Today’s discussion will be about taxes. Before you continue, however, please watch this:
I highly recommend this video—it is about as charged an exchange as you’ll ever see in Congress. For those of you who did or could not watch, here is a brief summary: late in the Senate Finance Committee hearing on that chamber’s version of a tax “reform” bill, Senator Sherrod Brown, Democrat of Ohio, calls out the bill as a giveaway to corporations and to the wealthiest Americans, paid for on the backs of the low- and middle-income. Senator Orrin Hatch, Republican of Utah and Chairman of the Committee, responds angrily to these charges, saying that he is sick and tired of Brown and his Democratic colleagues’ charges that the bill only works for the elite, that he has been in Washington for years trying to help working people, and that he himself used to be poor.
Notably absent from Senator Hatch’s comments was a defense of the bill he is peddling. This is not surprising, because the bill, which is being pitched by the Senator’s party as a tax cut for the middle class, is exactly what Senator Brown has claimed it is: a tax cut for the rich and powerful, made possibly by raising taxes and removing deductions for everyone else. Judging by Hatch’s reaction, he is fully aware of this. Brown’s comments appear to have hit a nerve.
Here is a selection of what the Republican tax plans will do:
- Permanently cut the corporate tax rate to 20 percent from 35 percent;
- Eliminate (or depending on the version, cuts deeply) the estate tax, which only applies to households with a net worth of $5.5 million or more;
- Cut taxes for “pass-through” income, which is a form of business income taxed as personal income
- Repeal the Alternative Minimum Tax, which ensures that wealthy people pay a baseline level of tax
- Reduce the top individual tax rate
In order to afford these tax cuts, the bills (House, Senate or both) do the following:
- Rip health insurance from 13 million Americans by repealing the individual mandate, a key element of the Affordable Care Act. The saving come from not providing health insurance.
- Remove a tax deduction incentivizing hiring of workers with disabilities
- Remove a tax exemption allowing those with extremely high medical expenses (primarily the old and chronically ill)
- Cut Medicare by $25 billion
- Increase taxes on 47% of families with children
- Remove a government program which funds creation of hundreds of thousands of affordable homes per year
- Remove the deduction for student loans
- Increase the deficit by 1.5 trillion dollars
There are elements of the bill which are so obviously giveaways to donors that its almost comical—for instance, there are tax exemptions for owners of golf courses and private planes. Even the few items in the package which will results in lower taxes for some—for instance, a doubling of the standard deduction and a small expansion of the Child Tax Credit—expire in eight years. And if you are asking yourself why a bill which raises the deficit by $1.5 trillion dollars still somehow manages to raise taxes on millions of middle- and low-income people, you will be asking a question no Republican has been able to answer.
If one of this bill’s defenders can be cornered into admitting that their bill will raise taxes—and some have—the response is predictable: the small additional tax burden doesn’t matter, because corporations and high net worth individuals, having been freed from the tyranny of excessive taxation, will create jobs and raise wages far and above what is needed to compensate for the additional taxation.
This theory goes by many names—trickle-down economics, supply-side economics, a rising tide lifts all boats. It is two things: the most oft-cited and influential economic ideology in American society, and among the most discredited economic theories in history. When corporations see increased profits, which would be the result of paying fewer taxes, they do not create jobs or raise wages—they pay more money to their shareholders. I know because of voluminous research on the subject, but also because that is literally what is happening right now—the stock market is at an all-time high, and wages have barely budged.
So why is the party attempting to pass this monstrosity, despite it being both a bad idea and tremendously unpopular? Two primary reasons. The first is that their donors have told them in no uncertain terms that the checkbooks are shut until they pass tax reform. This is not a guess; multiple members have said as much on the record. The second is that Republicans are setting the stage for massive cuts to Medicare and Medicaid in a few years; they will cry penury, claim there isn’t enough money to pay for everything, and attempt to shorten the lives of as many additional people as they can.
There is hope on the horizon—anyone who values tolerance, equality, and good governance had a great night in early November, when liberals won essentially every winnable seat in Virginia and New Jersey elections, as well as several more around the country. If we win this tax fight—and we can—that may spell doom for the Republican majority. But that hope will only be realized through ceaseless vigilance and resistance against this reign of terror.
Get involved at https://notonepenny.org/. Call your Senators and ask them to vote against this terrible bill. Every little bit helps.
After working in Washington, D.C., for two years, Andrew Orlebeke (’10) is in graduate school in Seattle, Washington, studying public policy. In addition to public service, he has a passion for traveling and an abiding love of sports.