R.I.P., G.OP.
Remember Congressional Republicans? They were the pious party who spent the entire Obama administration endorsing fiscal responsibility and small government and preaching the evils of the growing national debt and socialized medicine in the form of Obamacare. They swore that these principled positions would protect honest, God-fearing hard-working Americans from the undeserving chiselers of the welfare state.
All those principles can now be found in local landfills. While most of the attention in the 2016 election was paid to how an unqualified demagogue with a severe personality disorder could become president, what everyone ignored was the fact that he created an entirely new political party – the Trumpists – that replaced all those well-meaning, pious Republican patriots with the same people. The reborn Trumpists believe that welfare is good, and an increase in the national debt of another $1.5 trillion is desirable, provided the gravy is spread upon the biggest corporations and the super-rich and their heirs, and taken from the middle class they once professed to revere. So they are poised to pass what they call tax reform. Reform in this case, regardless of whether you are trying to read the House or Senate versions, means giving more than a billion dollars to President Trump and his heirs, and billions more to big corporations and the ultra-rich, the Trumpist Party’s donor base. The Trumpists have tripped all over themselves in their rush to pass this ready-fire-aim legislation while avoiding debate, hearings or serious analysis of its provisions.
A few wavering souls who still professed to embrace Republican principles came away from a meeting with Trump the other day reassured by his promises that all of their concerns would be addressed. They chose to believe Trump at the same time it was revealed that he is again questioning Obama’s birth certificate and claiming that the voice on the infamous “Access Hollywood” tape is not his. One of the senators who says he was reassured by Trump’s promises said barely a month ago that the president had “great difficulty with the truth.”
But the president and his new groupies are right in claiming that reporting on the proposed legislation has been plagued by fake news. The Jourmudgeon offers some of the most egregious:
- Donald Trump will pay way more in taxes.
- The middle class will get a break.
- The tax cut will keep in the United States trillions in corporate profits that now are sheltered offshore.
- The tax cuts will not increase the federal debt. Oh, maybe by a measly $1 trillion or so, but that’s Trump – uh, chump – change when it comes to the necessity of giving welfare to the wealthy. (If you’re having trouble getting your head around how much a trillion is, by the way, try this: You would have to live nearly 32,000 years to live a trillion seconds. And, under the proposed tax cuts, you’d have to pay a buck every second of those 32,000 years to offset the cost of this corporate welfare proposal.)
- The tax cuts will grow the economy because the wealthy and corporate America will spend it on new hires and substantial raises for workers (the old trickle-down theory resuscitated).
- Middle class people will get a break because the standard deduction will double, sheltering far more of their income from taxation.
- The bill will give small business owners relief in the way their so-called pass-through income is taxed.
- The tax cuts for the middle class will be permanent.
Now some real news:
- Middle-class taxpayers – particularly older taxpayers — who itemize deductions will take it on the chin so that Trump himself can reap millions of dollars a year by the elimination of the alternative minimum tax. His children will get at least another $1billion from us by the elimination of the estate tax.
- The much-heralded doubling of the standard deduction – to $24,000 for a couple filing jointly – is a myth. The effective increase is only $3,300, because the bill would eliminate the $4,050 personal exemption each of the couple can now claim. Add that $8,100 for the two of them to the current $12,600 standard deduction, you get $20,700 in deductions. Subtract that from the vaunted $24,000 proposed standard deduction, you’re left with a $3,300 break, not the nearly $12,000 promised. Even for middle-class families who benefit in the short term, the tax savings would be about $19 a week.
- For middle-class couples who itemize their deductions, particularly older middle-class couples, the two versions of the bill are a disaster. They would, variously, eliminate the deduction for medical expenses, including the cost of health and long-term care insurance. On or the other would eliminate or restrict the amount you can claim for state and local income and property taxes, and mortgage interest. The obvious policy intent is to drive those people toward the standard deduction. But again, the effective increase in that deduction is only $3,300, a huge hit for itemizers. The lower the income of those who itemize, the bigger the hit. The bills would also penalize taxpayers in states that vote Democratic, and would probably force state and local governments to limit support for social services, education and infrastructure.
- The bills are structured so that only the biggest companies and the wealthiest Americans see much benefit from the revisions that are supposed to benefit small business owners.
- One version of the bill will penalize people for seeking a higher education, the real engine of individual economic prosperity. It increases the burden of paying off student loans by making the interest on them taxable. It also makes tuition waivers for graduate students taxable, and some university endowments. Those endowments currently provide funding for need-based scholarships for students from poor and middle class families, so the tax would decrease aid for those students particularly.
- Even the modest $250 deduction teachers can now claim for spending their own money on school supplies could disappear. That is mean-spiritedness elevated to an art form.
- New measures for calculating inflation would cost middle-class taxpayers an additional $134 billion over 10 years, and then $31.5 billion in 2027 alone. Add that to the whopping tax increase everybody but corporations and the wealthy will see when tax cuts for everybody but them expire that year.
- In fact, by 2027 people earning $40,000-$50,000 a year will be paying $5.3 billion a year more than under the current tax code. People with incomes above $1 million will pay $5.8 billion less.
- The bills would slash corporate income tax by 43 percent. Everybody has heard about that, and the $1.5 trillion it will add to the national debt. But if the government takes in more in tax revenue than anticipated by 2027, it will give back up to an additional $79 billion to corporate America. The middle class, of course, will get none of that money.
- If the tax cuts do not pay for themselves, cuts to Medicare and other programs will go on the chopping block. Trumpists assure us that this won’t happen. These are the same people who let the Children’s Health Insurance Program expire in September, and haven’t renewed it.
- The tattered trickle-down theory that the Trumpists embrace predicted that the 1986 Reagan tax cuts and those under George W. Bush would spur job and wage growth and new investment. In fact, almost all the windfall went to executive pay, shareholder dividends, and manufacturing higher stock prices. When the Trumpists recently got a bunch of top executives in a room, only a few said they would use tax cuts to grow wages or plant capacity.
- The proposed bills will reward corporations that stashed trillions of dollars overseas over the past two decades by letting them bring home almost $3 trillion at a rate that is far below even the 20 percent proposed corporate income tax. They would provide a permanent break of almost half a trillion dollars for overseas profits. Will that largesse trickle down to the middle class? Dream on. Again, in 2004, the last time offshore profits were given a break, corporate honchos used it to drive up share prices, enriching themselves. Pfizer, the drug company, brought home $37 billion, and cut its workforce by 10,000. Hewlett-Packard repatriated $14 billion, and laid off 14,000.
- For good measure, one version of the bill would turn churches into fronts for political activity and donations, which certain factions have lobbied for for years. Many mainstream churches oppose the measure, predicting the number of sham religious organizations that would arise as a result.
- And, yes, the Senate’s version of the bill would eliminate Obamacare’s individual mandate, leaving people free to go without health insurance. That would result in 10 percent higher premiums for the rest of us, and insure that we will go back to paying the medical bills for the 13 million Americans who would let their insurance lapse.
- Both the Senate and House are so aware of how bad their bills are, how unpopular they are with the public, and what will happen when the true costs to the middle class come home to roost, that they moved them through Congress without hearings, without proper vetting by their own Congressional Budget Office or the Joint Committee on Taxation, and without time for members of either party to absorb what’s in the several hundred pages of legislation.
If nothing else is clear, this is: The Trumpists really, really hate everybody who doesn’t belong at Mar-a-Lago and who doesn’t bankroll them. And they don’t care who knows it, because they take us for fools, and are confident we won’t do anything about it.
To see The Jourmudgeon’s sources, and a more fine-grained analyses of the proposed tax bills, go to:
