The Truth Behind Republicans’ Tax Plan
September 27, 2017
The Republican tax “reform” plan is nothing more than a thinly-veiled giveaway to big corporations and the 1% – which makes sense coming from an administration led by a billionaire tax cheat who refuses to release his own tax returns.
Trump tapped two former Wall Street executives – Steven Mnuchin and Gary Cohn – to hammer out a tax plan out of the public eye that would be a massive windfall to Trump and his wealthy corporate buddies. Among the two, Mnuchin has been the primary salesperson to the American people (a terrible one at that), while he has found himself engulfed in scandals over his luxurious lifestyle and abuse of taxpayer dollars.
With people like this leading the way, how can hardworking families expect the Republican tax plan to look out for them?
The answer is they can’t. A majority of Americans believe that President Trump’s tax plan would disproportionately benefit wealthy Americans. And they’re right. This is a tax plan written by Wall Street, for Wall Street.
Republicans know that if they’re honest about what’s in their tax plan, Americans will oppose it. That is why they have retreated to deceitful math and flat out lies to try and sell their sham of a tax reform plan – In reality it is not tax reform at all, it is just more tax cuts for wealthy corporations and the 1%.
If Republicans were serious about tax reform, they’d join Democrats in promising that not one penny in tax cuts should go to giant corporations or the 1%. As Republicans are set to release their proposals today, here is a look at the truth behind their plan.
Republicans agreed to raise the lowest individual tax rate from 10 to 12 percent. Trump is trying to sell this plan as a populist tax proposal, but it is anything but – It includes more tax cuts for the rich, while actually increasing rates on low-income Americans.
The latest corporate tax cut Republicans have put on the table is still a trillion-dollar giveaway. That’s outrageous by itself, and immoral compared to the trillions of dollars in health care cuts Republicans proposed in the Cassidy-Graham-Heller health care repeal bill, and have similarly advocated for in previous repeal attempts.
Republicans have even floated proposals to try and tie health care repeal to tax reform in the Senate, which would mean they would be using Medicaid cuts that would hurt the elderly, disabled, low-income families and children, to directly pay for tax cuts for the rich. And the House Republican budget already ties their tax plan to a roughly $2 trillion cut in health care funding.
These proposals demonstrate the basic principle of the Republican Party: Tax cuts for the rich at the expense of hardworking Americans.
The American people overwhelmingly oppose key components of the Republican tax plan and, rightfully, think that it will benefit only the wealthiest Americans.
· 4% of Americans want a tax cut just for corporations.
· 42% of Americans say Congress shouldn’t cut taxes right now.
· 62% of Americans say taxes for the wealthy should be increased.
· 51% of Americans believe that President Trump’s tax plan will disproportionately benefit wealthy Americans.
· A plurality of Americans (44% to 28%) already say they oppose Trump’s tax plan.
· 65% of Americans say large corporations pay too little in taxes – including 47% of Republicans.
· Just 33% support reducing taxes on higher-income individuals.
Politico/Morning Consult poll:
· 60% believe that corporations don’t pay enough in taxes.
While we know that the Republican tax plan would benefit giant corporations and the 1% at the expense of hardworking Americans, we won’t know the specifics of their tax plan until the last minute. Where their phony rhetoric runs into reality, Republicans simply leave out hard numbers and claim it will all magically get worked out behind closed doors.
This is the new Republican playbook. We saw it with health care, and now we’re seeing it with tax reform. Republicans will wait until the last minute to make the details of their plan public, in hopes that they will be able to force a partisan vote without anybody knowing how damaging their legislation would be.
Republicans know that Americans don’t like their tax proposals and that the more people learn about their plan, the more they won’t like it.
Republicans are trying to use magical math to sell their tax plan to the American people.
The reported cost of the Republican tax plan — $1.5 trillion — is less than the cost of their corporate tax plan alone:
· $1.8 trillion: cost of cutting the corporate tax rate from 35% to 20%, over 10 years.
· $425 billion: cost of the “Trump loophole,” lowering the top rate on “pass throughs” from 39.6% to 25%, over 10 years.
· $175 billion: cost of paying the estate tax on estates worth more than $5.5 million. Only 50 farms and small businesses will face any estate tax this year.
· $400 billion: cost of repealing the Alternative Minimum Tax, which is paid only by wealthy households, over 10-years.
· $5 trillion: the combined cost of the Trump tax plan, over 10 years.
What’s really going on here? Republicans are using unprecedented gimmicks to hide the true cost of their tax cuts.
· “Current policy baseline” gimmick: rarely-used trick that magically reduces the cost of the Republican tax cuts by $439 billion.
· “Dynamic scoring” gimmick: Republicans are already dismissing the Joint Committee on Taxation’s estimates for how much growth their tax cuts will produce to offset costs (even before they have a plan for the committee to score!)
· “Temporary tax cut” gimmick: because their tax cuts will increase the budget deficit outside of the 10-year reconciliation window, Republicans will likely make some of them temporary. Ironically, temporary tax cuts do little or nothing to support economic growth.
· “Revenue-negative” cuts: Republicans have abandoned tax reform and some are even advocating for their cuts not to be paid for.
· The reality: the $1.5 trillion tax cut costs vastly more than Republicans are saying. They owe it to the American people to explain the actual details of their proposal — including any secret pay-fors that increase taxes on middle- or lower-income Americans or make deep cuts to programs families rely on.
One thing we can be certain of is that with their tax plan, Trump and Republicans will break, and have already broken, promises they made to the American people.
· Mnuchin pledged that Trump’s tax plan would not benefit the highest earners.
Bloomberg: “Mnuchin said in late November that Trump’s tax plan would benefit middle-class taxpayers, not the highest earners — an assurance that some Democrats quickly labeled ‘the Mnuchin Rule.’”
· Trump claimed “the rich will not be gaining at all with this plan.”
TRUMP: “And the rich will not be gaining at all with this plan. We’re looking for the middle class, and we’re looking for jobs. Jobs, meaning companies.”
· Trump said “wealthy Americans are not my priority. My priority are people in the middle class, and that’s where we’re giving the big tax reduction to.”
TRUMP: “So the wealthy Americans are not my priority. My priority are people in the middle class, and that’s where we’re giving the big tax reduction to. It’s about the middle class, and it’s about jobs.”
· Trump claimed that under his plan, “tax relief will be concentrated on the working and middle-class taxpayer.”
TRUMP: “By lowering rates, streamlining deductions and simplifying the process, we will add millions and millions of new jobs. In addition, because we have strongly capped deductions for the wealthy and closed special interest loopholes, the tax relief will be concentrated on the working and middle-class taxpayer. They will receive the biggest benefit, and it won't even be close. They have been forgotten. We are not going to forget them. They have built our country. We will not forget. Thank you. This is a working- and middle-class tax relief proposal.” [Trump Policy Speech, Economic Club Of New York, New York NY, 9/15/16]
· Trump said he supported raising taxes on the wealthy, “including myself.”
QUESTION: “Do you believe in raising taxes on the wealthy?” TRUMP: “I do. I do. Including myself. I do.” [Today Show Town Hall, NBC, 4/21/16]
· Trump said “I’m going to end up paying more than I pay right now in taxes.”
TRUMP: “OK. If I’m individually paying 35 percent, I will tell you that’s more, OK. I’m going to end up paying more than I pay right now in taxes, all right? I will pay more than I pay right now. The reason I’m going to pay more is because I lose all the deductions. They have deductions on top of the deductions, they have hundreds and hundreds of pages of deductions.” [First 100 Days, Fox News, 4/29/17]