Right now, Trump and the Republicans are trying to increase the deficit by $1.5 trillion dollars to cut taxes for the rich.

  • Republicans in the House and Senate are working overtime to push a huge tax bill through Congress by the end of the year, at Trump's direction.
    • They've approved a budget resolution that will allow them to increase the deficit by $1.5 trillion over 10 years in order to reduce taxes.
    • The House is hoping to pass their bill this Thursday (November 16)
  • Almost all of the benefits of the tax cut will go to the very wealthy; only 50% of households making less than $100,000 will get a tax cut at all, and their average annual tax cut will be roughly $350.
  • Households making more than $100,000 will get an average tax cut of $3,821, not including the benefits of the lower business tax rate and the estate tax repeal (which will almost all go to high-income households).[1]

A tax cut for the rich will do very little to help the economy right now.

  • This is because when rich people get more money, they're much more likely to put it in the bank than to spend it, whereas when working people get more money they're more likely to spend it.[2]
    • Sometimes it's important for the economy for rich people to put more money in the bank—this is true when interest rates are high and businesses can't afford to invest, because increasing savings makes more money available for investment.
    • But right now, interest rates are very low and capital is plentiful, so putting more money into bank accounts and the stock market will do very little to increase economic growth.
    • The only way to increase economic growth in a situation like the one we're in now is to get money into the hands of people who will spend it—which is the opposite of what the Republican tax plan does.

There are a lot of ways to spend the same money that would help the economy—and help working people in other ways. Congress should be working on those instead.

  • We could take the $1.5 trillion dollars the Republicans want to put directly into rich people's bank accounts and use it on things that would help working people, help the country, AND help the economy, such as:
    • If we invested $1.5 trillion dollars in infrastructure, we could fully upgrade all of the roads, airports, ports, and electric and water systems in the country[3]
      • This would create nearly 20 million jobs over 10 years, accounting for jobs building infrastructure and the positive effects on other industries of having state-of-the-art infrastructure;[4]
      • It would put the US economy on a better footing to compete globally, especially as countries like China announce hundreds of billions in infrastructure spending; and
      • It would increase each household's disposable income by $3,400 per year.[5]
    • If we invested $1.5 trillion dollars in drug treatment, we could fund nearly 2 million inpatient treatment beds for 10 years[6]
      • This is enough to pay for inpatient treatment for every opioid addict in the US[7]
      • This investment would also create roughly 1.8 million jobs[8]
      • It would also help the economy by reducing the over $75 billion annual cost of opioid addiction in the US.[9]
    • If we invested $1.5 trillion in expanding health care, we could:
      • Reduce Americans' out of pocket health care costs by over 40 percent;[10] or
      • Reduce the Medicare eligibility age to 59 from 65.[11]

Even if Republicans think cutting taxes is the best way to spend this money, why not give the benefits to working people?

  • Even if we thought that all of those possible investments were wastes of money and we wanted to cut taxes, we could do that and help the economy much more by just giving 100% of the benefits of the tax cut to households making less than $100,000 a year.
    • If we did this, we could give every household with income under $100,000 per year an average of roughly $3,000 in tax cuts/credits (versus the $350 that the average household in that income range will get under the Republican plan).[12]

Call your Representative and Senators, tell them you oppose the Republican tax plan, and ask them how they plan to vote. If they support the Republican tax plan, ask them:

  • Why have they decided to give $1.5 trillion to the rich instead of using that money to solve the country's problems?
  • Why do they think a giveaway to the rich is a better use of $1.5 trillion than fixing our crumbling infrastructure, fighting opioid addiction, or any of the other things it could be used for?
  • When will they get serious about fixing the country's real problems instead of giving the rich tax cuts that they don't need?

References

[1] https://www.ospc.org/taxbrain/19950/, RISE Stronger analysis (figures refer to House bill)
[2] Carroll, Christopher, Jiri Slacalek, Kiichi Tokuoka and Matthew N. White, "The Distribution of Wealth and the Marginal Propensity to Consume", Forthcoming, Quantitative Economics, 3; accessed from https://www.econ2.jhu.edu/people/ccarroll/papers/cstwMPC.pdf on November 3, 2017
[3] American Society of Civil Engineers, Failure to Act Report, 2016, 5
[4] Carnevale, Anthony P., and Nicole Smith, "Trillion Dollar Infrastructure Proposals Could Create Millions of Jobs", Georgetown University Center on Education and the Workforce, 2017, 4 (estimates for $1 trillion program multiplied by 1.5) and American Society of Civil Engineers, Failure to Act Report, 2016, 5
[5] American Society of Civil Engineers, Failure to Act Report, 2016, 4
[6] https://www.addictioncenter.com/rehab-questions/cost-of-drug-and-alcohol-treatment/
[7] https://www.cbsnews.com/news/more-than-one-third-americans-prescribed-opioids-in-2015/
[8] RISE Stronger estimate, based on 1.5x fiscal multiplier and 1-1 correspondence of GDP and employment growth given labor-intensive nature of addiction treatment
[9] Goldman Sachs "US Daily: The Opioid Epidemic and the US Economy", July 5, 2017, 6
[10] Kaiser Family Foundation, Report: The Rising Cost of Living Longer: Analysis of Medicare Spending by Age in Beneficiaries of Traditional Medicare, July 2015, 2; RISE Stronger analysis
[11] Center for Medicare and Medicaid Services, "National Health Expenditures 2015 Highlights", page 2; RISE Stronger analysis
[12] https://www.ospc.org/taxbrain/19950/, https://slate.com/business/2017/10/we-could-send-usd1-000-a-year-to-every-worker-in-america-for-the-cost-of-trumps-corporate-tax-cut.html, RISE Stronger analysis