The Washington PostDemocracy Dies in Darkness

Opinion Trump’s new tax plan shows how unserious Republicans are about governing

President Trump says the GOP tax plan is a “once-in-a-generation opportunity” to lower taxes on the middle class and businesses. (Video: Bastien Inzaurralde/The Washington Post)

“I will give you everything,” Donald Trump promised as a presidential candidate, and as president, not only has he continued to make that promise, but also the entire Republican Party has followed suit. Of course, they can’t actually deliver everything.

But this has become their guiding principle: that governing does not actually require making difficult choices, or when it does, one should just pretend that it doesn’t.

That’s one key message from the nine-page document that the Trump administration released today outlining the tax cuts it wants Congress to pass. The message in the plan itself and in the arguments they are using to justify it is that there are no choices to be made. We can have it all — cut taxes for corporations and the wealthy, which will shower great jobs on the rabble, which will not only not increase the deficit, it will cut it because so much new revenue will pour in.

If all that were actually true, it certainly would be terrific. But it isn’t.

President Trump spoke about his coming tax announcement at the White House on Sept. 26. (Video: The Washington Post)

We saw this same scenario play out on health care. The various Republican plans involved brutal cuts to Medicaid and insurance subsidies, the consequence of which would be that tens of millions would lose coverage, not to mention the removal of many of the Affordable Care Act’s vital consumer protections. But when they were questioned about these consequences, they’d say, “No no! Nobody will lose coverage! Everything will be cheaper and better! And we’ll protect people with preexisting conditions!” The supposedly serious people in the party made essentially the same argument that Trump did when he promised, “We’re going to have insurance for everybody.”

But it wasn’t true. And neither is it true that a bunch of tax cuts for corporations and the wealthy will create spectacular economic growth — Trump claimed yesterday that his plan will push growth to 6 percent, which no sane person thinks will happen — and it’ll all pay for itself because revenues will begin pouring in.

To be fair, the GOP plan isn’t solely tax cuts for corporations and the wealthy; there are some provisions in there aimed at the middle class. But the bulk of the goodies go to the high end. Here are some of the highlights of their proposal:

  • Cut the corporate tax rate from 35 percent to 20 percent.
  • Collapse the current seven income tax brackets to three.
  • Lower the top income tax rate from 39.6 percent to 35 percent.
  • Eliminate the inheritance tax.
  • Eliminate the alternative minimum tax, which is meant to ensure that rich people don’t get away with paying no taxes.
  • Create a 25 percent tax rate for “pass-through” companies, many of which are things such as law firms, that give their profits directly to individuals. Another notable pass-through company is the Trump Organization.
  • Double the standard deduction (although this is done in ways that could mean the benefit to those at the low end would be tiny).
  • Eliminate some unspecified deductions, but keep the mortgage interest deduction and charitable giving deduction that are so vital to wealthy taxpayers.

Politically speaking, it’s a formula that has worked before: offer ordinary people a little something to diffuse opposition, while you give spectacular benefits to the wealthy. If you learned that you were going to get a $500 tax cut, you might say, “Hey, sounds great,” even if the CEO of the company you work for is going to get a $1 million tax cut. At the very least, you’d be less inclined to take to the streets to protest the inequity.

When they’re confronted with the fact that this tax cut would exacerbate inequality and balloon the deficit they used to pretend to care about when a Democrat was in the White House, Republicans protest that in fact, it will work out great for everyone. There are no hard choices to be made, because the cuts at the top will trickle down to the masses and pay for themselves with all the increased revenue they’ll generate.

No serious economist believes this to be true; in fact, the truth is just the opposite. Tax cuts don’t pay for themselves, and corporate tax cuts in particular flow overwhelmingly to those at the top. Corporations don’t react to a cut in their taxes by taking all the extra profits and hiring new people or boosting the wages of their lowest-paid employees. The money mostly goes to things such as bonuses for executives, stock buybacks and dividends, which are paid to wealthy shareholders.

The truth is that Republicans are in fact making choices with this tax plan, just as they made choices on health care. Those choices mean that they’ll accept enormous deficits and worsening inequality if that’s the price of giving the wealthy a big, beautiful tax cut. Needless to say, that’s not exactly a winning message. So they simply come up with creative ways of pretending that these trade-offs don’t exist at all. Which once again proves that they just don’t take the task of governing seriously.