Republicans Using Populist Rhetoric to Sell Greed
The Tax Cuts and Jobs Act of 2017, introduced by House Republicans, is certainly about tax cuts (but almost entirely for wealthy Americans and corporations) but hardly about jobs at all. The 429-page whopper of a bill is a medley of discredited fiscal policies and political gifts to the GOP’s conservative base. It is also a crucial marker for whether or not Republican overreach will work. Having failed to pass health care reform, as I predicted earlier this year, the GOP’s tax reform bill is arguably the biggest test of the party’s ability to sell greed in the guise of helping most Americans.
Even more so than President Donald Trump, House Speaker Paul Ryan has owned the heart of the tax reform bill and deserves the most scorn for his hypocrisy in selling the plan as beneficial to the public. Ryan, joined by Texas Rep. Kevin Brady (who introduced the bill into the House Ways and Means Committee last week), surrounded himself with a group of ordinary-looking Americans and claimed the bill was “for the middle-class families in this country who deserve a break.” Without showing an iota of shame, Ryan added, “It is for the families who are out there living paycheck to paycheck, who just keep getting squeezed.”
But claims about how the bill will benefit ordinary people are being debunked. Before the bill was formally introduced, White House press secretary Sarah Huckabee Sanders claimed on Twitter: “The average American family would get a $4,000 raise under the President’s tax cut plan.” She innocently asked, “So how could any member of Congress be against it?” Amazingly, that $4,000 figure was not drawn from estimates of what “average” Americans might save on their tax bill, but rather was based on an unsubstantiated assumption that corporate America will be floating in so much extra cash from passage of the bill that some of its immense wealth will trickle down to Americans in the form of wage increases. Many studies show that trickle-down economics is nothing but a trick—one designed to help the rich.
When introducing the bill, Ryan claimed that “the typical family of four will save $1,182 a year on their taxes.” Georgia Republican Rep. Drew Ferguson cited the same figure to his constituents, and, like Huckabee Sanders, asked, “Who wouldn’t want American families to have more money in their pockets?”
Who indeed? The GOP, apparently, as PolitiFact notes in its analysis of the tax plan. According to the fact-checking site, in some specific scenarios some families may save $1,182, but given that the GOP tax plan eliminates a number of popular deductions, families that choose to itemize their tax bills are “likely to end up worse off if the bill is passed as is, even with the higher standard deduction.” Both Ryan and Ferguson also wrongly claimed that the estimated savings would be “$1,182 a year” and “every year,” when in fact the savings, if they appeared at all, would occur only in the first year.
Ryan, Ferguson, Trump and their fellow Republicans are hoping against hope that Americans will buy their scam. Charlie Fink, a member of the progressive organization Patriotic Millionaires, told me in an interview that “Paul Ryan and the right have adopted a populist language to mislead people about what they’re going to get.” In fact, the Republican website about the tax bill touts “more jobs,” “fairer taxes” and “bigger paychecks” as selling points, when in fact readers of the actual bill would rationally conclude that it would likely do nothing to increase jobs, would make taxes less fair by benefiting the rich and either temporarily increase paychecks by a minuscule amount, leave them the same or make them smaller.
One of the gimmicks Republicans are using to trick ordinary Americans into backing their bill is the idea that filing taxes will become simpler under their plan. During the photo op of the bill’s introduction, Brady claimed that most Americans would be able to file their taxes on a simple postcard. Trump made similar remarks in a Cabinet meeting last week: “We’ll make the tax cuts simple and fair so that the vast majority of Americans can file their taxes on a single sheet of paper.” Except, as Fink pointed out to me, “The current form 1040 is two pages and there are only seven or eight lines to fill out.” For those Americans who have a single job over the course of the year and choose not to itemize their taxes, their W-2 form provides all the necessary information for filling out the 1040 form. Nothing in the GOP tax bill suggests any of that would change. According to Politico, “in some ways, the House GOP tax plan will even make the tax code more complicated.”
Another GOP selling point is that the reduction of the number of tax brackets from seven to four will simplify taxes, but as Politico also points out, “the brackets are actually one of the easiest pieces of the tax code to navigate; regardless of their bracket, taxpayers can simply look up their taxes in a table.” In other words, if you know your income, you know what tax bracket you fall into. Looking up that information in a table with four rows versus seven is hardly a big deal.
Of course, no Republican will admit that most of the bill is geared toward rewarding the rich. What they are desperately hoping is that American taxpayers do not notice that the release of the “Paradise Papers” earlier this week—a massive document dump from the International Consortium of Investigative Journalists—is relevant to the tax reform effort. The 13.4 million leaked documents, which were obtained by German reporters from a secretive, Bermuda tax firm called Appleby, clearly show how the GOP’s biggest tax beneficiaries already engage in large-scale theft. Richard Phillips of the Institute on Taxation and Economic Policy explained to me in an interview that “U.S. companies report 61 percent of their foreign profits into offshore tax havens.” In Bermuda specifically, Americans companies, according to Phillips, “report 17 times the GDP of Bermuda in that country.”
In selling this tax reform bill, the GOP is claiming that slashing the corporate tax rate to 20 percent will make U.S. corporations more competitive globally, because the current statutory rate of 35 percent is “the highest in the industrialized world,” as the bill states. According to Phillips, the effective rate is more important than the statutory rate, given that big corporations take advantage of gaping loopholes to minimize their taxes. “Ideally, under a tax reform plan, you could close enough loopholes and then lower the rate and it would be about even,” said Phillips. “But,” he continued, “what this plan does is it closes a couple of tiny loopholes, opens up a few bigger loopholes and still cuts the rate. So it’s really just a big gift to them.”
Republicans are also paying lip service to corporate tax havens by promising a “tax holiday,” a one-time tax repatriation rate of 5 to 12 percent, which, according to Phillips, essentially rewards the practice of storing profits offshore and also allows companies to pocket about $500 billion in tax breaks. He argues that a tax holiday will likely not work because “you can’t really compete with a tax haven, as long as you’re allowing companies to do that, because they pay zero taxes there.” In other words, you cannot compete with zero or nearly zero tax rates, which is what offshore havens offer. The real problem is that corporations are able to hold their profits offshore in the first place, an issue the GOP is loath to address.
The “jobs” claim of the “tax cuts and jobs” act is based primarily on pouring so much money into corporations that they will create jobs, but Phillips points out that when corporations were given a tax holiday in 2004, similar to what Republicans are now proposing, “a subsequent study showed that companies that took the biggest advantage of that holiday actually were the ones that cut the most jobs because … having more access to capital simply means that they make more and bigger investments offshore.”
Once in a while, Republicans will inadvertently admit that their bill is written for their rich friends. In a piece published Tuesday, New York Rep. Chris Collins told a Hill reporter, “My donors are basically saying, ‘Get it done or don’t ever call me again.’ ” As Fink from Patriotic Millionaires told me, “The only thing the Republicans really agree about is greed, and they’re trying to cut everybody in on their greed.”
Recent polls show that Americans notice this greed and are not buying the populist rhetoric that is obscuring giveaways to the rich. Not only do most Americans think tax reform is not a high priority, they don’t believe that corporations will turn their extra cash into jobs. A majority of Americans think corporations should pay higher taxes. The GOP has tried in vain time and again over the course of this year to use their legislative power to deceive ordinary people. For the public good, may they fail yet again.