Trumpcare died, in part, because Trump’s rhetoric well exceeded his substance, contributing to a half-baked, ill-conceived “repeal-and-replace” bill. Trump’s tax plan is little different. If there’s one graph that anyone should see, it’s this one, prepared by the Senate Joint Committee on Taxation.
It’s a little blurry but, bottom line, this is not a middle-class tax cut, not when after-tax income growth is flat or negative for those who make less than $100,000 a year. Worse, the Einsteins in the Senate are making the tax cuts temporary while other provisions are permanent.
In the Senate, Republicans were so desperate to find money that this past week they released a new version of the bill that made virtually all of the middle-class tax cuts temporary. They expire before the bill’s final year, 2027.
An assortment of middle-class tax increases — again, to help cover the cost of the tax cuts for the wealthy — last for the full life of the Senate bill. As a result, it ends up being a tax increase on households making less than $75,000, according to the only rigorous analysis so far, by the Senate’s Joint Committee on Taxation. For families making somewhat more than $75,000, the tax cut is modest and likely temporary, given the deficit. The plan, says Martin Sullivan, chief economist at Tax Analysts, a highly regarded research group, has “stunningly meager tax benefits for middle class.”
And how will this bill affect our national debt? The Trump tax plan will grow it by $1.7 trillion, thus confirming that Trump is not a fiscal conservative. But this is a huge tax cut, right? Didn’t Trump say that his plan is the largest tax cut in American history? He did, and he is wrong. More like eighth largest. But, his “huge” tax cut will stimulate the economy, correct? Trump’s Council of Economic Advisors are saying the economy will grow 3% to 5% per year with his plan in place. Well, saying something and saying something that’s true are separate things, and his CEA is just saying what the guy who picked them wants to hear. The George W. Bush tax cuts were larger than Trump’s, and did we see 3% to 5% growth per year? Except for 2004 and 2005 (3.8% and 3.3% growth, respectively), no. The real answer is this:
The GOP’s insanity is compounded by its moving ahead without having any idea of what this policy will actually do to the economy. The debates in the Ways and Means and Senate Finance Committees and on the House floor all took place before the Congressional Budget Office’s analysis and, if it really exists, the constantly-promised-but-never-seen report from the Treasury on the economics of this tax bill.
This is looking more like passing a bill for the sake of passing a bill.
By refusing to hold hearings and forestalling Congressional Budget Office scoring, Republicans have moved fast. But they have not convinced the public mind to recycle an antique but still meaningful phrase. They may win a vote. They have not won the argument. What they are doing will not last, and will therefore not deliver any of the promised benefits. Their strategy is the equivalent of a 1980s-style corporate raid, which will yield a hasty and morally dubious windfall for a few insiders while damaging the longer-term economic health of the larger enterprise.
Some of the provisions in the bill are favorable, such as cutting corporate tax rates but, overall, not worth it, IMO. Kill the beast.