We’ll get to how the tax bill itself fits into that picture, but first I want to present a couple of things influential Republican senators said in the past few days. Let’s start with Iowa’s Chuck Grassley, who made this comment on the estate tax:
“I think not having the estate tax recognizes the people that are investing,” Grassley said, “as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
Right now, the first $5.5 million of any estate is not subject to the tax. Because of that, fewer than one in 500 estates owes any tax at all. So Grassley is saying that 99.8 percent of Americans lead contemptible lives of waste and folly, while only that remaining sliver of the extra-wealthy have shown the virtue that should win their heirs the ability not to pay taxes on the fortunes bequeathed to them. The Senate bill would double the tax’s exemption, while the House bill would eliminate the tax entirely; depending on how the final version turns out, Eric Trump may finally be free of the fear that he’ll have to pay taxes on his inheritance.
Now let’s turn to Utah’s Orrin Hatch, who explained why, despite his support of a bill offering trillions of dollars in tax breaks to the wealthy and corporations, we absolutely must start slashing the social safety net immediately:
“I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger, and expect the federal government to do everything.”
Grassley and Hatch are being criticized for these remarks, but we should appreciate that this isn’t one of those occasions when politicians are just spinning. There isn’t much political advantage in saying that if you die with less than $5.5 million in assets, like nearly all Americans do, that means you were lazy and self-indulgent, while only the wealthy have proved their moral worth by the size of their bank accounts. So when someone says something like that, you can be pretty sure he’s expressing his actual beliefs.
And that idea is woven through the Republicans’ tax bill. As Jared Bernstein points out, “The tax plan is written in such a way as to favor asset-based incomes, passive business investments and inherited wealth, and to penalize, once it’s fully phased in, those foolish enough to depend on their paychecks.”
Republicans would no doubt counter that any time you reduce taxes, you increase the incentives for work. But it’s important to remember that if you’re a regular wage-earning American, this bill is as likely to increase your taxes as decrease them. According to the Joint Committee on Taxation, Congress’ official scorekeeper on tax issues, every income group under $75,000 a year will on average see a tax increase by 2027. And while many of tax cuts that individuals at lower incomes might benefit from phase out over the course of the next decade, the cuts that most help corporations and the wealthy are permanent. All that is why, as Ryan Grim points out, while the bill has a net cost of $1.5 trillion, it actually cuts $6 trillion in some taxes but increases taxes in other ways by $4.5 trillion.
To be fair, the tax code already favors investments over work; Republicans merely want to reinforce and extend that characteristic. While they often lecture about the “dignity of work” when they’re proposing to take away safety net programs that aid those in need, they are doing little or nothing to change the tax code so that it does more to encourage work. Right now, wage income (i.e., money you work for) gets taxed at a higher rate than investment income (i.e., money you make when your money makes you more money). The salutary effects of labor on an individual’s spirit apparently only operate on the grubby lower classes, while the wealthy should be honored and rewarded for their ability to watch their portfolios grow.
Those are value judgments, rooted in how Republicans tend to view the worth of different people. They operate on the presumption that the economic system is fair, and the results of that system provide a measure of different people’s virtue. If you’re rich — even if you got rich by choosing the right parents — they presume that you deserve to be taxed as lightly as possible, while if you’re in need of the kinds of help we offer low-income people, then it reflects a moral failing. If we give you any help at all, it should be as grudging as possible, accompanied by stern lectures and even rituals of humiliation such as drug tests.
Their tax bill, and their upcoming assault on the safety net, will weave these principles more deeply into our laws. And these principles are their real rationale; ignore all the practical claims they make about the explosion of economic growth these tax cuts will supposedly produce, and how the benefits will trickle down to everyone, and how it will all pay for itself. Those arguments are transparently bogus. A recent survey of 38 prominent economists found that only one said the tax bill would significantly increase growth, and all 38 rejected the claim that the tax cut would pay for itself. Every model not constructed by partisan Republicans shows the tax bill producing at best a modest bump in economic activity, but nothing remotely resembling the skyrocketing growth that Republicans predict.
Confronted with this comprehensive debunking of their practical claims, Republicans are undeterred and undaunted. That’s because they’re driven by a moral imperative, one that says that no matter what effect cutting taxes on the wealthy and corporations might have on the economy, it’s just the right thing to do. It rewards the virtuous, and you can tell who the virtuous are by how much money they have. If you’re asking why they wrote the bill the way they did, that’s just about all you need to know.