begin quote from:
Dear senators: Don't bankrupt our country - CNN - CNN.com
www.cnn.com/2017/11/20/.../dear-senators-dont-bankrupt-our-country.../index.html
2 hours ago - The US is at defining moment: the tax cuts just voted by the House could put our country into a tailspin, writes Jeffrey Sachs. In the past, the GOP could be relied upon to protect the country from short term greed; it must do so again today.
Dear senators: Don't bankrupt our country | USA Extra News
today.breaking.hoxforum.com/news/dear-senators-dont-bankrupt-our-country
Dear senators: Don't bankrupt our country
Collins wants to 'skew' tax bill away from rich 01:50
Story highlights
- In letter to GOP senators, Jeffrey Sachs writes that US is at defining moment
- The tax cuts just voted by the House could put our country into a tailspin
Jeffrey Sachs is a professor and director of the Center for Sustainable Development at Columbia University. The opinions expressed in this commentary are his.
(CNN)Dear Sens. Susan Collins, Bob Corker, Jeff Flake, Ron Johnson, John McCain and Lisa Murkowski:
Jeffrey Sachs
I fear for the future of our country. I know that you do as well. You are patriots first and partisans a distant second.
We
are at a defining moment in our history: The tax cuts just passed by
the House and the last-minute changes to health care proposed by the
Senate leadership could put our country into a tailspin.
Congress
members and pundits tell us that Republicans need to pass tax cuts to
appease their party's mega-donors. Senators, patriots need to protect
the future for our children and grandchildren.
Years
ago, we could rely on the mainstream of the Republican Party to protect
the budget from short-term populism. A few Republican supply-side
zealots believed that tax cuts could pay for themselves. Many Democrats,
far too enamored of Keynesian solutions, have argued that deficits
don't really matter. I strongly disagree.
Though I am a Democrat, I sided with Republicans opposing President
Barack Obama's stimulus legislation in 2009 because I believed it would
burst the budget.
I
also opposed the bipartisan deal in 2012 to make permanent most of the
Bush-era "temporary" tax cuts, for the same reason. My Democratic
friends took exception with me both times. I told them that the
country's future comes before the party.
Senators get into shouting match over tax plan 02:21
Sadly,
the ratio of debt to gross domestic product has roughly doubled since
the end of fiscal 2008, from around 39% to 77%. A remarkable 39% of
the federal debt at the end of fiscal year 2016 was in foreign ownership. The non-partisan Congressional Budget Office (CBO) has demonstrated
that our fiscal trajectory remains unsustainable even before the newly
proposed tax cuts. It says we will likely reach a debt-to-GDP ratio of
89% by 2027 and 150% by 2047.
This
CBO projection is actually too optimistic. It assumes modest interest
rates for decades and no major new outlays for the military or for
coping with climate change, and no meaningful increases in federal
spending on science, technology, education, labor, infrastructure,
low-income families, children in poverty and other pressing needs. It
assumes no major stumbles in the economy, such as occurred in 2008.
By
some estimates, the long-run "fiscal gap" between outlays and taxes,
measuring both in net present value, is now more than $100 trillion.
That is more than five times today's national income.
The
implication is that taxes as a share of GDP will have to rise by
several percentage points, or government outlays as a share of GDP will
have to be cut sharply, a point emphasized repeatedly by the CBO, the Comptroller General of the United States,
and independent experts. Serious nonpartisan analysts have documented
these realities for years. These challenges will become crippling in the
future if we now choose to run headlong in the opposite direction by
boosting the deficits still further with reckless, unaffordable, unfair
and unnecessary tax cuts.
Why Sen. Ron Johnson opposes tax plan 02:11
Perhaps
taxpayers have come to believe that the public debt and unfunded
liabilities not yet on the books do not matter. Too many politicians of
both parties have pretended as much over the years. Yet debts must be
paid and unfunded net liabilities must be closed.
Let me correct a basic mistake fueled by the daily drumbeat for tax cuts. According to the Joint Tax Committee's estimate
of the House tax bill, federal revenues would fall by around $240
billion in 2019. Households with incomes above $500,000, roughly the top
1%, would have tax cuts of around $58 billion, or a whopping 24% of the
total tax cuts (an average $34,000 per rich taxpayer). Households with
incomes below $50,000, roughly the bottom half of households, would see
their taxes reduced by a mere $14 billion, or just 5.9% of the tax cuts
(an average of $160 per taxpayer).
This
may make it seem that poor taxpayers will gain slightly while rich
taxpayers would obviously gain a lot. In fact, the poor and working
class will almost surely end up far worse off than now. When steps are
taken to close the deficit, programs like Medicare will face the ax, or
payroll taxes will rise. The bottom half will end up paying much more
than they gain in the meager tax cuts allocated to them.
This is just basic fiscal arithmetic: If you make massive transfers to the rich, the rest of society will pick up the bill.
As
you know well, senators, most economic models show large and persistent
budget deficits as a result of the House proposals.Even if there is
some modest economic growth down the road, the tax losses will come up
front while any growth effects will come later. In fact, we should not
expect much, if any, added growth. Some sectors might benefit slightly
(manufacturing) while others (commercial and residential buildings) are
likely to be hit.
Even the Senate
legislation would make many of the incentive provisions temporary,
raising uncertainty and limiting or eliminating any incentive effect
from the very start. The only sure effect would be the enormous tax
saving of the rich and the enormous rise in the budget deficit.
Even
worse, our competitors are likely to match the US corporate tax cuts in
a global race to the bottom. All countries will end up losing tax
revenues with no net gains in growth.
What's more, the much ballyhooed gains for manufacturing are likely to be small. While the statutory tax rate would indeed decline from 35% to 20%, the marginal effective tax rate that determines the economic incentive to invest would decline by much less.
The
current tax code already includes many provisions such as accelerated
(or "bonus") depreciation that lower the marginal effective tax rate
compared with the statutory tax rate. The Congressional Research Service
has shown that the marginal effective tax rate of the US federal
corporate tax is already roughly comparable to that of America's major
competitors.
Rather than slashing
the statutory tax rate, the best tax policy to spur new business
investments would be to expand the provisions for accelerated
depreciation and expensing.
The
high statutory rate would continue to collect federal revenues on
pre-existing investments and on monopoly profits; the accelerated
depreciation and expensing would lower the marginal effective tax rate
on new investments.
Yet such a
preferred policy would also have to made up by raising tax revenues
elsewhere, both to pay for the accelerated depreciation and to move
towards closing the long-term fiscal gap.
Real
tax reform would also include an end to the abusive transfers of
intellectual property to overseas tax havens by America's largest
companies, such as Apple, Amazon, Alphabet (Google), Facebook, and
Microsoft; an end to the carried interest loophole by wealthy CEOs of
hedge funds and private equity funds; an expansion of the Earned Income
Tax Credit for low-wage workers; and a tax on carbon emissions so that
fossil fuels pay their true social cost. None of these are in the House
tax cut.
Real
tax reform certainly would not repeal the estate tax paid by the
mega-rich, a clear and ruthless wealth grab by the President and his
Cabinet of billionaires.
Real tax
reform would not make incentive effects temporary, such as the Senate
proposal to eliminate expensing of investments after five years. The
phase-out of key incentives exposes the hypocrisy of the tax-cut effort.
If the real goal is to improve incentives, then do so, but pay for them
honestly. To propose eliminating incentives within a few years makes
clear that the real aim is to transfer trillions of dollars to the
richest Americans.
Americans
want a government of the people, by the people, and for the people, as
America's expressed by the great Republican President, Abraham Lincoln.
They do not want a government of the ultra-rich, by the ultra-rich, and
for the ultra-rich. Americans want to be able to compete in world
markets without the government suffocated by debt. Please protect our
nation from fiscal disaster at the hands of a few greedy donors to the
Republican Party.
With respect,
Jeffrey D. Sachs, university professor, Columbia University
end quote.
Because a debt to GDP ratio of 89% by 2027 and 150% by 2047 is unsustainable for ANY country!
Also, punishing Democratic states the way it is done in this Bill by not allowing all citizens both Democratic and Republican to write off State taxes on their federal taxes is just mean spirited and beneath Republicans integrity and fair mindedness. Eliminating health care for 13 million and causing those thousands with pre-existing conditions to die without any insurance is just murder and nothing else!
