CNN Tax Debate: Ted Cruz Sure Loves the Top 1%
Republicans in both the Senate and the House of Representatives have been working at passing massive tax reform at the urging of President Trump. Analysis of each bill has only come out from the Congressional Budget Office and other non-partisan groups, but the early results seem to be consistent: Trump era tax reform is aimed at slashing taxes for corporations and the wealthy at the expense of everybody else.
Texas Senator Ted Cruz has been a big proponent of cutting taxes for the wealthy. Flanked by Republican Senator Tim Scott, Cruz went on CNN to answer questions and debate the key points of the Senate bill with Democratic Senator Maria Cantwell and Independent Senator Bernie Sanders. The end result? Cruz made it very clear just how much he loves the top 1%. We took a look at a handful of key moments from the tense CNN debate and examined the tax reform arguments made by each senator.
Economists agree on projected growth
Bernie Sanders: “This legislation will grow the deficit by $1.4 trillion.”
Senator Sanders is correct that the current expectation with the tax bill in the Senate is that the deficit will increase by around $1.4 trillion over the next decade. Senator Cruz didn’t deny that such a number was correct – it’s simple math. But Cruz’s explanation was that $1.4 trillion is a static number, meaning it doesn’t factor in any growth for the economy. Cruz believes that the tax bill could grow the economy by historic levels.
Senator Cantwell, however, countered that actual economists disagree with Cruz on that point. Out of 38 economists that were asked whether this bill would grow the economy by a few tenths of a percent – Cruz said he expects 3-5% – 37 of the 38 said no. When the outlier was asked why he said yes, according to Cantwell, he replied that he didn’t understand the question.
The estate tax
Tim Scott: “Our plan does not repeal the Estate Tax, that is a false statement.”
Senator Scott is correct that the current tax bill in the Senate does not repeal the estate tax, which Sanders would point out affects only the top two-tenths of a percent of people in the United States – the uber-wealthy. The tax bill in the House of Representatives, however, does repeal the estate tax.
And it’s not exactly as if Cruz has hidden his wish to repeal the estate tax, either. The Texas senator admitted it on stage after some prodding by Sanders, and released the following statement after the debate:
“Contrary to claims by Democrats, repealing the death tax will simplify the American tax system and provide needed tax relief for farmers, ranchers and small business owners.”
Cruz is wrong in his implication that struggling blue collar workers and small business owners will be positively affected. The estate tax (which he calls the “death tax”) affects only individuals with $5.49 million or more, or couples with $10.98 million. That amounts to the top 0.2% of Americans.
Who does this really benefit?
Ted Cruz: “If you’re a taxpayer, this bill benefits you.”
Cruz said in his opening statement that this bill will benefit all American taxpayers, which is false. The Congressional Budget Office has stated that the poor would lose billions of dollars in benefits currently offered by the federal government, while other outcomes – such as rising healthcare costs – will compound the problem.
When confronted with facts provided by non-partisan analysts, including that 87 million middle class households would see their taxes rise by the end of the decade, Cruz called the Tax Policy Center a “left-wing group.” Sanders quickly pointed out that the Tax Policy Center was founded by Ronald Reagan, George H.W. Bush, and Bill Clinton.
Raising taxes on the middle class
Maria Cantwell: “Raising taxes on the middle class is wrong, and that’s what this bill does.”
While the Senate bill replaces the current 35% corporate tax rate with a permanent 20% rate, the tax cuts for middle class Americans aren’t guaranteed long term. Cantwell states that the bill unfairly raises taxes on the middle class over the next decade, and Cruz’s major rebuttal is that they might be able to come up with permanent tax breaks for the middle class and poor if only the Democrats would stop filibustering to keep such ideas off the table.
Sanders goes further, claiming that Cruz and Republicans such as Paul Ryan will use the massive deficit hole they’ve created to go after programs such as Medicare, Medicaid, and Social Security – the latter of which Cruz once referred to as a Ponzi scheme. Ryan, for his part, has openly stated that entitlement cuts would be next on the chopping block after Congress passes tax reform.
Cruz attacks Sanders on socialism
Ted Cruz: “When (Democrats) say ‘rich,’ they mean ‘taxpayer.’”
Because he didn’t really elaborate, it’s hard to understand what Cruz was trying to say here. When Democrats say that the lionshare of the tax breaks in the Senate bill are going to the rich, they do not mean all taxpayers. They mean wealthy Americans.
According to Sanders, 60% of the tax breaks in the Senate bill will go to the top 1%. While the numbers don’t shake out exactly the same, Sanders’ claim is mostly backed up by research done at The Institute on Taxation and Economic Policy.
Cruz has attacked Bernie Sanders in the past for his socialist views, and Sanders has openly stated that to ensure healthcare and education for all Americans would require taxes to raise for everyone. Cruz even went so far as to quote the first half of that statement during his time, conveniently leaving off the portion where Sanders described paying $4,000 more in taxes to save three times that in health insurance premiums.
Corporations aren’t exactly hurting
Maria Cantwell: “It’s the middle class who is hurting. Corporations are making huge profits, they aren’t the ones we should be dealing with right now. We should be helping the middle class.”
Cantwell and Sanders make several claims throughout the debate about how well corporations are doing in America, and there is little argument from Cruz or Scott on the matter. The Dow has soared to record highs in recent months, unemployment is low, and companies are profiting more now than at any other time in American history. So why, then, is it the corporations that need the tax breaks?
Cruz frequently attempts to spin the conversation toward small businesses, which create two-thirds of all jobs in America and are often operating on a very fine line. It’s true that the tax breaks will impact small businesses, but by far the biggest beneficiaries will be large corporations.
Cantwell points to the struggling middle class as why this is all so misguided. The middle class has been consistently shrinking for two decades, and Americans that consider themselves to be middle class has dropped below 50%. Wage inequality is one of the biggest issues facing the American people, and the Senate’s tax bill does little to address that.
The truth about corporate tax rates
Bernie Sanders: “There is a big difference between the (corporate tax) nominal rate and the effective rate.”
Cruz claims that the 35% corporate tax rate is the highest in the world, but that doesn’t paint a complete picture. One of Sanders’ best points was that the corporate tax rate may be set at 35%, but thanks to many tax incentives and loopholes, the effective tax rate for corporations in America is much closer to 18%. Even Cruz and Scott agreed to that.
According to the Center on Budget and Policy Priorities, that puts the current corporate tax rate right in line with similar countries around the world.
“The share of worldwide profits that U.S. multinational corporations pay in U.S. and foreign income taxes is about 28 percent; the average for companies headquartered in other G-7 countries, weighted by the size of their economies, is 29 percent.”
Cruz also makes the point that President Obama proposed a plan to drop the corporate tax rate to 28% back in 2012, and this is true. However, Senator Cruz is misleading the audience once again. Along with the drop in tax rate, the unadopted Obama plan also would have banned several corporate deductions and loopholes that save companies billions each year.
Check out The Cheat Sheet on Facebook!