THE US Senate has approved by 51 votes to 48 a measure slashing the taxes of the rich and the major banks and companies by $1.5tn.
The tax cuts over the next decade will be added to the existing $20tn US national debt – and will take effect in January. The Tax Policy Centre in Washington has estimated that the measures will mean middle-income households seeing an average tax cut of $900 next year, while the wealthiest 1% of Americans will see their tax bill drop by $51,000.
The legislation is a giveaway to corporations and the wealthy that will widen the already huge gap between the rich and poor. ‘It contains huge, permanent giveaways for big banks and corporations, and asks our children, millions of working Americans and senior citizens, and future generations to pay the price,’ said Democratic Senator Chris Van Hollen.
The gains for the rich are staggering. Corporate taxes will be set at 21%, instead of the current rate of 35%. The bill will also temporarily lower individual tax rates. There will be less inheritance tax, an expanded child tax credit, and lower taxes on overseas profits.
The extremely wealthy and parents sending their children to private schools are also set to benefit. But families living in high-tax, high-cost states will lose out, with the destruction of any remaining amenities in their communities. In the immediate future, the plan will see the vast majority of taxpayers having lower tax bills, but the cuts expire in 2025.
By 2027, 53% of taxpayers would face higher bills, many of them in the lower income brackets to repay the deficit, if the debt bubble lasts that long. The boost for business has caused the stock market to soar in recent weeks into a fantastic bubble.
As a result of the measures, US companies with offshore dealings could decide to keep their money at home, enticed by lower corporation taxes plus a desire to avoid new restrictions on shifting profits abroad, but also to super-exploit a very hard-pressed working class.
They will also now be allowed to drill for oil and gas in Alaska’s National Wildlife Refuge Arctic region. Companies operating overseas, such as big tech and pharma companies, will be taxed at a low rate – 15.5% – to return the cash to the US in a one-time move. The tens of millions of the poor will sink further into the abyss, especially since Trump’s measures also repeal parts of the Affordable Care Act, the measures known as Obamacare.
Bernie Sanders, who was defeated for the Democratic Party presidential candidate by Hillary Clinton, commented yesterday, ‘Today marks a great day for the Koch brothers and other billionaire Republican campaign contributors who will see huge tax breaks for themselves while driving up the deficit by almost $1.5 trillion.’
He further suggested that the Republicans would not manage to offset the up to $1.5 trillion deficit they have created, predicting that they would end up hitting tens of millions of workers with new taxes.
He added: ‘Today is also a victory for the largest and most profitable corporations in this country like Apple, Microsoft, Pfizer, and General Electric, who, despite record-breaking profits, will now see hundreds of billions of dollars in tax breaks.
‘Today is also a victory for a number of members of the United States Congress who have significant investments in real estate, who, with this vote, will substantially lower the taxes that they pay and will further enrich themselves.’
US workers and their trade unions must now organise to take action against Trump and the Republican Party. They must break with the Democrats and form a Labour Party that will mobilise the masses of the working class and the poor to expropriate the bosses and bankers that are currently celebrating their good fortune under Trump, overthrow American capitalism and go forward to the Socialist United States of America.