The Republican tax bill, supported by most of California’s GOP delegation, provides corporations with added tax benefits if they outsource jobs. Republicans are, in effect, subsidizing companies who invest in jobs overseas rather than jobs for in California.
Reps. Steve Knight (R-Palmdale) and Mimi Walters (R-Irvine) provided the critical votes the bill needed to pass Congress and become law. In their misleading efforts to promote the unpopular bill, Knight and Walters never mention the provisions designed to help companies abandon American workers.
The Institute on Taxation and Economic Policy (ITEP) describes how the Republican bill, officially called the Tax Cuts and Jobs Act (TCJA), “radically changed the international tax system — for the worse.” Previously, the tax code encouraged “multinational corporations to artificially shift their profits offshore, or even shift real investments and jobs offshore, to avoid paying taxes.” Republicans doubled down on those provisions, exacerbating the problem.
The TCJA replaced the rule allowing companies to defer paying taxes on their offshore earnings with provisions that, in some cases, will provide even bigger breaks for corporations that shift profits offshore. These provisions give offshore earnings two significant tax breaks compared to domestic earnings.
Walters bragged about a secretary who will receive an additional $1.50 per week from the tax bill, but remains silent about the billions corporations will save through building more factories overseas.
The tax bill was always intended to be a massive tax giveaway to corporations, and Wall Street is basking in stock buybacks, which help enrich the already wealthy. Meanwhile, most workers aren’t seeing any changes in their paychecks.
Democrats predicted the impact of the tax bill as it was being debated. As the Washington Post’s Paul Waldman points out, “Democrats, on the other hand, said it was a scam. They charged that workers would see only a fraction of the benefits, and instead corporations would use most of their windfall for things like stock buybacks, which increase share prices and benefit the wealthy people who own the vast majority of stocks.”
Corporations are focusing on keeping investors rich and not substantially investing in workers. And Republicans are encouraging companies that do invest in workers to do so overseas rather than at home.
Rather than be honest with constituents as the tax bill was making it’s way through Congress, Republicans like Knight and Walters were focused on “spinning out a ludicrous fantasy with no basis whatsoever,” says Waldman.
Now that the bill is law and Americans can see what is happening, Republicans have a problem on their hands. According to conservative columnist Jennifer Rubin, Republicans are “facing a classic Trump problem: over-promise, underperform.”