The GOP Tax Plan Is Robin Hood in Reverse
President Franklin Delano Roosevelt famously said of America, “The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little.” By this moral standard, the Republican Party has grossly failed our country with the passage of their tax bill. By providing a giant tax cut for the rich and corporations (and making those permanent) and giving modest tax cuts for individuals (and making those temporary), by ballooning the deficit by $1.5 trillion, and by repealing the Obamacare mandate, it takes from those who need it most – everyday Americans, the poor, the sick, the disabled – to give to those who have more than enough. In short, it’s a sort of reverse-Robin Hood.
With language like “deductions” and “loopholes,” it’s easy to gloss over the debate over taxes. However, tax policy affects every single American, so it’s important to know the good, the bad, and the ugly. Unfortunately, this tax bill is mostly ugly.
It's a Big Tax Cut for the Rich and Corporations
In the bill just passed by Congress, the tax rate for top earners drops from 39.6 percent to 37 percent. This cut is actually bigger than what was in the individual House and Senate bills, and it goes back on a promise that President Trump and his administration made that any cuts made to taxes wouldn’t benefit top earners, particularly the president himself. It turns out, that was a huge, blatant lie. And while the top bracket previously started at $470,000 for married couples, now it starts at $600,000, with those still quite wealthy people making between $470,000 and $600,000 being taxed at an even lower rate of 35 percent. The plan also doubles the threshold for the estate tax – meaning that the super rich can pass down up to $22 million per married couple to their heirs, tax-free. How nice.
The biggest benefit in the bill, however, goes to corporations. It’s the biggest cut in our nation’s history, dropping the rate from 35 percent to a mere 21 percent. The GOP argument here is that cutting the corporate rate significantly puts more money in the pockets of businesses to reinvest, grow their businesses, provide wage increases, and create jobs. But economists aren’t sure that’s entirely true, given that corporate after-tax profits are currently at a historic high. This means corporations already have the cash to spend on reinvestment and higher wages -- they’re just choosing not to. So, the link between cutting the corporate tax rate and increasing jobs and wages is dubious, with many economists saying it’s not likely at all.
It's a Small, Temporary Tax Cut for Everyday Americans
While the bill provides massive tax breaks for the uber-rich and corporations, it’s only modest in providing tax relief for middle-income and poor families. The nonpartisan Tax Policy Center estimates that the average break would be about $1,600 in 2018, but the biggest break, calculated as a share of after-income tax, would go to those families making between $308,000 and $733,000. Those in the middle class would see a tax break of about $900, and lower incomes would see even less of a break. In short, everyone would get a small temporary break, but the biggest tax relief would go to those who make more. As the TPC says, “For middle-income people, an extra $900 would pay for about seven months of gas. By contrast, those in the top one percent could pick up a nice Mercedes C Class Coupe with their $50,000+ average tax cut.” And the catch with the individual tax breaks is they all expire in 2025, and the average tax cut would drop to only $160 at that time. But because many very rich individuals get a lot of their wealth through things like business ownership and investments, the GOP plan continues to benefit them even as their individual tax cuts expire.
It Repeals the Obamacare Mandate
Tucked into the GOP tax bill is a repeal of the Obamacare mandate – or the part of the law that says every individual needs to buy health insurance or face a tax penalty. It’s unclear exactly what the effect would be dollar-wise on insurance plans, but it’s the wide consensus of health-care-policy experts and insurance executives that it will force health-care premiums to soar through the roof and force the market to become unstable. Vox reports that the mandate is the thing that “holds down premiums by nudging healthy people with low cost into the market.” With only sick people in the market, it increases the costs of insurance for everyone. Remember that $900 average tax cut middle-income Americans would get? Senator Sherrod Brown from Ohio told the New York Timesthat the mandate repeal in the tax bill is a bad deal because many people would pay more in increased premiums than they would save in tax cuts.
Not only would the mandate repeal increase premiums, it would dramatically increase the number of people who are uninsured. The Congressional Budget Office currently estimates that 13 million people would lose health insurance coverage from the mandate repeal.
It Blows Up the Deficit and Will Crush the Poor, Disabled, and the Elderly
Essentially, taxes are payments made to the federal government by the people so that the government can pay its bills. By creating massive tax cuts, there is less cash flowing into the federal government, creating debt – or what politicians call “the deficit.” The Joint Committee on Taxation, a committee made up of members of both houses of Congress, estimates that the tax bill will rack up just under $1.5 trillion in debt over the next ten years. How is the government going to pay their debt? That’s the big question: $1.5 trillion is a ton of money.
If House Speaker Paul Ryan’s recent statements are any indication, the GOP will be targeting “federal healthcare and anti-poverty programs, citing the need to reduce America’s deficit,” according to the Washington Post. This likely means massive cuts to Medicare (the federal health-care program for the elderly), Medicaid (the federal health-care program for the poor), and Social Security (an income program for the retired and disabled, that every American worker pays for, from the time they get their first job until they retire). The Speaker said earlier this month, “We're going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit ... Frankly, it's the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements - because that's really where the problem lies, fiscally speaking.”
Just so we’re clear, by passing this tax bill, the Republican party has stated that they are willing to give massive tax breaks to corporations and the wealthy, increase the deficit by $1.5 trillion, then pay for that debt by taking money from the poor, the sick, the disabled, and the elderly – all at a time when income inequality is already devastating. Even if Republicans decide not to move forward on entitlement cuts in 2018, we’ll still have a $1.5 trillion debt that will ultimately be saddled onto the backs of millennials and the generations beyond.
The hypocrisy is stunning. For years, the Republican Party has positioned itself as the party of morals, of family values, willing to police the morality of everything from women’s reproductive health to marriage. And yet this same party is unable to see the immorality of their economic policy.
It’s my hope that every generation will come closer to FDR’s standard of progress. But, if this immoral tax bill is any indication of where we are as a country, we’re headed in the opposite direction of progress.
Nish Weiseth is the author of Speak: How Your Story Can Change the World. Follow her on Twitter.
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