You've Been Conned

If you are a staunch Republican and blindly support President Trump and his tax reforms, you might want to consider some information that hasn’t been handed you by one of the greatest con artists of the twenty-first century.  Perhaps it is time to smell the roses and see how much manure is stacked around the base.

While individual tax cuts will vary wildly across the nation, just know that, if your net worth is somewhere south of $10,374,030, you are not in the top one percent.  To put that in perspective, your household income for last year would need to be around $430,600, for you to enjoy the biggest piece of the pie from the new legislation.  The further away you are from those numbers, the worse you were treated in the last round of tax reforms.

The Fat Cats Know How to Party With Your Money

In my state of Florida, the top one percent earned $682,090.  It is projected that 98% of those wealthy individuals will get, in 2019, a tax cut of around $101,350.  If you are a wage earner, your paycheck may be a bit larger than it was this time last year.  Two factors enter here for individuals earning an hourly wage.  If you got an actual raise, congratulations, you are in the minority.  What you will normally see, would be a reduction in your withholding taxes that caused your check to be bigger.  Before you get too excited about this “raise” just know that it was done with the money we borrowed from countries like China.  Yes, your tax cut based raise should have a Made in China sticker affixed, just like your Ivanka Trump handbag (which was exempted from recent US tariffs, actually all clothing missed the list not just her stuff.)

 According to the U.S. Bureau of Labor Statistics, from June 2017 to June 2018, real average hourly earnings decreased 0.2 percent, seasonally adjusted.  Combining the change in real average hourly earnings with a 0.3-percent increase in the average workweek resulted in no change to real average weekly earnings over this period.

Source:  Bureau of Labor Statistics

While you may see a reduction in your hourly wage taxes, wealthy individuals and corporations got the giant bulk of this Republican sponsored windfall.  Also, know that their (corporate) income bump is permanent and yours is temporary.  The con man in chief will tell you that the corporate tax cuts, again paid for with money we borrowed from China and others, will eventually “trickle down to you.”  Well, history shows that it didn’t trickle down under Reagan and it didn’t trickle down under any administration elected since.  Most of this latest round went to corporate stock buybacks and executive bonuses.  There is not much left to trickle.

Where the lion's share of the corporate tax-cut landed: Wealthy America

When you see that the stock market is doing well you can rest assured that there are people out there making a nice profit.  If you don’t manage a stock portfolio of significant size, you don’t get to celebrate by buying a new ostrich skin jacket.  (I couldn’t resist the Paul Manafort reference)

Who Do We Owe?

President Trump claimed that people like him wouldn’t benefit from the tax cuts.  In fact, he claimed that the new tax bill will, “cost me a fortune.”  Well, he just got a top individual tax reduction of 2.6% (now 37% down from 39.6%) and the new “pass-through” provision will give the Trump Organization an additional 20% reduction for his pass-through business, which is taxed as personal income.  His business is basically a large holding company that is exempt from corporate income tax and brings in around $9.5 billion annually.  He would only be taxed on the amount distributed to shareholders.  President Trump and Jared Kushner will be getting this windfall for the near future and it will be financed by increasing the national debt and borrowing more money from China and others.

Average American's Slice of the Pie
(That's Your Share, enjoy your crumbs)

Over the next seven years, the tax bill benefits for individuals will expire, but the corporate benefits will continue.  The bill that was passed will result in higher individual income taxes for over half of all Americans in nine years.  The takeaway here is that you may have gotten a small sliver of the pie but the fat cats got a giant serving of pie a-la-mode.  President Trump got his pie with extra sprinkles.

Fat Cat Serving of the Tax Cut Pie
(Sorry, but they've already started eating theirs)