Earlier this year, Republicans failed to repeal and replace Obamacare largely because they never found a way to resolve one massive, fundamental contradiction.
The same problem now confronts them on tax reform.
On health care, conservative ideology dictates that government has no legitimate role in providing health insurance, even to those who otherwise cannot afford it. Yet over the years, much of the public has come to the opposite realization, concluding that without government help, tens of millions of Americans would forever be frozen out of the health care system.
Confronted with that dilemma, Republicans took the only course they saw open to them: They lied, and on a huge scale. While publicly promising voters that their plan would provide better care and cheaper coverage to more people, they drafted legislation that would do the exact opposite, stripping more than 20 million Americans of their coverage. In the end, they got caught and their plan failed.
As we turn to the subject of taxes, that same dilemma presents itself. Despite decades of evidence to the contrary, Republican ideology still holds that massive tax cuts for the wealthy and corporations are the key to economic growth. The problem is that the American public ain’t buying it.
According to a Gallup poll taken in April, just 9 percent of Americans believe that corporate taxes are too high. Just 10 percent believe that upper-income Americans pay too much in taxes. So if you’re a Republican, committed to tax cuts for the wealthy and corporations but confronted with numbers like that, what do you do?
For example, in a speech this week to kick off the Republican drive for tax reform, President Trump promised to deliver major tax relief for the middle class. “In a way — and I’ve been saying this for a long time — they’ve been sort of the forgotten people, but they’re not forgotten any longer, I can tell you that,” he told the crowd in Missouri.
However, when the Tax Policy Center ran the numbers on the tax-cut plan released by the Trump campaign last October, it found that the bottom 60 percent of taxpayers — those making $83,300 or less — would see an average annual increase in take-home pay of $500, or a 1.27 percent increase in income. The richest 0.1 percent of taxpayers would get an average benefit of $1.7 million, an income increase of 14.2 percent.
Overall, the bottom 60 percent would enjoy a grand total of 10.7 percent of the total tax cuts — basically, they’d be left to squabble over the crumbs that fall to the floor. The top 0.1 percent — that’s one person in a thousand — would get to eat the cake itself, collecting 47 percent of the benefits.
Now, the Trump campaign plan won’t be the plan that Congress actually votes upon, although it certainly seems fair to use it as a guide to the direction that they intend to go. It is also true that the final tax plan will be drafted not by the Trump White House, but by Speaker Paul Ryan and the GOP House.
And when the Tax Policy Center analyzed the tax-reform plan proposed by the House last fall, what did it find? By 2025, it concluded, “the top 1 percent of households would receive nearly 100 percent of the total tax reduction.”
There is no way — no honest way, at least — to reconcile deeply held public opinion with such a massive tax shift in favor of the already wealthy. The only path that can possibly get you there involves denial, deception and illusion, so that is what we’re going to get in the weeks and months to come.
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