The Republican Tax Plan: “A Big Beautiful Christmas Present” Or Coal in Our Stockings?

The real question: why?

Why this Republican tax proposal? Well, it’s billed as “reform,” and God knows our federal tax system is an ungodly mess crying out for reform. But this bill isn’t it. Fewer brackets means nothing. Admittedly, eliminating some deductions and, particularly, the Alternative Minimum Tax would be significant simplifications. Yet in other ways, new complications are actually added. Trump’s saying nine out of ten would be able to file on a postcard is a lie even biglier than usual for him.

It’s also a lie to call it the biggest tax cut in our history. It would be true if Trump had added the words for corporations.

And why cut taxes? Because they’re too high? When for decades government spending has exceeded taxes by hundreds of billions of dollars yearly? When the federal debt now tops twenty trillion?

Republicans — supposedly the party of fiscal conservatism — originally were supposedly aiming for a revenue-neutral reform — that is, making up the cuts by getting revenue elsewhere, like capping 401Ks. But of course taking any benefit away from anyone is political poison. So predictably, they jettisoned any notion of paying for the cuts. The budget they passed recently (with virtually no debate) permits them (due to arcane rules) to now enact a tax cut costing a whopping $1.5 trillion, over 10 years, with only 50 Senate votes, rather than an impossible 60.

But even with that giant window, making the math work is very hard. Especially with corporations getting most of the $1.5 trillion available. Additional fat cuts for fat cats necessitate compensatory tax increases for many middle and upper middle class folks. At best, some less affluent people will get peanuts, while caviar is served to the richest and, especially, corporations.

After decades of Democrats caricaturing Republicans as caring only for the rich, the GOP is now shamelessly proving it. When economic inequality has been a growing concern, to propose a tax bill that will significantly aggravate that inequality is disgraceful.

But they say the aim is to stimulate the economy, spur growth, and create jobs. Producing so much more income, and thus more tax revenue, that the cuts will pay for themselves. They’ve been making this argument for forty years. It has never proven true.

A tax cut might be stimulative if it put money in the pockets of Joe Sixpack who’ll spend it. But not when most goes to the rich who’ll just save it. And corporate hiring simply has nothing to do with how much tax they pay on profits.

Meantime, the whole growth stimulation idea ignores the impact on deficits and debt. Which are set to explode in years ahead as ever more older people collect pensions and benefits while ever fewer work and pay taxes. We can finance the gap by borrowing, as long as interest rates remain at historic lows. But if ballooning debt spooks the financial markets, interest rates will spike up, and we won’t be able to afford much except interest payments. That makes cutting taxes suicidal economic insanity.

And snuck into the bill is this hidden stinker: repealing the Johnson Amendment, which bars churches from partisan politics. A terrible idea. (Read about it here.)

No wonder they want to ram this through quickly, without any pesky hearings or debate. Before anybody can really figure out what’s happening. Just like they tried to do with health care. Rushing such a hugely complex and consequential plan is also disgraceful and crazy.

But finally, for Republicans, the real reason behind all this is not economic policy. It’s more like religious belief. Tax cuts are a matter of faith, comparable to belief in God for Christians. Never mind economics, reality, or sanity.

Will it pass? Very doubtful. Likely it will get watered down into something insignificant — which Trump will nevertheless call a “big, big win.”

“Huuuge!”

(Note, my family would benefit significantly from the GOP plan. And I was a Republican myself until recently. This tax plan epitomizes why I quit.)

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