The IRS is reporting that taxpayers, individuals and the 90% of small business owners who pay any business profit on their personal taxes, gave Uncle Sam $93 billion more in 2018 compared to 2017.
The reason—the 2017 tax law that gave huge tax cuts to corporations and the uber wealthy.
That’s $93 billion that should have been in our local economies creating consumer demand for small businesses. No wonder the 2017 tax law had no benefit for small businesses according to a national poll by Businesses for Responsible Tax Reform.
What happened to that big tax cut American’s were promised from the Tax Cut and Jobs Act the GOP Congress and President Trump crafted quickly without public hearings in the last two months of 2017?
It was all a marketing scam.
What the tax reform proponents really wanted to do was transfer money and wealth from working Americans to big businesses in order to cut corporate tax rates by 40%.
And that is exactly what happened.
The $93 billion more taxpayers paid in 2018 enabled big corporations to pay $91 billion less in 2018 taxes compared to the year before. Those corporate savings went primarily to shareholders and corporate executives, not employees or capital investments.
It gets worse.
There were 60 profitable corporations in the Fortune 500 that paid NO federal income taxes in 2018. That was a giant increase of these free-loading companies from the 18 that paid no taxes in 2017. All because of the 2017 tax law.
You will recognize most of these corporations that aren’t paying their fair share of federal taxes but here are just three that are of interest to South Carolinians—Delta Airlines, Duke Energy and Dominion Resources.
Oh, and about that reduction of corporate tax rate from 35% to 21% that big businesses said they needed to compete internationally, almost all of these big corporations weren’t paying anywhere near that 35%.
The effective corporate tax rate in 2017 was only 13.6% because these businesses were using all kinds of loopholes and write offs to avoid paying federal taxes.
Now, thanks to the 2017 tax law, the corporations that did end up paying taxes in 2018 only paid 7% of their profits on average—the lowest rate in over 70 years.
Clearly, the 2017 corporate tax cuts need to be rolled back and used to actually help our economy grow.