Politically successful conservatives elsewhere have rejected the GOP supply-side orthodoxy in favor of tax cuts that tilt strongly in favor of the bulk of voters. Australia’s governing conservatives, the Liberal Party, won a shocking upset last May in part because of their tax plan. Tossing out his predecessor’s focus on cutting taxes for big business, Prime Minister Scott Morrison instead made cutting taxes for people the primary goal. Through a combination of credits, rate reductions and changes in the thresholds for income tax brackets, every Australian making less than 200,000 Australian dollars ($137,000) a year would get significant income tax cuts. The income tax rate paid by those earning above that wouldn’t be touched at all.
Britain’s Conservative Party proposed something similar ahead of its December 2019 win. Out went proposed tax cuts for big business and the upper-middle class. In came cuts to Britain’s National Insurance contributions, a payroll tax similar to the U.S. Social Security tax. While all workers would receive this cut, it helps lowest-paid workers the most because the amount received is a greater share of their income. This policy helped Prime Minister Boris Johnson smash the opposition Labour Party’s “red wall” of working-class seats in northern and central England, giving Johnson the biggest Tory majority in more than 30 years.
Even Austria’s conservatives have wised up to the game. Their coalition agreement with the Green Party formed this year included significant cuts in income tax for anyone making under 60,000 euros a year, or about $67,000. Tax rates would be cut the most for people earning the least, making this plan most advantageous for Austria’s working and lower-middle class. Upper income families would get no rate cuts or bracket adjustments under the new plan.
It is hard to understate how revolutionary this thinking would be for the Republican Party. For decades, GOP economic orthodoxy has dictated that tax cuts should flow first to the wealthiest and only then to the rest of us. This is based on the supply-side theory that lowering the top rate paid by the richest Americans incentives people to work harder and innovate more. Cutting tax rates on capital gains is another holy grail for supply-siders for the same reasons. Many even want to eliminate the capital gains tax entirely, something that would mean many of America’s billionaires would pay next to nothing in income taxes.
This libertarian theory ignores conservative wisdom. Ronald Reagan said conservatism was ultimately rooted not in theory but in the “common sense and common decency of ordinary men and women.” Conservative voters know that the people who need tax cuts most are those who are struggling in today’s global economy, not those who are thriving in it. They also know that the renewed appeal of socialism and its cousin, ever larger government for its own sake, can be fought only by finishing the job Reagan began to build: a “new Republican Party” that is the natural home for America’s working class. As conservative leaders in other countries have learned, that means making their needs a top priority.
Trump seems to grasp what many of his advisers do not. He left his interview with Bartiromo with the impression that he wants to cut taxes for people making between $30,000 and $100,000 a year from between 24 and 28 percent to a mere 15 percent. That is a huge drop — one that would give thousands of dollars a year to a family making about $65,000 a year. That’s big enough for people to notice and large enough to actually help them make ends meet.
Tax cuts for the rich might appeal to the economics professors’ computer models and Trump’s wealthy economic advisers, but they aren’t going to appeal to the people he actually needs: America’s working- and middle-class voters. Trump should heed his populist instincts and the evidence from his fellow conservative leaders and craft a tax cut for the many, not the few.