To the editor:
The next event in Washington seems to be the tax cut legislation.
Recently, a politician was on television decrying a $2 trillion giveaway to the richest Americans. Since the highest tax rate for individuals is staying at 39.6 percent for any couple making over $466,950, I presume the culprit is the reduction in the corporate rate from 35 percent down to 20 percent. Those nasty corporations on Wall Street!
But who are these nasty corporations? I am reminded of Walt Kelly’s comic strip “Pogo” when he said, “We have met the enemy and he is us.” If any of us have a 401(k), 403b, mutual fund, any kind of retirement fund, bank accounts or are trust fund babies, we are the nasty corporations. Who do you think owns the stock of these corporations?
AT&T alone has over 6 billion shares outstanding, most of it owned by banks and mutual funds. However, before we baby boomers get excited about our potential windfall, we should look closer at the numbers.
The old adage applies here, “We only know what we are told.” We have been told that there will be a $2 trillion giveaway if the corporate rate is dropped from 35 percent to 20 percent. This is impossible.
In order for that to be true, the overall corporate profit would have to be $13.3 trillion ($13.3 trillion profit times 15 percent reduction equals $2 trillion). Now the GDP (Gross Domestic Product) is $18 trillion. That means the gross value of everything sold in the United States is $18 trillion, and the profit from that $18 trillion is $13.3 trillion, or a 72 percent profit on everything that is sold. Now if someone can point out any business anywhere in the world, other than the sale of illegal drugs that is making a 72 percent profit, I would like to invest what little money I have in them. Waiting to hear from our friends in Washington.