A major goal of the GOP at the start of this term was tax reform. Lately the messaging has changed and instead of tax reform, we’re now being sold far simpler and easier-to-sell tax cuts.
The president and his surrogates often say the United States is the most heavily taxed nation in the world. This is false. America does have one of the highest top marginal corporate tax rates, but companies pay far less in practice because of deductions and exclusions.
According to statistics gathered from the 33 industrialized nations in the Organization for Economic Cooperation and Development, the U.S. ranks 31st in tax revenue as percentage of GDP, 17th in corporate tax revenue, and 19th in tax revenue per capita.
Liberals talk about class warfare all the time but it bears repeating. Under this plan, Americans making over $418,000 per year will see their rates drop from 39.6 percent to 35 percent. These people do not need tax cuts, especially at the cost of the drastic cuts to Medicare and Medicaid outlined in the latest GOP budget proposal.
The nonpartisan Tax Policy Center found that a quarter of middle-class households (those earning between $49,000 and $86,000) would actually see their taxes rise under the plan, especially if deductions on mortgage interest and state and local taxes are cut as planned.
And they want to cut the corporate tax rate from 35 percent to 20 percent.
Reducing corporate tax rates typically does not translate into wage increases for the average worker. There is ample evidence to show that additional after-tax income goes to CEO pay, stock buybacks and dividends paid to shareholders. A recent study done by the Treasury Office of Tax Analysis shows this to be the case.
That inconvenient paper has recently been removed from the Treasury Department’s website.
Deficit hawks outraged that spending under Obama was increasing the deficit and ballooning the national debt, and would lead to runaway inflation, are now silent about the current plan’s budgetary effects. When pressed on the issue they repeat the “tax cuts pay for themselves” mantra they’ve used since Reagan. The evidence for that is mixed to say the very least.
By all means, let’s simplify our tax code. But to do that means eliminating many deductions, which will require much political wrangling and sacrifices by legislators whose donors exploit those deductions.
Trump and congressional Republicans quickly abandoned the reform idea and are opting instead for simple cuts. If you’re a Republican who claims to care about fiscal responsibility, you should be outraged.