Selling of corporate tax cut turns to deception

WASHINGTON — Psst. Hey, you. Wanna read something dangerous? It’s a government document so incendiary that the feds have tried to suppress it. They’ve purged it from their websites and disavowed its claims.

But it’s not about Roswell, or who killed JFK. It’s not even about climate change.

It’s something far juicier: a 34-page technical paper about corporate income taxes.

And it’s a document that matters if you’re trying to game out whether — and how much — enormous corporate tax cuts will trickle down to workers.

See, prior to 2008, whenever Treasury crunched the numbers on this subject, staffers assumed that corporate income taxes were borne only by owners of capital. That is: shareholders.

But toward the end of the George W. Bush administration, the nonpolitical career people in Treasury’s Office of Tax Analysis, a sort of internal think tank, began developing a new model taking into account newer research.

In 2012, they released a paper explaining their latest findings: that 82 percent of corporate taxes were borne by capital owners, and 18 percent were borne by labor. Workers don’t literally write the check, of course, but corporate taxes may discourage investment, and therefore lead to lower wages.

Figuring out who actually bears the burden of taxes, and who therefore benefits from corporate tax cuts, is thorny. But the answers these Treasury staffers produced are not so far from those of most other major nonpartisan tax crunchers, including the Congressional Budget Office, the Joint Committee on Taxation and the Tax Policy Center.

The Treasury paper was subsequently published in an elite academic journal. Outside of tax wonk circles, the numbers were generally ignored. Until now. That’s because Treasury Secretary Steven Mnuchin has been lately claiming that nearly all of the corporate tax burden is passed on to workers. It’s an argument that he has to make if he hopes to sell the administration’s tax cuts — which even a large share of Republicans oppose — as a helping hand for the Forgotten Man.

On Fox News, Mnuchin claimed that “most economists believe that over 70 percent of corporate taxes are paid for by the workers.” At an event in Kentucky, he declared that “over 80 percent of business taxes is borne by the worker.”

Tax watchers and interviewers began pointing out that Mnuchin’s claims were at odds not only with most credible estimates but also with those of his own staff. Which clearly annoyed Mnuchin. So Treasury took the unusual — unprecedented? — step of quietly deleting the inconvenient findings from its website.

It’s not clear when this erasure happened. The paper’s disappearance was first reported last week by the Wall Street Journal’s ace tax reporter, Richard Rubin. When I requested an interview with Treasury about the deletion, a spokesperson emailed me that “the paper was a dated staff analysis from the previous administration. It does not represent our current thinking and analysis.”

Which is a peculiar excuse, and not only because the paper was produced by nonpolitical staffers who still work at Treasury.

Updates to methodology — if that’s really all this was — do not require deletion of older technical reports, which normally stay archived online for transparency reasons. Four decades’ worth of other Office of Tax Analysis working papers somehow remain online, even though many have been superseded by subsequent reports.

In removing the paper, Trump officials are making it easier to conceal what their tax plan does, and whom it helps. This is part of a broader GOP effort to duck accountability.

The Senate budget resolution, for example, includes language that could help sideline any CBO analysis of the tax bill.

Surrogates on the Hill and executive branch have also been, somewhat incompetently, smearing the nonpartisan Tax Policy Center. The center recently produced a preliminary analysis of the Republican tax framework. It estimated that by 2027 the proposal would increase deficits by $2.4 trillion, with about 80 percent of tax cuts going to the top 1 percent.

Asked about these numbers on ABC’s “This Week,” Mnuchin claimed that no one can credibly estimate the effect of the plan, given how many details are still up in the air. In virtually the same breath, he also asserted that the plan will reduce deficits by $1 trillion and primarily benefit the middle class.

Those two statements can’t both be true, at least not simultaneously.

In other words, no matter how hard Trump officials try — and as this report disappearance demonstrates, they’re trying hard — they can’t keep their own lies straight.