— Inequality.org (@inequalityorg) October 4, 2017
The “tax reform framework” released by the Trump administration and Congressional Republican leaders on September 27 would affect states differently, but every state would see its richest residents grow richer if it is enacted. In all but a handful of states, at least half of the tax cuts would flow to the richest one percent of residents if the framework took effect. Nationally, more than two-thirds (67 percent) of the tax cuts contained in the framework would go to the richest one percent of Americans in 2018. These taxpayers are projected to have incomes of at least $615,800 next year. They would receive an average tax cut of $90,610 in 2018 alone, which would increase their incomes by an average of 4.3 percent.
I suspect there aren’t a lot of Americans who’d argue the federal tax code is fine just as it is. Over the years, special interests have helped bloat our tax code into a boondoggle only gifted tax professionals could hope to grasp. The need for reform has been evident for some time, but actually doing something means unraveling targeted tax breaks and deductions, each of which benefits a particular special interest or demographic. Once you start to unravel things, it becomes apparent how intertwined and complicated (and corrupt) the system has become.
When you’re looking at a system in need of change and you realize that every potential action could very well have an equal and opposite reaction, what do you do? Where do you start? What goes? What stays? Most importantly, who pays? Apparently not the wealthy.
While President Trump has insisted that the framework lays out a “giant, beautiful, massive…tax cut” that would be the “biggest ever,” many families would not know it from looking at their own tax bills. In total, roughly one in six Americans (16.7 percent) would see their tax bills rise next year if the framework were implemented in its current form, and that percentage would grow over time because of technical changes in the framework (i.e. “chained CPI”) that would slow the growth of tax benefits provided under the standard deduction, tax bracket cutoffs, and Earned Income Tax Credit (EITC).
In promoting their plan, the framework’s authors have touted their decision to increase the standard deduction as evidence that their proposal was designed with middle-class taxpayers in mind. But in the broader context of the plan, which also repeals personal and dependent exemptions, most itemized deductions, and the extra deduction benefit available to elderly and disabled taxpayers, this increase is less about boosting tax benefits for the middle-class than it is about repackaging them in ways that benefit some taxpayers while raising taxes on others.
I’m not a policy wonk, so delving into the gory details of the proposed framework isn’t an adventure I’m likely to undertake…but even a cursory glance reveals a very large (and unsurprising) truth. This tax reform plan is being sold as something which will give taxpayers across the board a “giant, beautiful, massive…tax cut.” The fact is that it’s anything but that. Most of the tax cuts would go to the upper echelons of earners and one in six Americans would actually see their tax bill increase.
(Question: Why is wealth redistribution considered to be “SOCIALISM!!!” when Democrats propose it…but defined as prudent fiscal policy when Republicans propose a plan which would redistribute wealth UPWARD?)
It’s not difficult to understand why the proposed framework looks the way it does. It was written by wealthy and powerful people to benefit wealthy and powerful people. No conflict of interest (or corruption) there, eh? So we gave the keys to the hen house to the wolves…what could possibly go wrong?
Then there’s the whole “How are we going to pay for what government is supposed to do when the proposed framework would cost the government more than $200 billion in the first year alone? That’s not tax reform, that’s the wholesale change of American governance…and guess who’s going to feel the pain? If you guessed, minorities, the poor, the sick, the unemployed, and other under-represented groups, you can go to the head of the class. Welcome to our Brave New World Order.
Nice work, America.