President Donald Trump reacts to supporters after speaking about tax reform at the Andeavor Mandan Refinery, Wednesday, Sept. 6, 2017, in Mandan, N.D.
If it seems as though Republican leaders have been on the verge of unveiling their master plan for securing tax cuts for months, it’s because they have. And next week, those GOP’s tax architects may actually get around to announcing to letting the rest of America in on the details.
You can tell they’re getting very close to a deal now because they’re putting the word out to anyone who’ll listen that their plan definitely will provide a big-time tax cut for the middle class and definitely won’t lavish huge tax cuts upon the wealthiest households and most profitable corporations.
Trump recently had this to say about taxes, “I think the wealthy will be pretty much where they are,” he told reporters at the White House. “If [their tax rates] have to go higher, they’ll go higher, frankly. We’re looking at the middle class and we’re looking at jobs.”
The Washington Post reported this week that, according to three people briefed on discussions, the White House and GOP leaders are considering scrapping plans to slash the income tax rate for top earners and eliminate the estate tax. They are also looking at a more moderate corporate tax cut.
Utah Senator Orrin Hatch, who is one of the so-called Big Six charged with secretly crafting the tax plan, said Republicans have no interest in “cutting taxes very much for the wealthy.”
“I think they want to do a middle-class tax cut—at least that is what most everybody has said,” Hatch noted.
So what’s the deal? Has the GOP gone soft, realizing that its core mission of securing tax cuts for its uber-rich benefactors is bad politics? Don’t count on it. Despite the shiny new talking points, all available evidence points to a Trump tax plan with trickle-down fundamentalism at its core. Trump and the GOP are clearly trying to make this a more politically palatable chore for members of Congress, especially coming off a drawn-out battle on health care.
Even if Republicans walk back their ambitious proposal to cut the 35 percent corporate tax rate down to 15 percent, which most Republicans have quietly admitted is nearly impossible given its astronomical cost, shaving it down to 20 or even 25 percent would still be a massive windfall for Corporate America.
Then, if GOP leaders forgo their plans to cut the tax rate for top income earners, they could still do away with the alternative minimum tax, which would greatly benefit the rich. They also intend to dramatically slash the tax rate for owner-operated entities from 39.6 percent to as low as 15 percent, creating a gigantic loophole for a small sliver of high-income Americans. Moreover, even if they pare down or abandon their plans to eliminate the estate tax altogether, getting rid of that conservative Holy Grail is simply getting rid of the worst part of a very bad plan.
It’s curious, too, how the White House remains tight-lipped about just how much of a tax cut the middle class will get. The Center on Budget and Policy Priorities estimates that Trump’s tax plan would increase the after-tax income of the middle-fifth of American households by just over 3 percent—about $1,900—while the top 0.1 percent’s income would increase by 20 percent—about $1.4 million. In addition, nearly a quarter of the middle-fifth households would actually get a tax increase of nearly $1,000.
The GOP proposal doesn’t even begin to factor who will actually pay for these massive tax cuts. But it’s clear that poor and middle-income Americans will shoulder that burden.
There are tons of different ways to deliver steep tax cuts to the rich. Those methods may change a bit and Republicans will use those minor changes to say, “See? This isn’t all about trickle-down tax cuts for the rich. This is real tax reform.” But the fundamental purpose of the Trump tax plan will stay the same: The top income earners will harvest nearly all the benefits of the tax cuts, leaving scraps for everyone else.
There’s a reason why Tennessee Senator Bob Corker, one the staunchest deficit hawks in Congress, just agreed to a budget deal that paves the way $1.5 trillion in tax cuts over 10 years with no clear way to pay for it, except for that GOP pipe dream of “yuge” economic growth.
Hint: it’s not to make sure the middle class is getting a break. It’s to make the rich richer again.
Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.