Trump Tax Cuts, California Cap & Trade, Anti-BDS Legislation

“Our tax system taxes work more heavily than wealth. We have a capital gains and dividends top tax rate that is about half the tax rate on wages. … Treating all kinds of income the same would be an important step toward a fairer tax system.”

– Matthew Gardner, senior fellow at the Institute on Taxation and Economic Policy on true tax reform toward a fairer tax system

Trump Tax Cut Plan Would Benefit Wealthiest Americans

Interview with Matthew Gardner, senior fellow at the Institute on Taxation and Economic Policy, conducted by Scott Harris

During the 2016 presidential election campaign season, Donald Trump promised to give America’s beleaguered middle-class families a substantial tax cut, and said he would consider increasing taxes on the wealthy. However, earlier this spring, the Trump economic team released an outline of its tax reform proposal which consisted of bullet points on a single-printed page. While details were scarce, analysis of the tax plan found that it would disproportionately benefit the wealthiest Americans and the billionaire and millionaire members of Trump’s Cabinet. While Trump has refused to release his federal tax returns, it’s a safe bet that he himself – as well as his luxury real estate development company would be primary beneficiaries of the tax reform plan.

Analysis of the Trump administration’s tax plan by the Institute on Taxation and Economic Policy found that “the wealthiest one percent of households would receive 61 percent of all the Trump tax breaks, and would receive an average of $145,400 in 2018 alone.” In contrast “the middle 20 percent of taxpayers would receive about 6.2 percent of the cuts, and an average tax cut of just $730 next year. While the richest 1 percent would receive tax cuts equal to 6.9 percent of their income in 2018, the bottom 60 percent of taxpayers would receive tax cuts equal to just 1.2 percent of their income.”

Between The Lines’ Scott Harris spoke with Matthew Gardner, senior fellow with the Institute on Taxation and Economic Policy, who discusses his group’s analysis of the Trump administration’s tax reform plan, and what a progressive reform plan focused on reversing growing economic inequality would look like. [Rush transcript]
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MATTHEW GARDNER: Trump is answering is all the easy questions about tax reform and none of the hard ones, by which I mean he is proposing to sharply reduce tax rates, especially at the top on both the personal and the corporate side – and to repeal the estate tax, to repeal the alternative minimum tax – that’s the main reason people like President Trump pay any taxes at all. But he is almost silent on the difficult question of how to pay for these reforms. You know, in a deficit environment, everyone agrees that it’s important for tax cuts not to break the bank – that if you’re going to reduce rates, you ought to look for loopholes to close and everyone knows we certainly have these.

But, especially on the corporate front, which is arguably where loophole closing is most needed at this time – there’s just no detail there at all. There’s very general language about taking away unwarranted loopholes. But notably, none of them are identified. So, it’s fair to say that we’re looking at sharp reductions of the taxes that the best-off Americans pay and much smaller cuts in the taxes that the rest of us pay, with the result that you’re looking at a very large hole in our budget deficit of about $4.8 trillion over the next 10 years.

BETWEEN THE LINES: How much detail has been provided about their proposed tax cut policy? What do we know exactly?

MATTHEW GARDNER: We know that the tax rate on pass-through income – businesses on the individual side will go down from the current 39.6 percent to 15 percent, a huge cut that would benefit only a small number of the very best-off Americans. We know that estate tax rate would go to zero. And we know that the corporate tax rate would go as low as 15 percent, although Trump has back-pedaled on that a little bit. And we know as well that most itemized deductions would be repealed, leaving just charitable and mortgage. So the deduction for state and local taxes would go away. We believe personal exemptions would go away as well – the exemptions that you claim for every family member on your income taxes and that there would be a new tax break for childcare, which hasn’t been very well-defined, but could be pretty big. The possibly unforeseen, likely unforeseen, impact of that is that larger families in the middle of the income distribution could actually see tax hikes under this swap. If you have a lot kids and you’re losing all your personal exemptions, this could actually mean a tax hike for you.

Similarly, if you live in a state where state and local taxes are fairly high or fairly progressive – New York, California, states like that – the loss of the federal itemized deduction for state taxes can also make you into a loser under this plan. So, it manages to be a very large tax cut, trillions and trillions of dollars while simultaneously imposing some tax hikes on people who certainly are not expecting them, based on the rhetoric we’ve heard from the administration.

BETWEEN THE LINES: The United States, over many decades, has experienced growing income inequality and as you look at the process of tax reform, what are some of the most essential and important things that could be done with tax reform to specifically address the goal of reversing this growing economic inequality which certainly adversely affects the majority of people in the United States?

MATTHEW GARDNER: I think a sensible starting point, a starting observation to make about our tax system is that it taxes work more heavily than wealth. We have a capital gains and dividends top tax rate that is about half the tax rate on wages. Rectifying that, treating all kinds of income the same, would be an important step toward a fairer tax system. It’s a step that would allow for affordable tax reductions for middle- and low-income families and it would just restore, I think, a little bit, the public’s faith that the tax system is an impartial thing, that it’s not there to help the Mitt Romneys and the Donald Trumps of the world to avoid taxes. We really need a tax reform that simultaneously takes away these visible indicators of institutional inequality and, as a result, helps to knit together the public’s trust in our institutions, in our government and in our leaders. As long as you have these symbols of opulence and inequality in our tax system, it’s a lot to ask for people to trust that their leaders have their best interests in mind. So ending corporate tax breaks – meaningfully ending them – taking away the tax break for wealth over work, these are both changes that would benefit low- and middle-income families that would get us closer to having something resembling a fairer tax system and would help solve our budget deficits and our democratic distrust deficit as well.

For more information, visit the Institute on Taxation and Economic Policy at itep.org.

Climate Activists Say California’s Cap and Trade Legislation is Gift to Big Oil

Interview with Masada Disenhouse, North American organizing director with the global climate group 350.org, conducted by Melinda Tuhus

On July 17, the Democratic party-controlled California legislature voted to extend the state’s trend-setting cap-and-trade program until the year 2030. The measure would reduce greenhouse gas emissions over time by allowing companies to “pay to pollute” if they can’t stay under the ever-tightening limits.

While this system has proven an effective way to reduce various pollutants, it also means that the communities closest to the polluting industries pay the biggest price, which has split the environmental community. The California cap-and-trade bill was initiated by the state’s Democratic Gov. Jerry Brown, which drew support from some Republicans. Brown says he spoke with all stakeholders – including industry, unions, agriculture and progressive activists.

Between The Lines’ Melinda Tuhus spoke with Masada Disenhouse, the North American organizing director with the global climate group, 350.org, based in San Diego. Here, she talks about why her organization opposed the cap-and-trade legislation and her view that even though California is leading the nation in many ways in responding to climate change, there’s still much more that must be done.

For more information, visit climate change group 350.org.

Congressional Bill Would Criminalize Americans’ Support for Israel Boycott

Interview with Josh Ruebner, policy director with the U.S. Campaign for Palestinian Rights, conducted by Scott Harris

Forty-three U.S. senators – 29 Republicans and 14 Democrats – have co-sponsored a proposed bill that would make it a felony crime for Americans to support the international boycott against Israel for that nations’ decades-long illegal occupation of Palestinian lands. The penalties attached to the legislation, called the Israel Anti-Boycott Act, S-720 in the U.S. Senate and HR1697 in the House, would impose a minimum civil fine of $250,000 – and a maximum criminal penalty of $1 million and 20 years in prison.

The American Civil Liberties Union condemned the bill, stating, “The impacts of the legislation would be antithetical to free speech protections enshrined in the First Amendment.” The ACLU also urged legislators to oppose the measure in the absence of significant revisions.

The two primary sponsors of the bill, Sens. Ben Cardin, D-Maryland, and Rob Portman, R-Ohio, initially rejected the ACLU’s criticism, but Cardin later said he was open to amending the legislation to address the group’s concerns. Between The Lines’ Scott Harris spoke with Josh Ruebner, policy director with the U.S. Campaign for Palestinian Rights, who discusses growing opposition to the Israel Anti-Boycott Act and what opponents are doing to advocate the bill’s defeat. [Rush transcript]
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JOSH RUEBNER: What the bill does is it extends and greatly expands the scope of a 1970s-era law that prohibits U.S. companies from complying with the Arab League boycott of Israel. And what it does is it extends the same civil and criminal penalties to corporations that adhere to this boycott of Israel by the Arab League to U.S. persons whose actions have the affect of furthering a boycott of Israel or Israeli settlements called for by an international governmental organization. So what this law would do, if it became a law, what this bill would do, it would basically have the potential to throw an individual in jail for up to 20 years, for doing something according to the ACLU, for posting on Facebook, that “I support the U.N. Human Rights Council compiling a database of Israeli settlements, products, that I’m not going do any personal business with these Israeli settlements because I don’t agree with Israeli settlements.” That’s the draconian nature of this bill and its authors have been caught trying to imprison U.S. persons for expressing a fundamentally First Amendment-protected right to freedom of speech has caused them to obfuscate the issue a lot and claim that it doesn’t pertain to individuals but the fact that a plain reading of the underlying law would suggest that individuals would be caught up in this dragnet.

BETWEEN THE LINES: The primary sponsors of this legislation – Democratic Sen. Ben Cardin of Maryland and Republican Sen. Rob Portman of Ohio have pushed back against charges by ACLU that these civil and criminal penalties violate the First Amendment of free speech here in the United States. What can you tell us about their rationale – Cardin’s and Portman’s – for disputing the notion that this is a violation of free speech.

JOSH RUEBNER: Well, I think Sen. Cardin from Maryland, who’s really the lead sponsor of this bill is quite embarrassed because he fancies himself as part of this Democratic resistance to Trump’s authoritarianism, and he’s been caught red-handed by the ACLU, the premier First Amendment organization in this country, trying to put forward a bill that penalize and severely criminalize the act of boycotting Israel. And he’s trying to make all kinds of obfuscations and legal arguments that the ACLU doesn’t know what it’s talking about. But I would much take their interpretation of the bill over Sen. Cardin, who, by the way, wrote this bill in conjunction with the American Israel public affairs committee and unveiled it at their annual policy conference this spring. So this bill is being put forward at the behest of Israel and its supporters in the United States, who are attempting, through various heavy-handed legislative efforts both in Congress and at the state level, to try to quash this growing and successful global civil society movement for campaigns that boycott, divestment and sanction. Sen. Cardin has just clearly overreached and he’s clearly embarrassed by the fact that he’s been called out by the ACLU on his very anti-First Amendment bill.

BETWEEN THE LINES: Josh, review for us the coalition that has been organized to oppose this anti-boycott act in the U.S. Congress. What kinds of groups have gathered together to unite to oppose this legislation?

JOSH RUEBNER: Well, certainly, this is is something that our organization has viewed as a top priority since it was first introduced in March and to be honest, it didn’t get a whole lot of traction until the ACLU came out very, very forcefully several weeks ago saying that the bill was in direct violation of the First Amendment. And so, since the ACLU came out with that letter, a whole host of organizations have jumped on the bandwagon in opposition to it. Moveon, Credo, lots of different First Amendment rights organizations, J-Street, and other organizations as well.

The importance of activists attending these town hall meetings, impressing their members of Congress is that when they do so, they’re finding that the crowds are with them, totally. And this is having a huge demonstration effect on members of Congress who have never necessarily seen such opposition from their constituents to their policies of supporting Israel’s policies of oppression toward the Palestinians.

For more information, visit U.S. Campaign for Palestinian Rights at uscpr.org and Jewish Voice For Peace at jvp.org.

This week’s summary of under-reported news

Compiled by Bob Nixon
Even as North Korea escalates its nuclear weapons and missile testing program, the nation is approaching its worst famine in 16 years. A new report by the United Nations Food and Agriculture Organization has raised alarm about a spring drought which could slash food production 30 percent this year. (“U.N. Agency Reports Worst Drought in 16 Years in North Korea,” New York Times, July 21, 2017; “N. Korea Ranks No. 1 for Military Spending Relative to GDP: State Department Report,” YONHAP News Agency, Dec. 22, 2016; “North Korea Faces Famine Again,” Japan Times, July 24, 2017)
After months of threats to send federal officials to Chicago to suppress a wave of gun violence, the Trump administration has deployed 20 agents from the Bureau of Alcohol, Tobacco and Firearms (ATF) to combat the city’s high murder rate. The Guardian newspaper reports that a federal gun task force for Chicago has been in the works since last fall. (“‘It Won’t Stop the Murders’: Why Chicago’s Activists Oppose Trump’s ‘gun Strike Force’,” The Guardian, July 10, 2017; “Chicago Gun Violence Taskforce: Whose Idea Was It – and Will It Work?” The Guardian, July 2, 2017)
A decade after the U.S. financial meltdown, California’s housing prices are skyrocketing with monthly rents of $3,000 to $4,000 for a two-bedroom apartment in San Francisco. The statewide housing crisis has generated growing pressure on California’s political leaders to create more affordable housing in a state where homeownership rates have fallen to a 70-year low. (“The California Renters’ Revolt,” The American Prospect, July 12, 2017; “California Housing Crisis Spurring Lawmakers into Action,” San Francisco Chronicle, July 14, 2017)

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