William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. Black was a central figure in exposing Congressional corruption during the Savings and Loan Crisis.
transcriptAARON MATÉ: It's The Real News, I'm Aaron Maté. Republicans have made it official approving one of the largest, if not the largest, upward transfers of wealth in US history. House Republicans passed their tax bill today, just hours after the Senate. The measure offers temporary tax cuts to middle-income Americans, while offering permanent tax cuts for corporations, fulfilling a decades long Republican, far right goal. Bill Black is Associate Professor of Economics and Law at the University of Missouri-Kansas City. Author of the book, The Best Way to Rob a Bank is to Own One. Bill, a lot of people are looking at this vote today with a fair amount of dismay and disbelief. Your thoughts as you see this long time goal from the Republicans to cut taxes for the wealthy go through.BILL BLACK: Well, first it is the biggest in history ever done through tax legislation in any country at any time in history. And it comes at a time when the United States already has record income inequality, record profits for corporations and record wealth for the top 1,000 of 100% in the world. The bill is absolutely indefensible on any of the grounds claimed and therefore, essentially all of the major claims for it have been outright lies. Of which we should highlight, Treasury Secretary Mnuchin, one of the asserted adults, by the way, who is supposed to protect us from President Trump under some fairy tales. Mnuchin said that there were good studies, study after study, that showed this bill was actually going to make money. By reducing taxes, we would actually increase tax revenue because we would spur economic growth. And then he doubled down on it and said that there were over 100 people at treasury working on those analyses. Well, of course, that was a complete lie. There was no one working on the analyses. There are no analyses. There are no analyses that could attempt to show that. The top Republican conservative economist, these are the kinds that are not prestigious in terms of academics but they're going to get the high-level positions in any Republican administration. Eight of them came out with a letter praising this tax bill. Not one of them mentioning the effect on the deficit. Just saying, "Oh well, we're not going to go there." And under their own analysis the bill would be a disaster if you believe what they purport to believe, but of course what we're seeing is Republicans don't believe anything about deficits. And there are many myths about deficits that Democrats shouldn't adopt but here just the hypocrisy is stunning. So, there's that. Then there's Corker Kickback. So, people who are wonks may remember that Senator Hatch, who by the way is chair of the finance committee in the Senate, and therefore allegedly the principal drafter of this beast, went crackers about three weeks ago on one of his Democratic colleagues because the Democratic colleague was making the point, through lots of questions, and statements, and data that the bill was going to be overwhelmingly for the rich. And Hatch said, "That's bull crap," famously and such. Okay, flash forward to about six days ago. Hatch needs to pick up Corker's vote. Corker, being one of the most of deficit hawkish type folks, who pledged time, after time, after time he'd never vote for any tax bill that added one penny to the deficit. Well, there's a problem. Under most estimates the bill is going to add about 1.45 trillion dollars to the deficit, which is a lot of pennies. So, Corker was in a problem and that was a big problem there were other sick members of the Republican Senators and it was very shaky whether they could get this legislation done. So, they bought off folks. They bought off Rubio. They bought off the alleged moderates from the North East and Alaska. But for Corker, they had this special provision. Now, what you need to know is that Corker's a very wealthy guy and he's a very wealthy guy largely because of real estate. So, Hatch created a provision that has a special, uber-low tax rate. If you make your money through real estate and through indirect means, of where you're not really sort of working for the money. This is particularly bad. And Corker has said, "Oh, it's outrageous to think that me flip-flopping on the bill has anything to do with this provision," which Hatch wrote specifically to bring Corker on board and succeeded in bringing Corker on board. But Corker says, "No, no, no, no. It would have only a trivial effect on me." Well, actually we don't know the exact effect because all we have is his disclosure forms and they say his income from real estate is between this number and this number. But we can tell you that he gets up to $1.2 million extra a year under this tax bill and a minimum of about 350 thousand depending on where in the range that falls. And of course, he knows where in the range that falls and could make that public, and could explain to the public exactly how much he got for all of this.AARON MATÉ: Speaking of public, Bill-BILL BLACK: Corker will someday-AARON MATÉ: Bill, speaking of public, President Trump would also, presumably benefit from this pass-through measure-BILL BLACK: Oh, yes.AARON MATÉ: ... as a real estate tycoon but we don't know to what extent because he won't public his tax returns. Let me ask you about the corporate tax rate. So, now that's been cut down to 21% and the main argument that President Trump and others make is that we're doing this to stay competitive. That our corporate tax rate is higher than other countries and our businesses are leaving the country because of it, and because now we're bring it down to 21% they're going to stay.BILL BLACK: Yeah. So, of course, if that's your logic, the race to the bottom, what happens when tomorrow people respond to what we've done by lowering their rate? Under this logic, then we'd have to lower ours and they have to lower theirs. And where do you end up? With virtually no corporate tax rate. Which, by the way, is actually pretty close to the rate for a bunch of very large corporations that have very special deals with places like Luxembourg and Ireland and such. They have corporate tax rates that closely approximate zero. And that comes to another scam in the tax bill. So, the alleged logic of this is true, US companies have trillions of dollars and they don't want it to be officially located in the United States because then they'd have to pay taxes on it so they keep it offshore. Now, the Republican logic of all of this is we'll have a really low rate to bring them tax money back in. We'll have more tax money and there'll be much more investment. The last part doesn't work at all and it doesn't because the money isn't actually sitting in the Cayman Islands because what would the Cayman Islands do with it? It wouldn't pay you interest and such. It's actually brought into places like New York banking system, in truth. So, it's not going to spur the economy but what it does mean is those companies that did those special scam deals with places like the offshore islands and Ireland, they are going to get a super low tax for bringing the money back, having scammed it first. So, scamming wins. You don't even get the reduced tax rate under the statute that you were talking about. You get an extra special low tax rate to reward for being the kind of folks who spend all your money avoiding taxes. Meanwhile, while all of this is going on of course, the Republicans are crowing. And this is John Cornyn, the number two Republican in the Senate says that we have just, we the Republicans, have just made Obamacare quote, "unworkable" unquote. And he thinks that's a great thing. So, he's pleading guilty openly to trying to sabotage healthcare for something like 85 million Americans, right?AARON MATÉ: That's right because this quote unquote "tax measure" also includes a repeal of the Obamacare insurance mandate.BILL BLACK: That's right, the individual mandate and the individual mandate, again, was put in, remember the Obamacare is really a program designed by a right-wing think tank and they're the ones who came up with the individual mandate because otherwise the economics don't work. It doesn't become a true insurance program. So, you have Republicans openly bragging that they sabotaged right-wing healthcare to ruin it for the American people. And while that's happening, the Republicans have also allowed to expire one of the programs that you would've thought would be absolutely, no one would go after. This is the Child Health Insurance Program, CHIP, which covers eight million American poor kids and they've allowed this to lapse. And what the Republicans are signaling is that they're going to use the excuse that there's no more money because of their tax cuts to have full Medicare and Medicaid and such. And that therefore, because of their giveaways to the wealthy, they have to slash healthcare protections for the poor, including the poorest kids. Merry Christmas.AARON MATÉ: Finally, Bill, in terms of the tax cuts, to even call this bill a tax cut measure is misleading because as I alluded to in the intro, not all tax cuts are equal in terms of some of the permanent and some of them are temporary. So, can you talk about how middle income, lower income people who think they are receiving a tax, or who are being told that they're receiving a tax cut, how even that is not going to last very long?BILL BLACK: Sure. This is clever in a nasty way. The short answer is that the tax cuts for the wealthy are permanent. The tax cuts for the middle class are temporary and they're front loaded so that it looks like you're getting a reduction in your taxes if you're middle class. Most middle class folks in the early years will have small reductions. But that will reverse and most middle class folks will actually end up with higher taxes under this bill. So, it's a redistribution bill that takes mostly from the middle class, certainly from the working class as well and redistributes to the absolute wealthiest Americans. But here's the key. The last poll I've shown showed that only 8% of Americans believed the Republicans that this was a tax bill primarily for the middle class. In other words, the Republicans have taken something, a massive tax cut, which intrinsically should be immensely popular with the population, and turned it into something that in the polls is one of the least popular things the Republicans are doing. And the Republicans, as we speak, are gathering on Capitol Hill to celebrate their great victory of robbing the middle class to enrich the ultra-wealthy through a legislation that will also screw up healthcare for tens of millions of Americans. And they think that is the best thing they've done during Trump's entire term. Wow.AARON MATÉ: Well, we have to leave it there. Bill Black, Associate Professor of Economics and Law at the University of Missouri-Kansas City. Author of The Best Way to Rob a Bank is to Own One. Thank you, Bill.BILL BLACK: Thank you.AARON MATÉ: And thank you for joining us on The Real News.