COMPASSION FOR MIDDLE CLASS WILL BE TESTED WITH TAX BILL
Tax cuts are the political equivalent of truth serum.
A typical politician can often get away with spinning wildly about economic growth, the budget deficit or even the longterm financial prognosis for Medicare and Social Security.
Peddling the bunkum and ballyhoo of tax reform in Indianapolis last Wednesday, Donald Trump claimed, “There’s never been tax cuts like what we’re talking about.”
Trump portrayed his tax proposals, developed with congressional Republicans, as the greatest boon to the middleclass since the invention of credit cards.
“By eliminating tax breaks and loopholes,” Trump declared, “we will ensure that the benefits are focused on the middle class — the working men and women, not the highest-income earners.”
Because the Trump plan is still only an outline rather than an actual legislative proposal, there is a degree of fuzziness surrounding all estimates of its costs and benefits. But it is hard to argue — even for this White House — that slashing corporate taxes, eliminating the inheritance tax and reducing the highest personal tax rate to 35 percent would be a bonanza for working men and women struggling to pay their bills.
In fact, a preliminary analysis by the mainstream Tax Policy Center suggests the wealthy would reap the largest benefits from Trump’s largesse. According to the think tank report released Friday, taxpayers in the top 1 percent would see their after-tax incomes jump by more than 8 percent. For everyone else, the benefits — if they exist at all — would be chump change.
Democrats, of course, will decry “tax cuts for the rich.” Every Democratic speechwriter can steal lines from the early 1980s when liberals first mounted this attack against Reagan’s tax cuts. It is safe to predict that mocking “trickle-down economics” will be a centerpiece of almost every speech opposing the Trump plan.
In the past, voters have often been more concerned about their own tax bills than the windfalls handed out to the wealthy. And that is why Republican political strategists have been banking on a tax bill as their best hope for a winning issue in the 2018 congressional elections.
Corry Bliss, who heads the Congressional Leadership Fund, a super PAC close to Paul Ryan, told me over the summer, “The most important thing for 2018 is whether Republicans cut middle-class taxes.”
By this standard, the plan unveiled by Trump fails abysmally.
In 2018, according to the Tax Policy Center, 12 percent of all taxpayers would have to pay more under the Trump plan, with an average tax increase of $1,800.
Let’s talk about the heart of the middle class — Americans earning less than $100,000. Asked on ABC’s “Good Morning America” whether the taxes of some middle-class families might go up, Trump economic adviser Gary Cohn said honestly, “I can’t guarantee anything.”
Cohn contended “a typical family of four earning $55,000” would see its tax bill decrease by $650 to $1,000. Cohn’s math is impossible to check, because the Trump plan does not make clear at what income taxpayers would switch from the new 12 percent bracket (up from 10 percent in current law) to a new 25 percent bracket.
But even if Cohn is right, a $650 tax cut means a whopping additional $13 in a weekly paycheck. And the Trump plan would do nothing for those Americans who earn too little to pay any income taxes, but still are saddled with a hefty payroll tax bill for Social Security and Medicare.
The political importance of tax cuts is that — once approved by Congress — they can take effect immediately. A swoosh of Trump’s pen at a signing ceremony and the withholding schedules for tens of millions of working Americans could be changed almost instantly.
That’s why, if the tax bill passes, all of Trump’s claims about his compassion for the middle class would face the ultimate fact check. Either voters would feel significantly richer because of the Republicans — or else they would feel betrayed by a president whose true belief has always been “Billionaires First.”