The recently signed Republican tax plan is the first major legislative achievement for Republicans in the Trump era. It’s an achievement in the sense that setting the record for most times getting hit by lightning is an achievement; a thing got accomplished but that thing only resulted in pain. The new law cuts taxes for almost everyone (at least initially), but the savings are disproportionately skewed towards the wealthiest Americans.
The default opinion in American politics is to always associate Democrats with higher taxes and spending/deficit increases while Republicans are always associated with lower taxes and decreases in spending and the deficit. Economic conservatism is regarded as synonymous with fiscal responsibility. The truth has always been much more nuanced, but for anyone to claim the two terms are the same after the passage of this law is nonsense.
First, let’s look at recent actions regarding taxes by both parties. Initially, the Republican plan cuts taxes for most people. The average household will see a $1,600 tax cut, but the average tax cut for those within income brackets under $75K is less than $1,000. Those making under $40K per year will only see a few hundred dollars, if that. Compare this to households making between $500K and $1M (who get $21K) and those making over $1M (average cut of $69K) and it becomes obvious that this being a bill about the middle class is a massive lie. In fact, the top 0.4% of households initially get 16.5% of the benefit from the bill, a percentage that increases over time.
This is because the tax cuts more or less expire by 2027 to meet budget constraints. Except, of course, for the $1M + households that will still be getting $23K in cuts. Republicans say that Congress will not allow these tax cuts for middle and low-income families to expire in the future, but one has to wonder why only the tax cuts for the rich last in a substantial manner. By 2027 that top 0.4% of households will be getting nearly 82% of the benefits from the plan. Not to mention Republicans took the estate tax (which only affects the wealthiest 0.2% of estates) and doubled the amount of money that could be handed down tax-exempt, in addition to lowering the tax rate on pass-through businesses. With this provision high earners can funnel pay through these organizations in order to pay less taxes, something demonstrated when Kansas Republicans passed a similar measure a few years ago.
It is abundantly clear that Republicans prioritize cutting taxes for the rich, not the poor and middle class. I suppose it’s better than having Democrats who raise taxes on middle and low income families. Or it might be if that wasn’t a lie. In truth, Democrats have been in full control of Congress for some of the biggest tax cuts in modern history. For example, the 2010 extension of the Bush tax cuts was the largest tax cut since 1968 as a percentage of GDP. When Bill Clinton and Democrats increased taxes in 1993, they did so only on the top 1.2%. The Obama-championed stimulus package that was enacted in 2009 featured the fourth largest tax cut in this period, with Obama’s plan lowering taxes for everyone except the top 1%, who saw their taxes go up by about 5%. The largest percent decrease in federal taxes owed was for those in the bottom 25%, not those at the top. That is what a tax cut intended for middle and low-income Americans looks like. And let us not forget that the stimulus package created or saved an estimated 3 million jobs by 2011 and would have done more if Republicans had not balked at a bigger spending package.
At least Republicans don’t drive up the debt with their reckless spending though, right? You’d be correct, but only if you believe the exact opposite of what I just suggested. This tax plan is estimated, based on a non-partisan analysis, to add $1 trillion to the national debt over the next decade (accounting for predicted economic growth). This will be even higher if individual tax cuts get extended, which Republicans are promising will happen because they expire after 10 years. Republicans have absolutely no evidence that this will not add to the debt; even conservative estimates have it adding around half a trillion dollars.
This after years and years of deficit hawks screaming at Obama and Democrats to cut spending because of the debt. While the total national debt did increase under Obama, he was in fairness handed a $1.3 trillion deficit (the amount the debt was increasing each fiscal year) and he had cut it by about two-thirds overall by the time he left office. The last president to actually balance the budget and start paying down the debt was Democrat Bill Clinton in the 1990s. When Bush took office he squandered this surplus on tax cuts that disproportionately benefited the rich and blew up the debt.
Now Republicans are doing the same thing once again. They have proven that for all their preaching of fiscal responsibility they are anything but, relying on hope that the economy will just do better than every model is predicting. Furthermore, they have proven beyond a doubt that they care little for the plight of the average American. Tax cuts for middle and low income Americans disappear over time and spending cuts Republicans enact to balance the budget will in all likelihood hurt these people, further offsetting the already meager benefits they are getting. This tax bill will only serve to make the rich wealthier and widen income inequality in the United States.
Jacob Kowalski is opinion editor for The Daily Campus. He can be reached via email at email@example.com.