Labor Voices column: Tax plans are not the answer

Dennis Williams

House Republicans released their so-called tax reform plan recently showing how out of touch they are with working people in this country. It’s not a tax reform plan at all but a tax cut plan for corporations and billionaires. Taxes, rates, interest deductions — it all sounds boring and that’s exactly how they want you to feel about it. But you should be angry. This tax plan is infuriating for many reasons and here are a few:

First of all, the GOP thinks the middle class makes $450,000 a year. Talking points released to help Republicans sell the plan says the bill would lower the tax rate “for low- and middle-income Americans” from 39.6 percent to 35 percent. But as critics immediately pointed out, that rate starts at incomes around $450,000 or higher. According to the U.S. Census Bureau, the median income in the U.S. is $59,000 a year. Either the GOP is so out of touch that they really don’t know what a typical working family makes or that’s how they plan to disguise their tax cut to the wealthy — by reclassifying what middle class means.

Another problem with this bill that should make your blood boil is it’s a job killer because it creates incentives to outsource jobs overseas. With this bill, a business that creates jobs in the U.S. would pay taxes on its profits at a rate of 20 percent, while a business that outsources its jobs overseas would often pay no U.S. taxes on the profits it earns. Currently, U.S. corporations pay the same rate no matter where the profit is made but with the GOP tax plan offshore profits are taxed at as little as 0 percent. Instead of encouraging corporations to create jobs, it rewards them for offshoring and making products overseas.

With this plan, people lose the ability to take tax deductions for college loans, high medical bills, moving costs and state and local income taxes. Teachers can’t deduct school supplies. Firefighters can’t deduct state and local sales taxes and working men and women who are forced to relocate or else lose their job can’t deduct moving expenses. But corporations will be allowed to take all of these deductions. Who writes a tax plan giving corporations a break but not teachers, firefighters or working people?

In response to criticism that the House bill doesn’t help the middle class, the Senate GOP came out with their own tax plan. Their plan only delayed a cut in the corporate tax rate by one year and still favors corporations over individuals. In fact, as of this writing, the Senate’s most recent tweak to the plan makes individual tax breaks temporary but those for corporations are permanent.

Neither GOP tax bill addresses the carried interest loophole which has allowed wealthy hedge fund managers and real estate investors to pay a lower tax rate on their incomes than what working people have to pay on theirs. The president vowed to end this scam many times during his campaign calling hedge fund managers “paper pushers” who are “getting away with murder.” For now, with the GOP tax plans, the paper pushers are going to keep getting rich while the middle class foots the bill.

Is this a government of, by, and for the people or for corporations and billionaires?

Dennis Williams is president of the UAW.



Labor Voices columns are written on a rotating basis by United Auto Workers President Dennis Williams, Teamsters President James Hoffa, Michigan AFL-CIO President Ron Bieber and Michigan Education Association President Paula Herbart.