Because Knight and Republicans lavished wealthy Wall Street corporations with massive tax breaks, federal revenue is plummeting, reports the New York Times. In fact, the amount of federal revenue collected from corporations thus far in 2018 dropped to historic lows, rivaling the drop seen in the Great Recession from a decade ago.
In the trough of the Great Recession in 2009, when companies were laying off hundreds of thousands of workers each month, corporate tax collections plunged by almost a third. It was the largest quarterly drop since the Commerce Department began compiling the data in the 1940s. No other period came close — until this year.
From January to June this year, according to data from the Treasury Department, corporate tax payments fell by a third from the same period a year ago. The drop nearly reached a 75-year low as a share of the economy, according to federal data.
These economic realities stand in stark contrast to the rhetoric on Knight’s campaign website. He promised the changes in the tax bill he voted for would result in economic growth and “higher tax revenues over time.”
“If we hadn’t changed our tax system, you would be expecting rising revenues,” Kimberly A. Clausing, an economics professor, told the New York Times.
Many economists are alarmed that deficits are quickly increasing even with the booming economy inherited from President Obama.
A Washington Post analysis puts a finer point on it, noting, “in a booming economy, the budget deficit should not — repeat, not — be widening.”
The president of the nonpartisan Committee for a Responsible Federal Budget, Maya MacGuineas, warns that there is no guarantee that economic growth will continue forever.
Expecting sustained growth is dangerous “particularly when it ignores the very real threat that the economy slows and we enter a downturn in a very vulnerable fiscal position,” MacGuineas told the New York Times.
Tax revenues are declining and the deficit is climbing, but rich corporations are not using their extra cash to invest in workers. Instead, they are using most of it to shower Wall Street investors with hundreds of billions of dollars in record-setting stock buybacks.
So while Knight helped saddle the next generation with mounting debt, the bill he supported is helping millionaires and billionaires increase their own wealth.