Democrats are proposing to raise taxes on the rich to fund infrastructure and an array of new social spending. But Republicans, reports Sahil Kapur, “are sending a pointed warning to congressional Democrats: If you raise taxes on corporations and top earners, we’ll just cut them back when we regain power.”
Oh no! Not that!
While this statement is a highly accurate prediction, it’s an extremely feeble threat. Republicans are going to cut taxes for rich people the next time they hold power, regardless of what Democrats do. Over the last three decades, Republicans have made clear that they believe the perfect response to a slowing economy, a rapidly growing economy, a budget deficit, a budget surplus, war, peace, high inflation, low inflation, or deadly pandemic is to give rich people a nice big tax cut. It’s their religion.
So, yes, if Democrats raise taxes on the rich, then Republicans will cut taxes for the rich next time they gain power. For any X, the statement, “If X, then Republicans will cut taxes for the rich next time they gain power” is true.
There are three basic reasons Democrats are proposing to increase taxes on the rich. First, they believe revenue levels are too low in general, and that rich people can pay much higher taxes rates without any detectable effect on the economy. Second, budget rules require that any permanent new spending be offset, so tax cuts enable them to permanently fund new programs they want. And third, raising taxes on the rich is extremely popular, which means that including those pay-fors not only makes them viable under Senate budget rules, but also makes the proposals more viable politically.
Crucially, none of those reasons are diminished by the fact that Republicans can and will cut taxes for the rich whenever they regain control of government. Cutting taxes for the rich is unpopular, and cutting social spending is even more unpopular. Republicans are willing to spend their political capital cutting taxes for the rich. (As noted above, it’s their religion, and when your deity commands you to do something, you don’t haggle over the cost.)
Republicans sometimes try to roll back social spending, but these efforts tend to go very badly for them. Republican senator Thom Tillis tells Kapur that Republicans will repeal “the funding mechanisms” for those programs, so that “the numbers don’t work.”
But that isn’t how budgets work. If Republicans repeal the taxes that finance new social programs, it does not affect the spending; it simply increases the deficit. So it seems Tillis is warning that the next time Republicans gain control of government, they’ll enact a huge tax cut for rich people that increases the deficit.