For Republicans over the past 30 years, “Cut the top marginal tax rate!” has been akin to motherhood, baseball and apple pie. The dogma of supply-side economics and its corollaries (e.g. “tax cuts pay for themselves”) have been a key part of every GOP presidential candidate’s platform since 2000 and every budget from Paul Ryan (even before he became House speaker). Right-leaning media, House and Senate Republicans and think-tank pundits generally have insisted that widening the wealth gap (by giving disproportionate tax breaks to the rich) was not only acceptable but also essential for prosperity.
It’s not surprising that the Goldman Sachs-staffed Cabinet and a real-estate billionaire president would follow suit. What is surprising is that the rollout is going so badly that the most dogmatic Republicans, the Freedom Caucus, are willing to at least partially jettison a tax giveaway to the rich. Politico reports:
House conservatives — desperate for a win on tax reform — are open to nixing some newly proposed tax cuts on the wealthy, challenging the GOP’s tax-cuts-for-all orthodoxy.Multiple House Freedom Caucus members said they’d support maintaining the 39.6 percent tax rate on upper-income earners instead of reducing it to 35 percent under the current GOP plan. President Donald Trump, concerned about Democratic accusations that his tax proposal would be seen as a boon to the wealthy, urged Hill Republicans to consider keeping the current top rate as is to pre-empt those attacks.
While they are at it, Freedom Caucus members should dump repeal of the estate tax, which benefits only estates worth more than $5.49 million (per person) and the 25 percent pass-through rate, which benefits only the wealthy who’d otherwise be paying the higher 39.6 percent rate. In other words, if they are ready to concede that tax cuts for the wealthy are economically unnecessary and politically toxic, why not dump all the breaks for the rich, just as Democrats have demanded?
Next, the Freedom Caucus might regain its fiscal bona fides by insisting that the tax plan not unleash a torrent of red ink. Michael R. Strain of the conservative American Enterprise Institute makes the case:
Over the next 10 years, the plan, as currently construed, will add over $2 trillion to the national debt. This will crowd out private investment, increase interest rates and reduce long-term growth, undoing the good done by a lower corporate rate. . . . Tax reform should be fiscally responsible, and this framework ain’t that.
And wouldn’t you know, a revenue-neutral tax reform plan is another demand from Senate Democrats. A deficit-neutral bill would also satisfy skeptics such as Sen. Bob Corker (R-Tenn.), who has vowed not to make our long-term debt problem even worse.
So, if rock-ribbed conservatives are willing to jettison tax breaks for the rich and embrace deficit neutrality and if both would cement GOP and Democratic support, why not, you know, write the bill in tandem with Senate Minority Leader Charles Schumer (D-N.Y.)? Schumer promised that with those two elements — no tax breaks for the rich and no added debt — a tax bill could attract Democratic support. Republicans wouldn’t need to resort to partisan bulldozing through reconciliation. Through regular order, they’d gain Sen. John McCain’s (R-Ariz.) support, too.
Woodworking Planshow to Woodworking Plans for The answer as to why this likely will not come to pass is as vulgar as it is obvious: Trump, his Cabinet, his rich friends and big GOP donors want big tax cuts for themselves. As Trump’s behavior (e.g. retaining properties he hawks from the White House, doubling the membership fee at Mar-a-Lago) suggests, his philosophy seems to be: If you cannot make money in office, why bother holding office at all?
If Republicans can get past Trump’s and his ilk’s greed, they might be able to pass an economically more coherent bill, reverse widening income inequality and rack up a nice, juicy bipartisan win. You wonder how long it will take a party desperate for a political win to figure that out.