The Joint Committee on Taxation, the Senate’s official scorekeeper when it comes to taxes and the deficit, released a report today estimating that the Republican tax cut plan would add AT LEAST $1 Trillion to the national debit. See: https://www.jct.gov/publications.html?func=startdown&id=5045
The Republican plan WOULD NOT PAY FOR ITSELF even if you fully accept the following Republican economic illogic.
The Republican have argued illogically that they can cut taxes by $1.5 trillion AND generate sufficient revenues to fully offset the loss of revenues. Their argument goes like this:
1. The Republicans say that a reduction in corporate taxes will provide a windfall to American businesses that they will use to expand their businesses and hire more workers regardless of whether they have a need to do so. CEOs instead of raising their own salaries or passing along the tax savings to stock holders in increased dividends or buying back their own stock, will do the right thing and hire workers and/or increases average worker salaries because that would be good for the country. This Republican illogic denies the reality that businesses expand and hire more workers when the demand for their product/services outpaces their ability to meet the increased demand with existing resources. They pay higher wages when they are afraid that they will lose their best workers to their competitors when their competitors, in need of workers, increase offering wages.
2. The Republicans say that many people are staying out of the workforce because current taxes take so much of their wages that it makes it unprofitable to work. Tax cuts will make seeking employment more attractive. The more people work the more taxes that are paid so government revenues go up. Leaving aside the fallacy that people factor in their tax rate when deciding whether to seek employment, the current employment rate is such that few people are unemployed. The Employment Act of 1946 and Full Employment and Balanced Growth Act of 1978 officially peg full employment in the U.S. at 4% or less. Current seasonally adjusted unemployment is 4.1%. That is the LOWEST unemployment since 2000 according the the Bureau of Labor Statistics. See: https://data.bls.gov/pdq/SurveyOutputServlet In reality, the Republican tax cut WILL NOT result in a substantial increase in employment because we are already at full employment. The wage tomato has very little juice left no matter how hard you squeeze it.
The Republican tax plan WILL NOT come close to paying for itself, even if you fully accept their economic illogic. In fact the Republican tax plan will add as much as $2 Trillion to the national debit according to the Congressional Budget Office. See: http://thehill.com/policy/finance/359353-gop-tax-bill-would-add-17-trillion-to-debt-cbo
Bottom Line: Let’s get real. The Republicans are passing a tax bill that will DO NOTHING to help our country but will DO A LOT for a few RICH campaign funders. The rest if us and our kids will eventually pay the bill.
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