Republicans have released their long-anticipated tax plan and it is dreadful.
President Trump asserts it is a “giant, beautiful, massive tax cut,” but America doesn’t need tax cuts; we need tax reform. The plan is not only a huge gift to the wealthiest Americans, it adds trillions to the federal debt.
Where to start?
Independent analysis from the Committee for a Responsible Federal Budget (CRFB) has estimated that the increase in the debt caused by the Republican plan would be more than $2 trillion over 10 years. But according to the CBO, our debt now — $20 trillion — will increase by $10 trillion in the next decade based on current law.
That $10 trillion, added to the tax plan’s $2 trillion debt burden, results in a massive total of $12 trillion additional debt in 10 years. This is more than all the debt accumulated since 2005 in the Bush and Obama presidencies, including the Great Recession.
Republicans portray themselves as the fiscal adults reining in the spendthrift Democrats, but not with this plan.
Republican leaders claim the tax cut would pay for itself with increased economic growth. This is a myth. Tax cuts may or may not increase growth, but the most optimistic growth does not generate enough revenue to replace revenue lost due to the cuts. CRFB explains this in detail on their website at CRFB.org.
Despite proclamations by the president, the Treasury secretary, and the president’s chief economic adviser, this is not a middle-class tax cut. Tax Policy Center analysts have estimated that 80 percent of the benefits will go to the top 1 percent of earners. These 1 percenters make at least $730,000 a year, and their average tax cut would be $130,000.
To sell this plan, President Trump insists “No, I don’t benefit” from his tax proposal. Let’s examine that statement.
Although President Trump has refused to release his latest tax returns, his 2005 returns have become available. Those returns illustrate the huge benefit he would receive if the tax plan were adopted as proposed. In 2005, Mr. Trump paid $31 million in the Alternative Minimum Tax, or AMT. His new plan eliminates the AMT, so, with similar income, he would save $31 million.
Another proposal allows individuals to use a 25 percent tax rate on certain business partnerships instead of the current rate of 39.6 percent paid by the wealthy. Assuming the same income stream as 2005, Mr. Trump would save an additional $16 million if the proposed rate were in effect.
The elimination of the inheritance tax would be the largest windfall to the Trump family. The Bloomberg Billionaire’s Index estimates Trump’s net worth to be $2.86 billion. The current 40 percent tax on estates greater than $11 million would mean the Trump estate would save more than $1 billion if the estate tax were eliminated.
When President Trump says he doesn’t benefit from the proposed tax plan, he insults us. He believes he can lie and we voters are too ignorant to recognize it.
Attempting to defend the plan, Republicans point out that it is a work in progress. It is true that heavy political lifting by the Republican House and Senate will be required to transform this nine-page outline into an actual tax bill. But from the many fabrications we have already seen from the plan’s defenders, what confidence can we have that it will get better instead of worse?
Another Republican defense of this plan is declaring that nonpartisan analyses critical of the plan are wrong. But analysts from groups such as the CBO and CRFB are rewarded based on the accuracy of their predictions. Conversely, politicians are rewarded by passing legislation and getting re-elected, and truth and accuracy become collateral damage. Nonpartisan analysts are more credible.
Who would like the Republican plan? Someone who doesn’t believe a 60 percent increase in the debt is a problem. Or someone who believes in the discredited “trickle down economic theory,” where the wealthiest Americans get massive tax cuts so the middle class can enjoy the leftovers.
The Republican leadership misrepresents the plan’s increase to the debt, and denies the plan’s extraordinary tax cuts for the wealthy. Republicans are right that the country needs comprehensive tax reform. Now they need to create it.
The writer is a retired U.S. Navy officer. He lives and writes in Savannah. His email address is EdConant420@gmail.com.