Trump’s Tax Deform

10.25.17
Stephen Jaffe
Business /25 Oct 2017
10.25.17

Trump’s Tax Deform

The Big Con is underway: “tax reform,” a devious Republican scheme to shift vast sums of money from public causes to the bulging pockets of the already wealthy. Real tax reform is needed — our present system is too complicated and riddled with loopholes — but it should address America’s gross economic inequality by moving wealth from those who have more than enough to those who don’t have a fair share. The Republican plan does the opposite.

With 20% of Americans holding 89% of the wealth, while 80% of the people share just 11% (from a 2017 New York University study), higher taxes on the rich and lower taxes on the rest would reduce this wealth gap, but the current Republican plan is basically a huge tax cut for the rich, hidden behind simplifications and small cuts for others. The respected and nonpartisan Tax Policy Center estimates that the richest 1% of households would reap 80% of the benefits.

Nobel Prize economist Paul Krugman has a list of ten Republican tax “lies” including that America is one of the highest-taxed nations (it’s actually third lowest among developed countries in its effective tax rate), that lower corporate taxes will create jobs (many of the largest corporations calling for tax cuts are planning on automating many of their jobs) and cause wealth to “trickle down” to you and me (laughable, given its failure in the Reagan years, Bush years and its recent colossal failure in Brownback’s Kansas), and that their proposal is a big tax cut for the middle class (also laughable: middle after-tax income would rise about 1%; the highest 5% of incomes would rise around 9%).

Republicans try to scare us by talking about the “death tax” (estate tax) they hope to repeal, but it applies to only a handful of the richest estates — 5,200 out of 2.7 million last year. What should scare us is a GOP budget plan to pay for tax cuts by cutting Medicare, Medicaid, education, and other public services, in addition to adding $1.5 trillion to our debt.

Cutting taxes for the rich is the top Republican priority. One observer wrote that Republicans would “crawl across a continent of glowing coals” to do so, and another said that big-dollar donors are “mad as hell” that the Republican Congress failed to save them $700 billion by failing to repeal Obamacare. Big money talks, and it’s screaming at Republicans.

Kansas Representative Kevin Yoder hears the screams and wrote, in a recent voter email, “By simplifying the [tax] code, we can shift the benefits away from the wealthy — who have done well for themselves already — to those in the middle-class and low-income working families who are still trying to get ahead.” They could “shift the benefits,” but the plan he’s pushing doesn’t do that. It does the opposite.

Mr. Yoder is playing the old bait-and-switch scam, sucking us in with a vision of filing our return on a simple postcard, then bamboozling us with false claims about who will and who won’t benefit. Even Trump’s Treasury Secretary Steven Mnuchin (net worth $300 million) admitted last week that it’s “very hard not to give tax cuts to the wealthy with tax cuts to the middle class.” And those cuts to the wealthy are worth much, much more.

Actually, Mnuchin’s wrong: it’s not “very hard,” but requires a very different philosophy — one that values the work of the many as much as that of the few; one that believes in greater equality for a fairer and more balanced society. It’s perfectly possible to design tax reform where, say, 80% of households pay less and 20% of the richest pay more, while maintaining public services and not adding to the debt.

Adopt those goals and crunch the numbers. Voila: tax reform good for most Americans. The Republican con artists offer nothing of the sort.

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