Taxpayers, You’ve Been Scammed<br />In fact, the usual suspects like Paul Ryan were talking about the need for “entitlement reform” — meaning cuts in Medicare<br />and Medicaid — to reduce deficits even as they were passing a huge tax cut that will make those deficits much worse.<br />Yet even before the tax cut, federal tax receipts were looking weak for an economy with low unemployment<br />and a rising stock market — for example, far lower as a percentage of G. D.P.<br />Meanwhile, about your companion’s steak dinner: Most of the tax cut actually consisted of<br />huge tax breaks for corporations, which is in effect a big tax cut for stockholders.<br />Even the most optimistic analyses suggest that there would be little effect on wages for the first few years, which means<br />that for now what looks like a tax break for the wealthy is, in fact, a tax break for the wealthy.<br />Ryan celebrated the tax cut with a tweet about a teacher saving $1.50 a week on her taxes; that’s like<br />saying you should feel grateful for a “gift” that’s actually being charged to your own credit card.<br />But wait — weren’t there a lot of stories about companies using the tax cut to give their workers bonuses?<br />Well, the theory is that lower corporate taxes will draw in lots of money from overseas, which corporations will invest in new plants<br />and equipment, which will drive up the demand for labor, which will raise wages.<br />For example, corporations with monopoly power won’t see lower taxes as a reason to invest more; they’ll just take the money.
