A report from the Urban-Brookings Tax Policy Center at the time said “the new tax law will raise deficits and make the distribution of after-tax income more unequal... The new tax law simplifies taxes for some people but also adds complexities and exacerbates compliance issues in other areas.” The Penn Wharton Budget Model (PWBM), a nonpartisan, research-based initiative located at the Wharton Business School, was more specific: “The Tax Cuts and Jobs Act of 2017 increases debt by between $1.9 trillion to $2.2 trillion over the next decade.”

 

This, on top of the fact that the United States has been losing significant revenue from tax breaks for the wealthy for years. Another report from the Institute on Taxation and Economic Policy revealed that “since 2000, tax cuts have reduced federal revenue by trillions of dollars and disproportionately benefited well-off households.” The report continued, “From 2001 through 2018, significant federal tax changes have reduced revenue by $5.1 trillion, with nearly two-thirds of that flowing to the richest fifth of Americans. The cumulative impact on the deficit during this period is $5.9 trillion, including interest payments. By the end of 2025, the tally of tax cuts will grow to $10.6 trillion. Nearly $2 trillion of this amount will have gone to the richest 1 percent. By then, the total impact on the deficit will be $13.6 trillion, including interest payments.” The researchers also point out that their “analysis does not include hundreds of billions of dollars in so-called tax cut ‘extenders’ for corporations and other businesses that Congress has periodically enacted under each administration.”

 

Congressional Republicans and President Trump clearly knew their promises would not be kept. They just didn’t care. As usual, they decided to listen to lobbyists instead. Corporations, trade associations and special interest groups spent $9.6 million to lobby Congress on issues related to taxes in the first three quarters of 2017 alone. But the fourth quarter said hold my beer. In that one quarter alone, the National Association of Realtors spent $22.2 million, the Business Roundtable spent $17.3 million, and the U.S. Chamber of Commerce spent $16.8 million.

 

Public Citizen, a nonprofit consumer rights advocacy group and think tank, found that “6,243 lobbyists were listed on lobbying disclosure forms as working on issues involving the word ‘tax’ through the first three quarters of 2017. That is equal to 57 percent of the nearly 11,000 people who have reported engaging in any domestic lobbying activities at all in 2017. Put another way, this equals more than 11 lobbyists for every member of Congress.”

 

Obviously, when that many hands are in the cookie jar, the cookies are going to be badly crumbled. So, did corporations get their money’s worth from all this lobbying?  You betcha!

 

In fact, poor Corporate America didn’t feel they got quite enough in the original tax bill, so they continued their lobbying efforts full blast even after it passed. And boy, did that work out for them! In fact, those lobbyists worked so hard that large companies got even more tax breaks in the CARES Act.  Yes, you read that correctly. Big business – and wealthy Americans – got an additional $174 billion in tax relief in the initial economic rescue package. These breaks include increasing the amount of deductions companies can take on the interest of their debt, allowing net operating losses to reduce tax liabilities, and another slash in capital gains taxes (which can be applied retroactively, for up to two years!  Yay!).

 

And then there is this: Another New York Times analysis found that “through a series of obscure regulations, the U.S. Treasury carved out exceptions to [the CARES Act] that mean many leading American and foreign companies will owe little or nothing in new taxes on offshore profits, according to a review of the Treasury’s rules, government lobbying records, and interviews with federal policymakers and tax experts. Companies were effectively let off the hook for tens if not hundreds of billions of taxes that they would have been required to pay… One of the most effective campaigns, with the greatest financial consequence, was led by a small group of large foreign banks, including Credit Suisse and Barclays.”

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So, let us get this straight. These banks don’t like paying taxes for some odd reason, so Donald Trump’s Treasury Secretary Steven Mnuchin unilaterally decided to exempt them from paying them?  Where can we sign up for that deal?

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The New York Times again: “Officials at the Joint Committee on Taxation have calculated that the exemptions for international banks could reduce (their tax burden) by up to $50 billion.” Set aside for a moment that the U.S. Treasury in no way has the unilateral power to do such a thing – making this whole move unconstitutional – but we should probably question why Steven Mnuchin was so hell-bent on protecting foreign banks.

 

The answer to that question came on February 23, 2021, when The Washington Post reported that Steven Mnuchin was starting an investment fund with the intention of raising money from Persian Gulf sovereign wealth funds and other international sources. As a matter of fact, when the Capitol riots broke out on January 6th, Mnuchin was on a “diplomatic” trip to the Middle East and Africa – a trip paid for by American taxpayers – meeting with Egypt, Israel, Qatar, Sudan, the United Arab Emirates, and Saudi Arabia.

 

Just one day after leaving government, Mnuchin filed paperwork in Delaware to start his new firm. These guys have some nerve.

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The BRUTAL TRUTH is this:

Everything that was promised to Middle Class

America by Donald Trump and congressional Republicans

regarding their 2017 tax cut has proven to be 100% false.

(read more here)

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​​So, where do we go from here? Conversations about taxes usually focus on who gets what and who pays what, but we need to think much broader than that and design a tax system that matches our optimistic and ambitious vision for America’s future.

 

The time has come to shift the American growth model. Adam Smith, the author of The Wealth of Nations, once said taxes should be efficient, predictable and convenient. Our current approach is the exact opposite.

 

The U.S. tax code is still arbitrary and ridiculously complicated, which makes the entire mess inefficient, unfair and outdated. It’s also super easy to cheat. The gross tax gap is the amount of true tax liability that is not paid timely and voluntarily. This number provides a rough estimate of the level of noncompliance/voluntary compliance when it comes to how Americans pay their taxes. A hard-to-believe report from the Internal Revenue Service (IRS) showed that the tax gap on tax years 2014 through 2016 showed the estimated gross tax gap increased to $496 billion over that time, an increase of over $58 billion from the prior estimate. The estimated average gross tax gap on tax years 2017 through 2019, the latest data available, is projected to be $540 billion per year. The tax gap non-filing, underreporting, and underpayment projections for that time is $41 billion, $433 billion, and $66 billion respectively.

 

Additionally, the IRS estimates that the American public reports less than half of income that doesn’t require third-party verification (i.e., a W-2). The New York Times puts it this way: “Unreported income is the single largest reason that unpaid federal income taxes may amount to more than $600 billion this year, and more than $7.5 trillion over the next decade. It is a truly staggering sum – more than half of the projected federal deficit over the same period.”​​​​