Economic guru Ron Insana says President Donald Trump’s tax-reform blueprint is “deeply flawed” as Congress is prioritizing cutting taxes for the super-rich rather than helping households struggling to survive.
The CNBC personality claims GOP leaders say tax reform is needed to create jobs and raise wages, but the U.S. economy is at near full employment and cutting corporate taxes doesn't lead to wage increases.
Insana wrote that Washington should save a tax cut for a rainy day, when economic growth has stalled.
Congress is working to try to enact the most sweeping overhaul of the tax code since the 1980s that would lower taxes for millions of individual tax payers and slash the rate paid by corporations.
The proposal would also eliminate most individual tax deductions, a move that could result in some taxpayers seeing an increase in their total bill to the government while others see a decrease.
However, the author of four books on Wall Street was blunt in his disdain for the plan.
“It will wreck the housing market; it's punitive to every high-tax blue state in the nation (maybe purposely so); it's anti-family and now, with the repeal of the Affordable Care Act potentially imbedded in the House version, there will be tens of millions of Americans without health insurance, unlike their peers in Congress,” Insana wrote for CNBC.com.
“Companies do not raise wages when rapid technological change is leading to greater automation, lower labor costs and higher productivity. It's a bald-faced lie that wages will magically rise once corporate tax rates come down,” the CNBC and MSNBC contributor wrote.
The money on this faux tax reform would be much better spent on infrastructure, education, job retraining and immigration law reform.
Addressing the actual, over the theoretical and ideological, needs of the economy will help the people who were promised relief by this president. But nothing I have seen about either the House or the Senate version of tax reform fits that bill.
Instead, "average Americans" will, once again, be footing the bill for those far less needy than themselves.
Meanwhile, investors have turned wary on Wall Street amid signs of delay in corporate tax cuts until 2019, which may stall the market rally.
Senate Republicans have unveiled a tax-cut plan that would delay lowering corporate rate to 20 percent by a year and provide small-business owners with a deduction rather than a special business rate, Reuters reported.
The Senate Republicans’ version of the bill differs markedly on corporate, business and individual tax cuts from legislation detailed by their counterparts in the House of Representatives.
The S&P 500 is trading at 18 times expected earnings, expensive compared with its 10-year average of 14.3, according to Thomson Reuters Datastream. Cutting corporate taxes would boost earnings and make stocks relatively less expensive.
“If the Senate version is elected, a market correction will follow and as the battle for tax reform intensify, stocks are likely to feel the pinch of a wobbly market,” said Peter Cardillo, chief market economist at First Standard Financial.
Complicating a Republican push for the biggest overhaul of U.S. tax law since the 1980s, senators said that, like the House, they wanted to slash the corporate tax rate to 20 percent from 35 percent, but in 2019, not right away.
The House was set to vote on its measure next week after its tax-writing Ways and Means Committee approved the legislation on Thursday along party lines, with Democrats united in opposition.
The Senate’s timetable was less clear, with a formal bill yet to be drafted in that chamber, where Republicans have a much smaller majority and a narrower path to winning approval for any legislation, let alone one as contentious as a tax package.
To be sure, Americans are more likely to believe the wealthy will benefit most from the tax reform currently being pushed in the U.S. Congress by Republicans who insist their goal is to help the middle class, according to a Reuters/Ipsos opinion poll.
The poll found 32 percent of Americans think the wealthy will benefit most, compared to 14 percent who think all Americans will benefit and 14 percent who think large U.S. corporations will benefit most.
Despite an insistence by Republicans that their goal is help the middle class, only 8 percent of Americans think that demographic will benefit the most, the poll, which was conducted Nov. 3-8, found.
Republicans and Democrats are divided on who they think tax reform would help the most. Among Republicans, 26 percent think all Americans will benefit, followed by 16 percent who think the wealthy will benefit most, the poll found.
(Newsmax wire services contributed to this report).
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