Ah, yes.  The truth- and the dangers- are now becoming obvious.

The GOP was desperate to provide a benefit to their benefactors.   So, they lowered the corporate tax rates to a ridiculously low 21%.  Even though most corporations never paid the much bandied about 35% rate.  (Only professional corporations and small businesses got stuck with that level of taxes.  Big corporations always hid- and still do- their profits from the tax man.)

I am not saying we didn’t need to lower the tax rates.  We absolutely did.  But, we needed to include true worldwide revenues and profits in the calculation.   (You can see my equitable and reasonable tax plan here.   I’ve been advocating it for years and years.)

Oh, and those promised wage increases that corporations would benevolently provide as a result of the tax cuts?   Yeah,  you know it.  They don’t exist.

Instead those tax cuts are being used to increase executive pay, to allow stock buybacks, and to acquire competitors.   Like those of us who truly understand the economy (and the greed that has eradicated the American Dream over the past 40 years) proclaimed would happen.

Right now,  inflation in the US is the highest it has been in a very long time.  Since the Great Recession.  As you can see in the graph below, it’s increasing way over the expected rates.  Given that wages are not increasing, it means workers have much less disposable cash- because inflation is eating away at the little they are paid.  (Don’t forget- it’s going to get worse.  Since I left for a European vacation, the price of fuel rose more than 20 cents a gallon or almost a 7% increase- in just TWO weeks!)

Which means it will be much harder for the Federal Reserve to apply its magic as the situation worsens.  And, that’s compounded by an important factor- the effect of the tax cuts.

You see, the lower tax rates have cut into the collections of funds the U.S. Treasury collects to fund the government.   This past month, the IRS collected 33% less from corporate taxes than it did exactly 1 year ago.  Yes, it’s true that corporate taxes never accounted (in the last three decades or so) for the bulk of the US revenue (since corporations have stopped paying their fair share)– only amounting to 9% of total tax collected by the IRS.  But, that means- if all else were equal- revenue that the government needs to pay its bill dropped by 3% compared to last year.

But, it’s not the only drop.  Payroll taxes dropped by 5%.  Oops- that’s about 40% of the total US collections.  Which means there’s an additional overall hit to the Treasury of about another 2%.

And, estimated taxes- the taxes paid by unincorporated businesses, and the self-employed or folks who earn significant revenue from non-payroll sources- dropped by 7%.

Yup, the IRS is now collecting about 8% less money than it did last year.  And, last year we had a big deficit- and contributed virtually nothing to maintain (forget about improving) our infrastructure.

The good thing is that the government is spending less money than last year.  About 9% less, now that we no longer have those unfunded liabilities (called the War in Iraq and Afghanistan that were prosecuted primarily off-budget).    But, the federal deficit is still swelling.  For the first nine months of FY 2018 (remember that the federal budget runs from October to October), the deficit was about $ 607 billion- about 1/6 larger than it was for the same 9 months of FY 2017.

Where’s that great increase in revenue that the GOP promised would come from the tax cuts?   Oh, yeah, that’s never happened.

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