Instead, the best way to understand this bill may be to focus on this question: What values are being expressed by the choices Republicans are making?
The first value is the one lying at the heart of all Republican tax policy: The rich are just better than the rest of us. They’re more noble, more deserving, more worthy of consideration and help. When Republicans speak of tax “relief,” it is the wealthy whose burdens are being lifted. So it is with this cut, which not only has multiple provisions explicitly benefiting the wealthy, like a reduction in the top income tax rate and a doubling of the inheritance tax exemption, but also phases out many of the cuts that benefit those at lower incomes, so that with each passing year its benefits flow more to the top.
When you make a choice to eliminate a provision that helps ordinary people so that you can preserve a corporate tax cut, you’re making a statement of values.
The centerpiece of the bill is a dramatic reduction in corporate taxes, and there’s something important to understand about that: It’s a big tax cut for the wealthy, too.
You no doubt remember how Mitt Romney was roundly mocked in 2011 when he said, “Corporations are people, my friends.” But he was actually right. What many missed was the next thing he said by way of explanation: “Everything corporations earn ultimately goes to people.”
Which is true — it’s just that there are very specific people getting that money. While Republicans would like you to believe the spectacular windfall they’re bestowing on corporations will be passed on to workers in the form of higher wages, that’s not what the corporations themselves are saying. They don’t seem to have plans to make huge investments that would create jobs, because they’re already making near-record profits and they don’t have the demand that would justify those investments. So what are they going to do with the money? “U.S. corporations are saying they would use a tax reform windfall to buy back shares, retire debt and other shareholder-friendly moves, in recent post-earnings calls with investors and securities analysts,” Reuters recently reported.
So there are people benefiting from the corporate cuts: people who own a great deal of stock in corporations. In other words, rich people.
And it’s not just rich people who are the greatest beneficiaries of this bill, but idle rich people. The bill gives some of its most generous benefits to people who inherit money — they’ll now be exempt from any taxes on the first $11 million. The corporate tax cuts will flow to those who own stock, which is not money you work for. While we don’t know for sure how it will work in the final version, reports lately have indicated that the gigantic new pass-through loophole may be structured to advantage people who don’t actually work in their pass-through businesses, but are just passive owners.
If you actually rely on your wages as your sole source of income, you’re probably going to be out of luck. And in fact, analyses of the Senate bill — which it looks like the final bill more closely resembles than the House version — showed that by 2027, every income group under $75,000 would see a tax increase. Those are people whose incomes don’t come from large inheritances and stock portfolios. The Tax Policy Center’s analysis found that the Senate bill “could reduce taxes by nearly three times as much for business owners in 2019 as for people … whose primary source of income is wages or salaries.”
This is from a party that loves to deliver stern lectures to poor people who rely on public assistance on how their meager benefits need to be cut so that they’ll fully appreciate “the dignity of work.”
There are lots of other ways Republican values are coming through, like the reduction in the deductibility of state and local taxes, which they’ve barely pretended is anything other than an effort to harm states that elect Democrats (despite the fact that those states already tend to send more tax money to the federal government than they receive in spending). Or the elimination of the individual health insurance mandate, which will save hundreds of billions of dollars by reducing spending on health care for people of modest incomes — money that is being put toward the corporate rate cut. Or the fact that despite all their rhetoric about “simplifying the tax code,” this bill actually injects new layers of complexity and new opportunities for tax avoidance which could be particularly lucrative for those with high incomes.
None of this should be much of a surprise to those familiar with the contemporary Republican Party. Indeed, the values behind this bill have been clear for a while, even to citizens who aren’t all that attentive to the minutiae of policy. Which is why the bill is so remarkably unpopular, with majorities opposing it in just about every poll that has been taken.
That’s a big part of why Republicans are in such a hurry. If they went through an ordinary process — lots of hearings, a lengthy floor debate, lots of time for the public to consider the implications and let legislators know how they feel about it — the bill would probably be doomed. In order to pass it, they’d have to change it dramatically, in ways that would mean it no longer reflected their values.
So this bill is what we’ve got, and what they’re almost certain to pass next week. It shows who they are, and if they think voters aren’t going to understand, they’re going to be in for a surprise.