Despite a few sops to middle-class families with children, the bill redistributes wealth upward. The big cut in the corporate tax rate and the elimination of the alternative minimum tax overwhelmingly benefit the wealthy. The 4.6% cut for marginal income between $470,700 and $1 million for married couples benefits only the affluent. The gradual elimination of the estate tax will exclusively benefit extremely wealthy heirs.
Some parts of the House bill are defensible in the abstract. The mortgage interest deduction is a regressive tax break that contributes to the lack of affordable housing in popular urban areas, and reducing it to $500,000 from the current $1 million isn’t a bad idea. If the money were being used to, say, help fund healthcare, this would be a good trade-off. But using the money to fund tax breaks for the rich? Not so much.
The House proposal, then, is classic modern Republicanism: distributing wealth upward at a time of increasing inequality. And let’s not ignore the fact that the resulting loss in overall tax revenue to the federal government will inevitably lead, in time, to calls for reductions in spending—i.e., to government programs that help the poor.
As if that weren’t all bad enough, this bill is also a bait-and-switch on the part of the president.
Trump was able to capture the Republican nomination in part because he shrewdly recognized the unpopularity of the party’s economic agenda, even among the party’s base. Running as a protector of the welfare state and scourge of Wall Street, he appealed to cultural conservatives who cherish Social Security and don’t support upper-class tax cuts. The most relevant parts of the Republican establishment have nevertheless gone all-in on Trump for a simple reason: He apparently didn’t mean a word he said.
And this was obvious during the campaign — at least if you paid attention to Trump’s proposals rather than his rhetoric. During the first presidential debate of 2016, Hillary Clinton described her opponent’s tax plan as “Trumped-up trickle down.” Perhaps realizing that the intended catchphrase wouldn’t be included in any future compilation of great political wit, Clinton delivered the line awkwardly, and it went over poorly. But she wasn’t wrong. Trump’s campaign tax plan was very regressive, and represented the same basic priorities as the new House plan. Trump told voters he was a more populist Republican, but his governing agenda lines up with that of George W. Bush.
I’d like to say that this will finally blow up Paul Ryan’s reputation as a WONKY GREEN-EYESHADED DEFICIT HAWK who secretly cares about the poor, but…