Billionaire Michael Bloomberg knows the Trump administration and Congress are ignoring experts and real business people when it comes to the new tax bill. How does he know? Bloomberg was in the room. Bloomberg described being at a meeting with numerous CEOs and President Trump’s economic adviser Gary Cohn. Cohn, Bloomberg writes, is a “friend of mine.” Yet the info Cohn received at that meeting — that a tax cut wouldn’t “jump-start the economy” was either never delivered or got lost in translation. Bloomberg explains that corporations don’t need cash that a tax cut would provide — they’ve never had more cash on hand; it’s at record levels. What they need is competitive workers and better infrastructure to succeed.
Calling the current tax bill proposals “economic malpractice,” Bloomberg, who was Mayor of New York City for 12 years, lists numerous ways the legislation would hurt, rather than enhance America’s future. The problems are:
- First is education. As America falls behind world leaders in this all-important category, the tax bill further imperils education funding by limiting local and state deductions. Result: a less-educated work force that hurts American companies’ ability to compete in a global economy. Not just that but a guarantee that poverty gets passed down to new generations of the poor, because the escape route — education — is blocked by the tax bill.
- Second is infrastructure: Infrastructure spending gets hit in two ways. Sapping local and state funds guarantees an inability to pay for needed fixes and new projects, while increasing the federal deficit to pay for a corporate tax cut undermines the ability of federal infrastructure projects to go forward, be it airports, bridges, the electrical grid, or water delivery. No one can build a healthy business where the infrastructure is subpar.
- Third is inequality: Bloomberg says thinking lower corporate tax rates will lead to higher wages “fundamentally misunderstands how labor markets work.” The middle class will wait and wait and wait, but the trickle down won’t come.
- Fourth is exploding federal deficits: Economists generally agree that there are times the government should run big deficits. But this isn’t one of them. The corporations and wealthy individuals getting the handouts are already flush. What needs the money are the commitments to Social Security, Medicare, infrastructure etc.
Bloomberg believes the 35% corporate tax should be lowered, but only in a “revenue neutral tax reform” effort. That is, when the loopholes are closed and the system is fair, a lower corporate tax rate will bring in the same amount of revenue that it does now.