Remember Tax “Reform” (i.e. cuts)?

August 17th, 2017 at 10:36 am

“Really?! You’re complaining about regressive tax plans, now? Like that’s America’s biggest problem?!?”

Yes, I’m writing about ongoing plans for even-more-regressive-than-I-thought tax plans, based on some interesting, new analysis from the Tax Policy Center. And no, that’s not America’s biggest problem.

That would be the presidency in crisis. If it wasn’t clear to some from the start, it is becoming increasingly clear to many more, including the CEOs who signed up to advise the new president (which was never going to end well), that our president is not only incapable of uniting the country when he’s given the opportunity to do so. He cannot resist doubling down on tearing us further apart, and in the process, lending support to potentially and actually violent racists and anti-semites.

If I have any value-added in this space, however, it is in regards to policy. Obviously, a crisis in the executive branch interacts with policy in myriad ways. There’s the economic and social impact of foolish statements, like Trump’s off-the-cuff suggestion that military intervention in Venezuela is on the table. This served to prop up Maduro, prolong the ever-intensifying suffering of the Venezuelan people, and distance us from allies who were and are trying to help.

There’s the inability and unwillingness to deal with the many challenges we face: racial divisions, climate change, inequality, opportunity, public investment in people and physical capital (I kid you not: the Trump admin has dubbed this very week as “infrastructure week”), fiscal pressures, and the fundamental congressional dysfunction to address any of these, which of course, predated Trump, but which has increased. (To be clear, their inability to legislate their many harmful ideas is currently a feature of their dysfunction, not a bug.)

Their (Trump, Ryan, Brady) tax reform plans, from what we can tell, would exacerbate the problems of both inequality (most of their benefits go the wealthiest households) and insufficient revenues to meet the challenges listed above. And based on the new TPC study, once you factor in the eventual pay-fors, these plans are even more regressive than at first blush.

So, yeah. I’m writing about this stuff, in no small part because, trust me: the purveyors of these tax cuts are not sitting still. They’re actively working behind the scenes to pass this type of a plan, and while I definitely don’t want to lose sight of the bigger picture, I’m also happy to pull the curtain back on their efforts.


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7 comments in reply to "Remember Tax “Reform” (i.e. cuts)?"

  1. Nick Batzdorf says:

    Nothing useful to say, just expressing utter dismay (yet again) and hope that people stop to think about how shortsighted these policies are.

    My rear end is severely chafed from hearing “tax reform” used in the media, when it really means “American rot.” Linguist George Lakoff has this nailed, although I’ve never seen his suggestion for a better term.

    • Nick Batzdorf says:

      I’m thinking “tax plunder” is an appropriate term.

      “Smash and grab” applies to the kleptocracy in general.

  2. Smith says:

    When will someone argue for pre 1964 marginal tax rate of 90% on income over $2 million
    currently we’re 10% below the Ronald Reagan rate 1982 to 1986 of 50% on income over $391,000
    All dollar amounts are in 2017 dollars.
    Then we should close corporate loopholes to get effective rates closer to 35%, competitive with Germany and France (both around 30 to 33% exclusive of VAT) though above U.K. (where income tax is much higher 40% on $52,000)
    No stupid notions of cut rates and broaden the base, a disaster when sellouts TIp O’Neil and Bill Bradley engineered this in 1986 and one of the dumbest things Obama and Clinton supported.
    Restore Capital Gains rates to higher levels.
    Tax retroactively foreign earnings and future earnings, and no tax holiday. Another stupid thing Obama and Clinton supported.

  3. Smith says:

    Quick someone call Krugman and explain to him the 1% have doubled their share of national income from 10% to 20%. Reagan’s Revolution still rules. How can Krugman be so (what’s another word for stupid) obtuse. He is repeating a Greg Mankiw argument to boot. This is why Krugman once said in his New York Times blog (since mostly abandoned for twitter where he retweets) that inequality doesn’t inhibit economic performance because yacht sales are the same as car sales or products bought by middle class (ignoring the difference in demand for spending on necessities). Even Reagan got 50% rates on $400,000 income for most of his two terms (1982 – 1986, and a 70% inherited top rate before that. Even Bernie Sanders promoted lower rates than those Reagan rates. Go figure. This supposed equivalence is no less than neo liberal economic fake news. Maybe Clinton and Barrack 80% of Bush Cuts Retained Obama would agree Democrats have restored rates, but this is a big lie.

    Here is the phony news:

    “What Will Trump Do to American Workers?
    Paul Krugman AUG. 21, 2017”
    “The election of Ronald Reagan was supposed to have set America on a path toward lower taxes and smaller government — and it did, for a while. But those changes have largely been reversed.
    According to the Congressional Budget Office, back in 1980 the top 1 percent paid 33 percent of its income in federal taxes. Under Reagan, that share briefly fell below 25 percent. But as of 2013, the most recent year covered, Obama’s tax hikes had brought federal taxes on the 1 percent back up to 34 percent of income.”

    • Smith says:

      I’ll do the math for you.
      $15 trillion in national income (national income is less than GDP for various reasons)
      $1.5 trillion equals the ten percent share of national income collected by top 1% in Reagan’s day.
      $1.125 trillion is would be what they kept after paying the low, low, 25% rate Krugman cites.
      $3 trillion is what they actually get today, it now being 20% of income garnered by the top 1%.
      $2.01trillion is what they keep after paying the high, high rate of today.
      $885 more money is what they keep under this alleged equal regime.
      1.2 million would be the number of top 1% households, or about 1% of full time income workers too.
      $740,000 is the extra money they each receive over and above what they used to get in Reagan’s day.

      Double your income and pay the same rate in taxes? Who could imagine that we already have a version of Steve Forbes regressive plutocratic flat tax. Except this is more regressive than the Forbes tax because it’s really only flat for the very rich people as rates really do rise when you are middle class and neither the 47% paying no tax, nor the 1% who are grateful for that upper capped rate of 40% on income above $400,000. Make a million, make twenty million, you pay the same rate. Or a bit less (as the 35% figure shows, assuming that is correct).

      Any you wonder why money goes to capital instead of workers? We used to have 90% rates on $2 million before 1964.