Corporate tax cut in GOP scam only adding debt. And they want Tax Scam 2?

Even Mick Mulvaney and the rest of the Trump acolytes at the Office of Management and Budget (OMB) are now admitting that the deficit would be higher than they projected back in January, and would near $1.1 trillion next year.

And Jim Tankersley of the New York Times focused on a big reason why these tax cuts aren't "apying for themselves" - because corporations are paying much less to Uncle Sam.

The reason is President Trump’s tax cuts. The law introduced a standard corporate rate of 21 percent, down from a high of 35 percent, and allowed companies to immediately deduct many new investments. As companies operate with lower taxes and a greater ability to reduce what they owe, the federal government is receiving far less than it would have before the overhaul….

From January to June this year, according to data from the Treasury Department, corporate tax payments fell by a third from the same period a year ago. The drop nearly reached a 75-year low as a share of the economy, according to federal data.

“If we hadn’t changed our tax system,” said Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore., who studies business taxation, “you would be expecting rising revenues.”

That’s especially true because corporations continue to book hefty profits, with pre-tax totals rebounding in Q1 after a decline at the end of Q4 (likely due to corporate write-downs and other moves to lower their profits for the 2017 tax year, when they were taxed at a higher rate).



We know the extra profits aren’t trickling down into wage growth, as hourly earnings growth is no better it was 6 months ago, with the only difference being an increase in inflation that eats up more of those raises.



On top of the lower corporate tax rates, Tankersley notes that other incentives tucked into the GOP Tax Scam encouraged other moves that cut corporate tax liabilities by favoring capital investments over hiring people and raising their wages.

Other factors could also be holding corporate tax receipts down. Some analysts believe the so-called expensing provisions of the new tax law, which allow companies to write off new investments immediately, may prove more popular than some forecasters anticipated. Companies, for example, could write off investments in software or machinery or new buildings.

If that’s true, “it means the government will lose more revenue than we all originally thought, especially in the short run,” said Kyle Pomerleau, an economist with the Tax Foundation in Washington, which forecast a large increase in economic growth from the tax cuts and the expensing provision. Such a scenario, Mr. Pomerleau said, would mean that growth should be even stronger than expected.

And yet the GOPs in the House of Representatives are planning to put this failing policy on steroids. Not only do they want to make the current tax cuts permanent (they were slated to expire in 2025 so that they “only” cost $1.5 trillion for 10 years), they want to vote on additional write-offs in the next 2 months.

House Republicans plan three pieces of legislation covering permanence, savings and business in hopes of reaping some success in the Senate. Other ideas, including a measure to protect capital gains on business investments from inflation, are also under discussion….

Additionally, the proposal would create “fully flexible” Universal Savings Accounts for families, allow education savings to be spent on apprentice fees and give new parents penalty-free access to retirement accounts for child expenses.

Stan Collender – aka “The Budget Guy” - called out House Ways and Means Chairman Kevin Brady's plan to double down on tax cuts as an unserious measure intended to grab campaign donations versus actually get passed into law.

It has nothing to do with taxes, fiscal policy or economics: Brady is using his new tax cut scheme to solicit campaign contributions from corporations and industries who want something in these bills.

The best way for corporations to get Brady to pay attention will be to contribute to him, the GOP’s campaign arms, other Ways and Means Republicans, the leadership political action committees and the Trump reelection effort, and to do it before the election.

Brady and the rest of the House GOP will be looking for first-time or increased campaign contributions/political tribute from three categories of tax cut supplicants:

The companies, industries and groups that didn’t get anything in the tax cut enacted last December.

The companies, industries and groups that didn’t get all they wanted in the tax cut enacted last December.

The companies, industries and groups that need a change from what they got last December (a so-called “technical correction’) because that bill was drafted improperly.

So there's no economic or pragmatic reason for Tax Scam 2, other than to pose for and kiss up to right-wing oligarchs who are already haven't done much to add to the real economy with all the giveaways in the first Tax Scam.

I find myself thinking of this song a lot these days when discussing the GOP’s regressive tax schemes and the inevitable failures of their cynical politics.