President Trump does not want you to know that the goal of his tax cut for the rich is to cut taxes on the rich. The White House insists that it has no interest in protecting plutocrats’ pocketbooks from Uncle Sam’s prying hands. On the contrary, the administration says it designed its tax plan with no objective beyond lightening the burden on “middle-income” families, simplifying the tax code, and accelerating economic growth.
And if the resulting plan just so happens to redistribute trillions of dollars from the government’s coffers to America’s wealthiest families, that’s a pure accident — or else, a mathematical illusion.
At his confirmation hearing, Treasury Secretary Steve Mnuchin promised that “there would be no absolute tax cut for the upper class” on his watch. Late last month, Mnuchin allowed that he couldn’t be certain that the final tax-reform bill would not cut taxes on wealthy households — but he insisted that his “number one objective” was to provide relief to middle-class families. Trump, for his part, predicted that rich people like him would actually end up paying more under his tax plan, because of all the special-interest loopholes that it would eliminate.
Congressional Republicans have been similarly reluctant to forthrightly champion the upward redistribution of wealth. Instead, Paul Ryan has invited voters to consider how neat it would be if all tax forms were printed on very small pieces of paper.
Of course, the “number one objective” of all Republican tax plans is to relieve the economic anxiety of America’s wealthiest people. Ryan’s plan illustrates this fact in stark terms — the Speaker’s bill would ultimately deliver 99.6 percent of its tax cuts to the top one percent. Trump’s indifference to the deficit allowed him to cut the middle class in on his heist, but his plan still gifts 50.8 percent of its tax relief to the one percent, and very little to those on the middle of the income ladder or below.
Exactly how much Trump’s plan would “simplify” the tax code is unclear, since it is bereft of even the most basic details. But the lion’s share of its provisions — from the repeal of the estate tax, to the abolition of the alternative minimum tax, to the 15 percent rate on pass-through income — would deliver massive gains to Mar-a-Lago’s customer base, while neither providing significant relief to the middle class nor advancing the prospects of postcard-size tax returns.
Still, the GOP has been rather successful in disguising its true aims. Nearly 75 percent of Americans oppose tax cuts for the rich. But a plurality of voters still trust Republicans over Democrats on issues of taxation.
In most cases, when a political party’s donor base and fringe activists force it to adopt a heinously unpopular policy commitment, said party forfeits the upper hand on the issue in question. There are a lot of plausible explanations for how Republicans have avoided that fate with regard to taxes. But one is that the Democratic Party has utterly failed to articulate a clear, comprehensive alternative. As Vox’s Dylan Matthews writes:
Republicans and conservatives, in government and in think tanks, have no shortage of big, ambitious plans that reflect a vision for the role taxes should play in society … Democrats, though, are far less likely to think about the tax code holistically. More typically, they propose spending plans — for free college or health care or family leave — and then come up with a tax plan to pay for it. Or they use the tax code itself to create new programs through new tax credits. The result is that taxes get more complicated, and that Democratic politicians end up talking about taxes mostly when they want to raise them (at least on the rich).
Democrats have every reason to make taxes one of their signature issues. Voters want the tax code to be simpler and fairer — which is to say, they want the middle class to pay less, the rich to pay more, and for everyone to spend less time on government-mandated paperwork.
Republicans cannot deliver these goods because they are beholden to interest groups that oppose them. The libertarian billionaires who shield the GOP from popular rebuke demand tribute. And those billionaires — along with tax-services companies — have an investment in keeping Americans confused and overwhelmed at tax time.
As Matthews notes in his (excellent) piece, Democrats could offer taxpayers something simpler than postcard-size returns — no returns at all.
In a number of countries, like Japan and the UK, the vast majority of people don’t have to file tax returns at all. Instead, through a system known as “precision withholding,” the government takes exactly the right amount out of every paycheck. If they find that a mistake was made — not accounting for a charitable donation or mortgage interest, for example — they find that mistake in charity and bank records, and they fix it for you.
Matthews goes on to explain that such a proposal would likely drive a wedge between voters and the GOP.
When Sens. Ron Wyden (D-OR) and Dan Coats (R-IN) introduced a fairly timid, intentionally bipartisan tax reform bill in 2011 and included a proposal for return-free filing, anti-tax crusader Grover Norquist blasted it, writing in a letter to the senators that “the clear goal of this measure is to raise taxes in a way that leaves politicians with clean hands.” Norquist wants to make taxes complicated so people hate them, just as Intuit wants them complicated so that people remain dependent on its terrible, unnecessary software.
Democrats have no interest in maintaining Americans’ antipathy for the IRS, or accelerating the growth of income inequality. The party has plenty of internal disagreements on pocketbook issues. But there is a broad consensus on Team Blue that the tax code should be more progressive. It shouldn’t be difficult for Nancy Pelosi and Chuck Schumer to unite most elected Democrats around a tax-reform blueprint.
Such a plan could combine return-free filing with a massive increase in the tax credits for earned income and child care, financed by healthy increases in the taxation of high-income individuals and multi-million-dollar estates. The party could also go more ambitious, and offer a detailed plan for overhauling the tax system with an eye toward simplicity and progressivity. Matthews’s post offers a grab bag of neat ideas to mix and match.
So long as the White House is arguing against the status quo, its purported desire for a “middle-income tax cut” will retain a patina of plausibility. Trump’s plan really would cut taxes on many middle-income households — it would just cut them on the rich by a far larger margin, thereby jeopardizing funding for welfare programs on which the non-affluent depend.
Democrats are making it easy for Trump to say the second part softly. Right now, Steve Mnuchin doesn’t need to explain why the president’s tax plan offers less relief to the middle class than Chuck Schumer’s does; or why shifting the tax burden from working families to the rich is actually bad for the former; or why it’s more convenient for taxpayers to fill out short tax forms than it is to file no returns at all.
The donkey party should do everything in its power to frame the tax-reform debate around the GOP’s actual priorities. And the best way to do that is to put forward a plan for achieving Trump’s purported objectives.
The Democratic proposal doesn’t have to be fancy or detailed or comprehensive. It just can’t boil down to “America’s tax system is already great.”