The basic ideas of federal tax reform are simple: Remove a bunch of loopholes that give some taxpayers an unfair advantage, and reduce some tax rates in the expectation that this would help the economy to grow.
It’s far more confusing than that, of course, because of the labyrinth of taxes the federal government has created over the decades. The biggest criticism of proposed tax code changes is that they are more generous to corporations and the very wealthy. If true, this would betray a campaign promise made by President Trump, who promised voters he would redo the tax code to help the middle class and working people.
The House has passed a reform package that has not generated much enthusiasm, while the Senate is considering a separate bill as well. The president craves just about any bill to sign, because it would be his first significant legislative achievement since taking office.
When looking at a subject like this, it often helps to see what allies of the party in power think. Surprisingly, opinions among Republican-aligned groups are mixed, and this is reflected in a column this week in The Washington Post by Marc Thiessen of the conservative and libertarian American Enterprise Institute.
Thiessen cites Congress’ non-partisan Joint Committee on Taxation, as well as the Tax Policy Center, which both conclude that 9 to 10 percent of Americans would pay more taxes under the existing Senate proposal. Only 76 percent would see lower taxes, while the remainder would be unchanged.
Such an outcome, says Thiessen, is not in the Republican Party’s best interests.
“There are four words that no American should ever be able to utter: ‘Republicans raised my taxes,’’ he wrote.
“When Republicans reform the tax code, there should be no losers, especially not the middle class,” he added. “For years, Republicans have been telling Americans: It’s not the government’s money, it’s your money, and we want to let you keep more of it to spend, save or invest as you see fit. If they raise taxes on millions, congressional Republicans will be violating that fundamental principle.”
Thiessen noted that House Ways and Means Chairman Kevin Brady, R-Texas, disputes the analyses. Brady believes critics are not taking into account reports that say tax reform would boost worker pay, offsetting any tax increases.
That may happen, but then again it may not. There’s no way of knowing for sure. Republicans are being foolish if they believe tax cuts alone are the magic dust that will spur the economy.
After all, with Mississippi as an unfortunate exception, the national economy has been steadily improving in the past few years, and there were no tax cuts at work there. It was just a long, slow recovery from The Great Recession.
Thiessen’s argument makes more sense. If Republicans take better care of corporations and the wealthy at the expense of ordinary people, what’s the point of reform? The GOP would be putting its congressional majorities at risk.
