Here we go again. Donald Trump — the populist — promised to change healthcare to improve the lives of regular working people by giving them better coverage for less money. He’s now promising to pass tax reform that will be “a middle class miracle.”
But the Republican Party, to which Trump leaves the design of his policies, is not a hotbed of populism, except when they are running for office. When governing, they have a far different goal. It’s been the same for the last forty years, ever since the Reagan-infatuated party drank the supply side Kool-Aid.
According to this mythology, if you slash government programs that help regular people and cut taxes on rich people, the economy will boom and everyone will benefit. Growth will offset the loss of revenues so the windfall will be free. The trouble is, no matter how plausible the huckster, it never works out that way. Theres no free lunch, so regular people lose government programs that improve their lives, the rich get richer, but the economy does not boom, deficits skyrocket and the only thing that trickles down to us or our children is the unpaid bill.
Eventually, the regular people may begin to feel they are being conned. They noticed during the healthcare debate that Obamacare wasn’t the bogeyman described by the Republicans, but a lifeline crucial for many, and that Trumpcare would have degraded their prospects.
Will the scales fall from the eyes of an aggrieved populace regarding the “miracle” tax plan before it can be jammed through? Not if the Republicans can help it. They’re trying the same trick they did with healthcare. They are concocting the mess behind closed doors, without input from the minority party. They are speaking in glittering generalities, offer as few details as possible, and will try to enact their handiwork before the reality can dawn on the intended victims.
Trump and the minions he sends out like to front the plan, Gary Cohn and Steve Mnuchin, keep telling transparent lies, especially that millionaires and billionaires like them won’t get anything out of tax reform, only the little people will benefit. How dimwitted do they think we are?
People like Trump, his plutocratic cabinet, and the donors who call the tune for the Republican Congress will make out like bandits, because they are bandits — robbing form the poor to feather their already gold-plated nests. TrumpTax calls for eliminating the estate tax, for instance. But it only affects people with over $11 million. The Alternative Minimum Tax that prevents the super-wealthy from using loopholes to pay less tax than working stiffs would also be eliminated, and the top rate would be cut to ease the suffering of those who make more than $470,000 a year.
Analysis by the Urban-Brookings Institute suggests the plan would increase after-tax income for the bottom 80 percent of taxpayers by less than one-half of one percent. So, someone earning $1,000 a week would gain about four dollar. And the Republican budget would rub salt in the wound by cutting many government benefits that middle and low income workers depend on.
By contrast, the top 1% of taxpayers would get a tax cut of 9% which would increase their take-home pay by an average of $200,000. People like Trump, Betsy DeVos, Wilbur Ross and Cohn and Mnuchin, the authors of the plan, that is, those in the top 1/10th of 1% would receive an average tax cut per year of over $1,000,000.
But that’s peanuts compared to the Estate Tax windfall for wealthy families like the Trumps. The tax doesn’t apply to 99.8 percent of Americans. Only 5,500 tax returns a year belong to estates large enough to be taxed. But for those megarich families, the windfall will be huge. If Trump is worth the $10 billion he claims at his death, the repeal of the estate tax would give Melania, Don Jr., Eric, Ivanka, and Tiffany a tax break amounting to $1.9 billion. Wilbur Ross’s heirs would get an additional $545 million. Betsy DeVos’s heirs a cool $900,000 million. The children of the other 99.8 percent of us would get nothing, no benefit from this tax change, except we’d probably have to pay for the government services now financed by the taxes on the billionaires or kiss them good-bye.
Economics writer Steven Pearlstein reports in the Washington Post the interesting fact that most voters are not yearning for a tax cut. Only those in the plutocratic class. According to a Pew survey, only 26% of us think we are paying too much in taxes. Sixty percent feel corporations and the wealthy are paying too little, which is the exact opposite of what the TrumpTax plan would do.
Instead of a tax cut for themselves, most people say they want the government to do a better job of spending the money on schools, infrastructure, healthcare and an income safety net for the elderly, veterans, and the deserving poor.
Instead of a plan along those lines, TrumpTax would provide a tax break for the rich of $1.5 trillion paid for by more deficits. And Brookings research also shows that the effective corporate tax rate is not the highest in the world 35% Republican talking points claim. Instead, but corporations pay an effective rate of 24% on average.
And half of all business profits are not taxed at all due to loopholes and pass-through provisions that gift them with a lower tax rate. Such tax avoidance schemes are not available to wage-earning tax payers, but allow the hedge-fund class to dodge $100 billion a year in tax liability.
The only middle class miracle that will occur in regard to TrumpTax is if middle class taxpayers let Trump and Congress get away with this gigantic con. Doing so would be a lot more generous to the Trump cabal than they plan to be to the rest of us. The malefactors of great wealth always cry class warfare when tax reform arises, but this too is a con. Only one side is waging class warfare, which is why they keep winning. Until the sheep wise up, they will keep getting sheared.