To the Editor:
It’s quite an accomplishment of Dan Nordberg to extol the virtues of the Trump-GOP tax cuts and their alleged benefits for small businesses without offering any quantifiable or verifiable data to support his claims (Opinion: Tax reform continues to power small business growth in Colorado, Oct. 12, 2018 CSBJ). Instead, he offers warmed-over political rhetoric and empty promises that evaporate like cotton candy on your tongue when you closely examine the facts.
Case in point: Nordberg writes, “More than 6 million American workers have received a bonus, a pay raise or improved benefits as a result of the president’s tax cut law.”
Sounds great, until you do the math. The total work force is 155 million people. So according to Nordberg, just 4 percent of the workforce saw any benefit from the tax cuts. The other 96 percent are apparently still waiting.
And when you add in the rising cost of health care, prescription drugs, gasoline and other necessities — as the Bureau of Labor Statistics has shown — real wages have been flat or declined since passage of the tax cuts, even for that 4 percent.
Nordberg fails to mention that the tax cuts overwhelmingly favor the wealthy. The average tax cut next year will be about $63,000 for the richest 1 percent in Colorado ($1.8 million average annual income), according to the Institute on Taxation and Economic Policy. That’s more than what an average sole proprietor earns in a year ($51,000), according to the Small Business Administration.
What’s more, Nordberg says some small businesses will now benefit by deducting 20 percent of their business income. But three-fifths of the value of this tax break will go to the richest 1 percent by 2024. This is partly because business income is so highly concentrated. The wealthiest 1 percent of business owners receive over half of all pass-through-business income.
So, if they’re not raising wages, what are the corporations doing with their tax cut windfall? Many of them are buying back their stock. In fact, companies have announced stock buybacks of more than $750 billion so far this year, with estimates that the figure will top $1 trillion by year’s end. Buybacks mostly enrich the already wealthy, including CEOs, because rich people own most corporate stock: The wealthiest 10 percent of American households own 84 percent of all shares, the top 1 percent own 40 percent. About one half of households own no stock.
Nordberg seems to think that small business owners will benefit because their customers will have more money in their pockets to spend at their stores. This is a myth. The tax cuts have blown a nearly $2 trillion hole in the national deficit. To reduce this debt, President Trump’s budget seeks to slash $1.3 trillion from Medicare, Medicaid and the Affordable Care Act.
House Republicans propose slashing $5 trillion overall, including $2 trillion from these same health care services. Such massive cuts could delay Medicare for seniors until the age of 67, cause millions to lose their health care, jack up premiums and other out-of-pocket costs for millions more, make life-saving medicines costlier and restrict critical services for people with disabilities. When these services are cut, working families are stressed. They can’t afford as many groceries, haircuts, dinners out, new cars and other goods and services offered by local businesses. It’s this type of local spending that grows businesses, creates jobs and makes neighborhoods hum. Cutting taxes mostly for the wealthy and expecting the benefits to trickle down to small businesses and their customers is a discredited economic theory that didn’t work in the 1980s and won’t work now.
— Tracy duCharme, small business owner