of business in '82, but my opinion of you just went up 100%. I'm glad the Dallas Morning News published your essay.
Has your account been hacked? This essay seems out of character with my impression of you but I've been wrong before and will probably be wrong again.
ReplyDeleteAA 737 CA checking in. What is your opinion on the large levels of cash we see corporations holding onto?
ReplyDeleteThank you! I can only hope that members of Congress will listen to arguments like this and put Country over Party and the personal gain of wealthy donors.
ReplyDeleteThanks for taking the time to write this article and for the DMN to publish it. It helps to hear how an executive who has run a large company views the proposed tax bill. And I am afraid you are correct.
ReplyDeleteDear Mr. Crandall,
ReplyDeleteThank you for your editorial in the DMN. I think it is important for the CEOs to weigh in on this issue, and so many others. As a group, they could put a stop to it. A CEO should be able to consider the long game as well as the quarterly results. Alas, when short-term gains are prioritized over long-term, we rob our own future for the present, and short-change the next generation.
By the way, you will likely not remember me, but I we tangled many years ago when I was on the Irving City Council during the DFW expansion. It turns out that you were right and I was wrong.
Very well said, Boss !
ReplyDeleteThis sane comment from a man who has spent many years in the CEO chair needs to be shared widely throughout the business press. (~from one of the FSD DC-3 guys)
Bullseye!
ReplyDelete