THE MORNING PLUM:
As it happens, this reading of the GOP tax plan is entirely correct.
The new Tax Policy Center analysis of the bill tells the story. It finds that in 2027, 53 percent of taxpayers will see a tax hike, relative to current law. That’s because the plan makes the individual rate cuts and the preferences that will benefit lower earners temporary, while establishing an inflation index that nudges people into higher income brackets over time, to limit the impact on the long-term deficit. Meanwhile, the bill makes the corporate tax cuts (which overwhelmingly go to shareholders and capital, and thus mainly to the rich) permanent.
The key to understanding the plan’s regressiveness is in the distribution of the tax cuts and tax hikes that will hit in 2027. I’ve created a chart, using the TPC’s data, that tells this story:
As you can see, the groups who see a tax hike in 2027 are heavily concentrated in the lower-income quintiles. By contrast, more than three quarters of the top 1 percent get a tax cut — an average tax cut of nearly $40,000. And more than 90 percent of the top 0.1 percent get a tax cut — an average tax cut of more than $200,000.
Republicans have said that passing this plan is key to staving off a disaster in the midterms. They are hoping to sell it to voters by claiming that at its core, it is a middle-class tax cut, and they are hoping that the tax cuts that working- and middle-class Americans see in the short term will make this claim credible.
It is true that in the short term, the vast majority of taxpayers will see a tax cut. But even in the short term, the plan is very regressive. Here’s another chart that demonstrates this, using the TPC data:
Next year, the bottom three quintiles get an average tax cut of less than $1,000, while the top 1 percent gets an average tax cut of more than $50,000, and the top 0.1 percent gets an average tax cut of nearly $200,000. By 2025, the lower quintiles get approximately the same-sized tax cut, while the average tax cut for the top 1 percent jumps to higher than $60,000, and the average tax cut for the top 0.1 percent jumps to more than a quarter of a million dollars.
And over time, as the first chart shows, more and more in the lower quintiles end up paying higher taxes, even as the very wealthiest Americans continue to enjoy huge benefits. Indeed, the TPC data show that by 2027, more than 80 percent of the plan’s benefits go to the top 1 percent. As Dylan Matthews points out, this is even worse than a previous iteration of the bill.
The plan gets increasingly regressive over time. But this feature of it is essential to maintaining the GOP priorities at the core of the bill and to the GOP’s hopes of passing something that embodies those priorities. Republicans must pass the plan with only GOP votes, because Democrats will not accept a plan that lavishes such an enormous share of its benefits on the rich, and Republicans will not accept a plan that does not do that. So Republicans must pass it through the Senate by simple majority, which requires keeping it from raising the deficit over the long term. Managing that — while also keeping the tax cuts that overwhelmingly benefit the rich permanent — required them to make the tax cuts that benefit everyone else temporary. Thus, the plan’s increasingly regressive nature is essential on multiple levels.
Republicans will try to get around the awful politics of this by arguing that in the short term, the middle class gets both a tax cut and will also benefit from the explosion of growth and wages that cutting taxes on corporations will supposedly produce. But very few economists believe that the latter will come to pass. And given the size of the tax cuts for less fortunate Americans relative to those that top earners will enjoy, it is far more likely that voters will continue to see the plan as a giveaway to the rich. Which is exactly what it is.
* MUELLER PROBE SET TO ENTER ‘MORE CONTENTIOUS PHASE’: Trump’s lawyers are meeting with special counsel Robert S. Mueller III this week, to ask whether he’s close to wrapping up. But The Post reports that the investigation still has a long way to go:
People familiar with the probe say that such assurances are unlikely and that the meeting could trigger a new, more contentious phase between the special counsel and a frustrated president … The special counsel’s office has continued to request new documents related to the campaign, and members of Mueller’s team have told others they expect to be working through much of 2018, at a minimum.
The dynamic here is that Trump’s lawyers are telling him he’s close to getting cleared, but if this doesn’t happen soon, it could set him off and cause him to try to close it all down.
* GOP TAX BILL COULD HURT REPUBLICANS IN SUBURBS: Republicans say they must pass the tax bill to prevent a 2018 bloodbath. But the Washington Examiner reports that it is likely to hurt them in the suburbs, where control of the House may be decided:
That’s a tall order for a proposal that has been underwater for weeks and is viewed skeptically by upscale suburban voters in Republican strongholds who worry it will raise their taxes. … Strategists for both parties expect the House majority … to hinge in large part on the battle for the burbs. Democrats are looking at 27 GOP-controlled districts with a sizable suburban population; Republicans, defending a 24-seat majority, are monitoring at least a dozen.
One GOP strategist actually says: “Step one is passing the bill. Step two is selling it.” But the real problem isn’t that Republicans just need a good sales pitch; it’s the bill itself.
* TRUMP UNLEASHES STREAM OF DISTORTIONS IN SPEECH: Linda Qiu fact-checks Trump’s big national security speech yesterday and finds a pattern: He repeatedly used distortions to aggrandize his influence or to claim to be breaking records:
He falsely called the $700 billion defense policy bill for 2018 “a record.”… He misleading suggested that NATO members are increasing defense contributions at his urging. … He exaggerated when he said foreign countries were not sharing the “cost of defending them.”… He exaggerated his national strategy’s emphasis on border security as “the first time ever.”
The constant need to do this remains remarkable and unsettling.
* TRUMP’S APPROVAL IS IN THE TOILET: The new CNN poll also finds that Trump’s approval rating sits at 35 percent, which is “his worst mark yet in CNN polling”:
Trump’s approval ratings continue to be the lowest for any modern president at this point in his presidency. As of December of their first year in office, all first-time elected presidents back to Eisenhower have approval ratings of 49% or higher except for Trump.
Here is one record that Trump actually is breaking!
* OBAMACARE’S FUTURE IN DOUBT: The New York Times reports that some health-care experts think the Affordable Care Act’s future may be in doubt, now that the GOP tax plan repeals the individual mandate, but that remains to be seen:
Insurance companies and Democrats in Congress find themselves in rare agreement, predicting that premiums will soar and insurance markets will swoon if the government can no longer threaten people with tax penalties for going without health insurance. The Congressional Budget Office estimates that repealing the mandate penalties would increase premiums by 10 percent and leave four million more people uninsured in 2019 and 13 million more uninsured by 2027.
Republicans say this will liberate people from having to buy insurance, while taking the money that would have made insurance cheaper for those who will now go without it to pay for corporate tax cuts.
* AND TRUMP WORRIED GORSUCH WOULD NOT BE ‘LOYAL’: The Post reports that Trump considered rescinding Neil Gorsuch’s nomination to the Supreme Court, because he was angry over Gorsuch’s criticism of his attacks on the judiciary as “disheartening”:
Trump, according to several people with knowledge of the discussions, was upset that Gorsuch had pointedly distanced himself from the president … The president worried that Gorsuch would not be “loyal,” one of the people said, and told aides that he was tempted to pull Gorsuch’s nomination — and that he knew plenty of other judges who would want the job.
Of course, Trump’s anger and expectation of Gorsuch’s loyalty only underscore that Gorsuch was, if anything, not disheartened enough by Trump’s view of the judiciary’s proper role.