Foon Rhee

A jackpot for the 1 percent, a pittance for the rest of us

Of all the terrible ideas President Donald Trump and Republican leaders in Congress are pushing, this is among the most galling:

They’re angling to give huge tax cuts to wealthy Americans who don’t need the money, while stiffing the shrinking middle class and the struggling poor who do.

If you’re wondering why Team Trump is going to such lengths on something as unpopular as blowing up Obamacare, one big reason is to get rid of taxes on the rich and corporations. The bill passed by the GOP House in May includes nearly $1 trillion in tax cuts and would eliminate two tax hikes on individuals earning $200,000 or more a year that have helped expand health coverage for the poor.

On Tuesday, Senate Republican leaders kept Trumpcare alive – barely – with Vice President Mike Pence breaking a 50-50 tie on a procedural vote to start debate. But they failed to pass an actual bill to allow negotiations with the House on final health care legislation.

If they can’t get the tax cuts under the guise of “fixing” health care, the White House and GOP leaders plan to try again and call it tax “reform.”

Don’t be fooled by the vague statement they issued Thursday; it is far less about simplifying the tax code, and far more about giving a windfall to the wealthy. And don’t trust Trump’s new claims that his top priority on tax reform is to help the middle class, who have “gotten screwed.”

The proposals he and GOP leaders have actually put on the table would lower the highest tax bracket from 39.6 percent to at least 35 percent, end the estate tax on family fortunes and eliminate the alternative minimum tax, which makes sure the rich can’t use loopholes to avoid paying any federal income taxes. Nationally, the top 1 percent would get 40 percent of the savings, an average of $270,000 per household, according to the latest analysis by the nonpartisan Tax Policy Center.

In California, the bottom line would be even more unfair. The 1 percent with the highest incomes – an average of more than $2.7 million a year – would get nearly two-thirds of the total tax cut, an average of nearly $150,000 each in 2018, the nonpartisan Institute on Taxation and Economic Policy estimated this month. The middle fifth of taxpayers would get less than 7 percent of the total savings, an average of $770 each; the poorest fifth would get an average of $120 each.

These huge tax benefits for the rich make even less sense when you consider worsening income inequality in California and America. A small group reaped the biggest benefits during the last economic boom, and it’s happening again during the recovery. For every millionaire in Silicon Valley, there are many more stuck in low-wage jobs.

Or look at the pay gap between CEOs and workers. In 2016, the chief executives at America’s largest companies averaged $15.6 million in salary, stock options and other compensation – 271 times the pay of the average worker, according to a new study by the Economic Policy Institute.

The rich are getting richer already, without more tax cuts. Yet the powerful political network backed by the billionaire Koch brothers is launching a multimillion-dollar PR campaign to back the White House push. Americans for Prosperity supports cutting corporate taxes, which would definitely make Koch Industries more prosperous, and ending the estate tax, which would be a bounty for the Koch family.

To help the vast majority of Americans, we should be focusing on creating middle-class jobs, boosting wages and lessening the impact of globalization.

Democratic leaders are trying to do that with a more populist economic message that echoes Sens. Bernie Sanders and Elizabeth Warren. On Monday, they unveiled “A Better Deal,” which calls for a new tax credit for creating jobs, more job training and college aid, more investment in infrastructure and lower prescription drug prices. Top House Democrat Nancy Pelosi of San Francisco wrote that the blueprint “represents a renewed Democratic commitment to the hardworking men and women across the United States who have been left out and left behind for too long.”

Maybe the new message will help Democrats in California and elsewhere trying to win back Congress in 2018. It certainly could have boosted Hillary Clinton last year.

She never quite connected with white working class voters, who instead believed a New York real estate tycoon would look out for them. But Trump is part of the 1 percent. He’s never going to betray them with higher taxes.

As for the other 99 percent, many barely make it from paycheck to paycheck – half of all American families, according to one recent survey.

I’m very blessed not to be in that boat, but all the layoffs and buyouts at newspapers are forcing me to think about what could happen. I don’t have much of a backup plan if I lose my job, unless winning Powerball counts.

My fallback plan, however, is no more of a fantasy than the newspaper industry’s strategy. It’s going all in on digital, but with a few exceptions hasn’t figured out how to make real money off it. So McClatchy, which owns The Bee, and other media companies have banded together to ask Trump’s Justice Department to lift antitrust rules so they can negotiate jointly with Facebook and Google, which use our stories but grab more than 70 percent of online ad revenue.

This plea is coming as Trump – who sure knows how to hold a grudge if nothing else – has declared war on the “fake news” media. So, yeah, that’s gonna work.

It’s frightening to be at this president’s mercy for financial survival. If working Americans, in my industry and many others, are counting on Trump to come to our rescue with big tax cuts, we will be sorely disappointed.

Foon Rhee: 916-321-1913, @foonrhee