Is There Any Problem Tax Cuts for the Wealthy Can't Solve?
Chris Rock had a routine in which he described how when he was a kid, the only health care his father offered for any ailment was Robitussin. Asthma? Robitussin. Cancer? Robitussin. “I broke my leg, Daddy poured Robitussin on it.”
Tax cuts are the Republican Party’s Robitussin. Whatever you think ails the country’s economy, if not its very spirit, tax cuts will fix it. Slow GDP growth? Tax cuts. Slow wage growth? Tax cuts. Long-term productivity declines? Tax cuts. Inequality? Tax cuts. And of course by “tax cuts,” we mean tax cuts for corporations and the wealthy.
What’s remarkable about this isn’t only that it’s justified with a shameless combination of magical thinking and outright lies (more on that in a moment). Most striking of all is the utter lack of imagination the Republican Party shows on the issue it cares most about. After eight years of waiting, preparing, plotting, yearning, and fantasizing about the day when they would finally have control of government again, what they came up with is … pretty much exactly what they’ve advocated in the past. This is most definitely your father’s GOP.
In case you haven’t had a chance to peruse the document the White House released last week, it would, among other things, reduce the corporate tax rate from 35 percent to 20 percent; reduce the top tax rate and collapse the current seven brackets down to three; eliminate the Alternative Minimum Tax and the estate tax; and create a 25 percent tax rate for “pass-through” businesses, instead of the regular income tax rates at which those who utilize them have to pay. This would be a great benefit to those who use pass-throughs, including a certain Donald J. Trump.
There are a few provisions that would give some assistance to people in the middle class, but as the nonpartisan Tax Policy Center wrote in their analysis of the proposal, “Taxpayer groups in the bottom 95 percent of the income distribution would see modest tax cuts, averaging 1.2 percent of after-tax income or less. The benefit would be largest for taxpayers in the top 1 percent (those making more than $730,000), who would see their after-tax income increase 8.5 percent.”
To put it in dollar terms, those in the middle of the income spectrum would get a tax cut averaging $940. Those in the top 1 percent would get a cut averaging $146,470. Those in the top one-tenth of 1 percent would get a cut averaging $747,580. And many people would see their taxes go up.
Naturally, Republicans are trying to sell this massive giveaway to the rich by saying that their real concerns are all about the middle class. “The whole purpose of this is to get a middle class tax cut, to help the people who are working paycheck to paycheck and keep more of their own hard-earned dollars,” said Paul Ryan on this Sunday’s Face the Nation. “We’re looking at the middle class in terms of making sure they can pay less,” said budget director Mick Mulvaney on Fox News Sunday. “The objective is a middle class tax cut,” said Treasury Secretary Steve Mnuchin on Meet the Press. “The objective is not to give an income tax cut to the wealthy.” I suppose that if cutting the wealthy’s taxes isn’t the objective, it’s just a happy accident. They had no idea!
But the critics, Republicans insist, just don’t grasp the magical effects of tax cuts, as their adrenalized power flows through the economy like spinach heading to Popeye’s biceps. Corporations that are already enjoying some of the highest profits in history supposedly will take their windfall and, instead of returning it to their wealthy shareholders like they usually do, will use it to raise their workers’ wages. When Donald Trump sees his tax bill slashed by the cut for pass-through income (if indeed he pays any taxes at all, which we still don’t know), he’ll use it to provide a vital shot in the arm to the gold-leaf wallpaper industry. Those wealthy heirs who currently have to pay taxes only on estates over $5.5 million will take their newly tax-free inheritances and, um, create jobs or something. It’ll all trickle down, just like they always said.
Republicans are calling this tax “reform,” but there’s really no reforming going on, no innovative ideas or creative rethinking of how the government gets revenue. It’s guided by the same old conservative principle that a glorious future of prosperity awaits us if we only minimize the taxes paid by corporations and the wealthy. In short, they’re not offering anything they haven’t before.
You might forgive that lack of imagination if there were any reason to believe that this kind of tax cuts would actually produce the results they claim. But there isn’t. Ask any economist not employed by a Republican think tank (including many conservative ones), and they’ll tell you: Tax cuts don’t create so much growth that they pay for themselves. Cutting taxes for the wealthy doesn’t bring fantastic benefits for everyone. Corporations don’t send tax cuts to their workers. That’s just not how it works.
We had a recent test of the GOP hypothesis when George W. Bush passed large tax cuts in 2001 and 2003, and instead of the skyrocketing growth Republicans predicted then, we saw an economy trudging along lethargically until it plunged off a cliff into the worst economic disaster since the Great Depression. Yet somehow we’re supposed to believe that if we do the same thing Bush did, the results will be exactly the opposite.
When a party keeps proposing the same failed policy and offering the same flim-flammery to justify it year after year and decade after decade, even when it means they live up to their opponents’ caricatures of them and incur genuine political cost, you know there’s a powerful motivation at work. It’s not about solving the particular set of problems that face the economy now, nor is about accomplishing something to show their base. It’s not even about satisfying their donors, much though that matters. It’s deep in their bones, an elemental need, a hunger that overwhelms shame and reason.
Taxing the wealthy and powerful, as far as Republicans are concerned, is just wrong. It offends them. It’s a blight on the nation, an insult to all that is right and good and everything America could become. If only those noble and virtuous elites could have that crushing burden lifted from their shoulders so they could fly free and lead us into a future where justice prevails and the grasping hands of the ungrateful multitudes can no longer reach them!
That’s the animating vision, but Republicans don’t have a lot of time to realize it — they could lose a house of Congress in the 2018 election and see their dreams wither. But they have the chance now, and by God they will have their tax cuts.