Rampell: If the tax bill is so great, why is the GOP lying about it?
By Catherine Rampell
Published: November 17, 2017, 6:01am
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Nearly every claim Republicans are using to market their tax plan is at best a distortion, at worst a deliberate falsehood. Which raises the question: If their plan is really so great, why not sell it on the merits?
Consider just a few of Republicans’ key talking points and their tenuous relationship to reality.
1. The tax cuts will pay for themselves.
Republicans claim that tax cuts will unleash economic growth. Through that growth, we’ll all become richer. And as our incomes rise, tax revenue will, too. Hence, the tax cuts will be free.
Some Republicans even argue that the bill is so pro-growth that it will reduce the federal debt.
“If we pass this tax reform package in something like its current form, we will reduce the size of the deficits,” Sen. Patrick J. Toomey, R-Pa., erstwhile budget hawk, said on “Meet the Press” on Sunday. “We will have smaller debt than we otherwise would.”
Despite searching high and low, however, Republicans have been unable to locate any credible tax outfit that thinks their proposals will do anything other than lose money. Republicans’ solution: Just lie about what the experts say!
In that same interview, Toomey cited a Tax Foundation report he claimed showed that the Senate bill would reduce deficits once you accounted for growth.
The Tax Foundation, a center-right think tank, uses relatively optimistic assumptions about the economic effects of tax cuts. But even its analysts determined the bill would increase deficits by a half-trillion dollars over a decade.
2. The tax plan primarily helps the middle class.
Nope. The biggest benefits go to higher-income Americans, both in raw dollar terms and as a percentage of income. To give you a sense of scale: Under the Senate bill, households making more than $1 million receive an average tax cut of nearly $50,000 in 2027; those making $40,000 to $50,000 get an average cut of $480.
Averages also disguise a lot. Lots of lower- and middle-income families won’t benefit at all. Many will be worse off.
Under both the Senate and House bills, nearly half of households making less than $100,000 will see either a negligible tax change or even a tax hike in 2019, according to Martin Sullivan, chief economist at Tax Analysts.
3. The bill will hurt President Trump.
We don’t know precisely what either bill would do to his taxes, because Trump won’t release his returns. But based on what we do know, it’s safe to say he and his family stand to benefit yooge-ly.
For example, both the Senate and House tax bills would repeal the alternative minimum tax, which cost Trump tens of millions of dollars in the most recent (leaked) tax return we have, from 2005. Both bills offer big tax cuts for income from “pass-through” corporations — such as the Trump Organization. And both bills would either kill or scale back estate taxes, allowing Trump’s kids to inherit his fortune tax-free.
4. This will be the biggest tax cut in history.
Arguably, the biggest tax cut ever was in 1872, according to Tax History Project Director Joseph Thorndike. That’s when Congress decided to get rid of income taxes entirely.
In fact, it’s not even the biggest tax cut in the past five years, in either inflation-adjusted dollar terms or as a share of gross domestic product, according to the Committee for a Responsible Federal Budget.
5. The economy desperately needs a big tax cut.
Lots of headline measures, such as unemployment, suggest the economy is doing well. The time for deficit-financed stimulus is when the economy is in recession, not one of the longest expansions on record. Otherwise we’ll have no powder left in the keg when the economy actually needs it.
So: Why all the falsehoods? Why not just sell their tax agenda on the merits?
Presumably because Trump and Republican lawmakers know they’re offering a plan the public doesn’t want. Ergo, they need to promise things the tax plan doesn’t do.
