Now you see it, now you don't. Now you see it....

So, whatdaya' think of our new middle class tax cut?  Slick, huh?

I'll make this short and simple because I know few of you are into this boring minutiae.  Unless your name is Rockefeller or D Trump or even WJ Clinton, after the initial bone they'll toss you, you're not going to benefit from the "middle class tax cut" the US Senate is now trying to ram through before their holiday recess.

If passed, everyone would receive a tax cut in 2019.  But after that the various provisions that benefit those generally making less than $75,000 begin to expire....they're NOT permanent....and by 2027 they'll see a tax INCREASE.  Only the provisions that are likely to benefit the upper income class, and businesses, will remain in place. 

Our politicians tell us that our businesses are not competitive with much of the rest of the world because our business tax rate is DRAMATICALLY higher than anywhere else.  That's a very deceptive truth.  Our tax RATE is indeed very high, but no business pays that rate.  After they take all the deductions the tax code allows them, the EFFECTIVE tax they pay....their taxable income....is not much out of line at all.  A modest cut to close that remaining gap is indeed justified, but nothing like what they're trying to sell us.

President Trump's Chief Economic Adviser, Gary Cohn, formerly of Goldman Sachs, was caught off-guard at a recent CEO's conference when they admitted that only a few would take their tax savings, if Congress passes new tax cut legislation, and use it to increase their "capital investment".  In other words, grow their business and create new jobs.  Truth is, they're already enjoying record high profits.  They're cash-rich already!  This is why the stock market is at an all-time high.

So what exactly are businesses doing with their record profits?  Primarily increasing their dividends and buying back their own stock.  Example:  Last year Apple, GE, Pfizer, McDonalds, Gilead Science, Microsoft, Boeing, AIG, Express Scripts, Walmart, Johnson & Johnson, Oracle, Alphabet (Google), CVS Health, Disney, Wells Fargo, Visa, JP Morgan, Citigroup, and Goldman Sachs collectively bought back $189 BILLION of their own stock.  Just 20 companies, in just one year. (Source: Standard & Poors)  

If these companies, or many thousands of others, had wanted to expand their businesses and create more jobs, they had more than enough cash available to do it.  We have no shortage of investment capital!

So what will it take to spur businesses to expand and hire?  DEMAND for their products / services. (Hello..."supply and demand".  Ever heard the term?)  If the middle class received the bulk of any tax cut, they would likely use it to buy a new TV, or a new laptop, or maybe even put it toward a new car or a new house.  When businesses see their products flying off the shelves, they'll expand and hire.  Until then, what's the point?  Unless they can SELL more of what they make, why make it?

Is this so hard to understand?  Bottom line, the promised "middle class tax cut" does virtually nothing for the middle class long term.  Provide REAL tax cuts for the working class and they'll buy more, giving business the incentive to grow in order to keep up with the new demand.

Please, send a short email to your Senators and tell them you're on to their slick shell game.

S