The Tax Policy Center is a group that previously attacked the GOP outline for tax reform by announcing a study that showed a big increase in the federal deficit over the next ten years if the tax plan is adopted. That's idiotic and obviously wrong because until the brackets and the tax rates for each are announced (and that has not yet happened), no one can estimate the impact of the tax plan. Think of it this way: suppose I told you that the new tax plan would be to pay at the rate of 10% up to a certain number and 35% after that number is reached. Would your taxes go up or down due to that plan? Most likely if the number where the 35% rate kicks in is $14,000, your taxes would likely go up. If that number, however, were $4 million, your taxes would likely go down. The Tax Policy Center doesn't know the rates or the brackets but it is certain that there will be a bigger deficit as a result of the unknown changes.
When the first study came out, there was still a chance that the people at the Tax Policy Center just misunderstood the GOP proposal and had made an honest mistake. Today, however, brings news which makes clear that the TPC is not non-partisan and that it is just tossing mud at the GOP tax plan no matter what the truth. Today, TPC announced that the GOP plan would provide a major $70 billion gift to foreigners. How can that be, you might ask. According to the TPC, if the corporate tax rate is reduced from 35% to 20%, American businesses would save $200 billion in taxes each year. Since foreigners and foreign entities own roughly 35% of the stock in American public corporations, that means that foreigners would save $70 billion a year in taxes.
This is pure nonsense for a number of reasons.
1. The savings from corporate tax reductions are savings for the American corporations themselves, not for their shareholders. As dividends are paid to shareholders, the tax rate paid on those dividends will remain unchanged even with a change in the corporate tax. If the foreigners sell American stock, their liability for capital gains taxes remains unchanged even with a change in the corporate tax.
2. The point of the cut in the corporate tax is to make America appealing for investment whether from domestic or foreign sources. If a billion dollars is invested in the US economy, that will help tens of thousands of American workers. We want foreigners to look more favorably upon American investments. Cutting the corporate taxes does just that.
3. The analysis by the TPC ignores the huge percentage of the American economy which is comprised of private companies. All sorts of small businesses and some of the large ones are owned by American citizens. TPC just uses the percentage of public company ownership in its calculations. The percentage of private companies owned by foreigners is much, much smaller than 35%.
So the calculation by TPC is wrong. The methodology used by TPC is wrong. Indeed, TPC misses the basic purpose of the tax reform proposals.
There is no way that the people at the Tax Policy Center could have missed all of these points. These are not the sort of mistakes that anyone even slightly familiar with how the tax code works would make. That certainly indicates that these misstatements are intentional. The so-called non-partisan center is obviously not only hyper-partisan but also willing to say anything no matter its validity in order to attack the GOP tax plan.
When the first study came out, there was still a chance that the people at the Tax Policy Center just misunderstood the GOP proposal and had made an honest mistake. Today, however, brings news which makes clear that the TPC is not non-partisan and that it is just tossing mud at the GOP tax plan no matter what the truth. Today, TPC announced that the GOP plan would provide a major $70 billion gift to foreigners. How can that be, you might ask. According to the TPC, if the corporate tax rate is reduced from 35% to 20%, American businesses would save $200 billion in taxes each year. Since foreigners and foreign entities own roughly 35% of the stock in American public corporations, that means that foreigners would save $70 billion a year in taxes.
This is pure nonsense for a number of reasons.
1. The savings from corporate tax reductions are savings for the American corporations themselves, not for their shareholders. As dividends are paid to shareholders, the tax rate paid on those dividends will remain unchanged even with a change in the corporate tax. If the foreigners sell American stock, their liability for capital gains taxes remains unchanged even with a change in the corporate tax.
2. The point of the cut in the corporate tax is to make America appealing for investment whether from domestic or foreign sources. If a billion dollars is invested in the US economy, that will help tens of thousands of American workers. We want foreigners to look more favorably upon American investments. Cutting the corporate taxes does just that.
3. The analysis by the TPC ignores the huge percentage of the American economy which is comprised of private companies. All sorts of small businesses and some of the large ones are owned by American citizens. TPC just uses the percentage of public company ownership in its calculations. The percentage of private companies owned by foreigners is much, much smaller than 35%.
So the calculation by TPC is wrong. The methodology used by TPC is wrong. Indeed, TPC misses the basic purpose of the tax reform proposals.
There is no way that the people at the Tax Policy Center could have missed all of these points. These are not the sort of mistakes that anyone even slightly familiar with how the tax code works would make. That certainly indicates that these misstatements are intentional. The so-called non-partisan center is obviously not only hyper-partisan but also willing to say anything no matter its validity in order to attack the GOP tax plan.
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