by Anthony J. Ogorek Ed.D., CFP™
“My donors are basically saying, ‘Get it done or don’t ever call me again.’ ”
Western New York’s own Chris Collins, a member of the U.S. House of Representatives, spoke more candidly than any member of Congress regarding the reasoning behind his seemingly irrational vote to almost single-handedly allow federal budget talks to move forward, setting the stage for the Republican tax cut bill that will have disastrous consequences for our state.
How any local representative – actually we have two of them including Rep. Tom Reed – could sell out the constituents who have elected them by abolishing the state income tax deduction, as well as the Historic Tax Credit program that has been so critical to the revitalization of the City of Buffalo, is difficult to fathom. How can a three-term representative like Collins, who carried his last election with 67 percent of the vote, be so out of touch with issues that are critical to the continued renaissance of our region?
One of the supposed hallmarks of the Tax Cuts and Jobs Act is “a once-in-a-generation opportunity to replace our outdated and complicated tax code,” according to Collins. The reality is that there is no subtraction here, with the House bill adding 440 or so pages to an already Byzantine tax code.
Further Collins in a Dec. 2 press release claims, “Families in Western New York will be able to keep more of what they earn.”
Well that depends. If true, it is indeed curious that the personal tax cuts in the bill are temporary, however, the corporate tax cuts are, and you guessed it, permanent. This seems clear evidence that the donor class – a handful of corporate and well-heeled donors – is calling the shots in the 27th Congressional District, not the 220,000 citizens who re-elected Collins.
According to the Office of Management and Budget 2018 United States Budget Estimate, 80 percent of estimated federal revenue will be paid by individuals through payroll and income taxes. Just 13 percent of federal revenue is projected to come from corporations.
With this being the case, why are corporate rates dropping by a whopping 43 percent when profits are at all-time highs?
Collins has stated that the Tax Cuts and Jobs Act “will unleash America’s competitiveness and bring jobs and profits back home, where they belong,” in reference to the repatriation of trillions of corporate dollars held in offshore subsidiaries.
According to Axios, “For the offshore money that is tied up in foreign accounts, companies have not guaranteed they would bring that money back. And even if they do, they haven’t guaranteed they would invest those profits into raising wages, hiring more workers or building/upgrading facilities.”