When President Trump signed the largest overhaul to the U.S. tax code in 30 years in the fall of 2017, there was no mistaking who would benefit: corporations and the super-wealthy. They have. In April, a study found that 60 of the largest companies in America paid no taxes in 2018, despite netting a combined $80 billion in profits. A few months later, another study found that the 2018 tax rate for the wealthiest 400 families in America was more than a percentage point lower than that for working-class families.
But as tends to be the case with just about everything that comes out of the Trump administration, it’s far worse than it appears.
On Monday, The New York Times reported that the 2017 tax cut has been a bigger boon to corporations than previously realized, largely due to the work of lobbyists who successfully convinced the Treasury Department to bend the code to their favor, depriving the U.S. of billions in tax revenue.
Desperate for some sort of legislative accomplishment after their failure to repeal the Affordable Care Act, Republicans didn’t put much care into writing the bill to overhaul the tax code, pushing it through Congress and onto Trump’s desk in a matter of weeks. The open-ended nature of the bill’s language meant Treasury would have a lot of leeway in how to enact its provisions. According to the Times, Treasury officials were taking so many meetings with lobbyists that they barely had time to do their jobs.
Though the new law had slashed the corporate tax rate by 14 percent, it actually included some new taxes, aimed largely at disincentivizing corporations from funneling profits to overseas tax havens. One by one, corporations convinced the Treasury they should be exempt from these taxes. It may have helped that Chip Harter, the Treasury official in charge of outlining how to administer the new taxes, had worked at a law firm where he helped corporations avoid taxes. Foreign banks were able to finagle some of the biggest exemptions, according to the Times article, which noted Treasury Secretary Steve Mnuchin was a former bank executive. It’s as swampy as it sounds.
The big benefit for the foreign banks was personally signed off by Treasury Secretary Steven Mnuchin, a former bank executive: pic.twitter.com/yLsR9QliOL
— Jesse Drucker (@JesseDrucker) December 30, 2019
The lobbyists were dispatched from some of the biggest corporations in the world — HSBC, Coca-Cola, ConocoPhillips, News Corporation. And in the end, they mostly got what they wanted, skirting the new taxes written into the bill. The government will now take in hundreds of billions of dollars less than expected when the bill was signed. The deficit, that old hobby horse of fiscal conservatives, is expected to surpass $1 trillion next year. It’s grown more than 50 percent since Trump took office.
Meanwhile, Trump is trying to restrict Supplemental Nutrition Assistance Program benefits, which could cause millions of Americans to lose their food stamps. How else is the government to make up for the money that will now be staying in the pockets of corporate America?