House Republicans voted Thursday to pass their version of tax reform; the forthcoming plan from the Senate GOP will now also include a repeal of the ACA's individual mandate. (Drew Angerer/Getty Images)

Robert Reich: The GOP Tax Bill Is Everything That’s Wrong With Our Democracy

The Republican plan will hurt the poor, enrich the wealthy and make GOP campaign donors very happy.

BY Robert Reich

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The reason Republicans give for enacting the plan is “supply-side” trickle-down nonsense. The real reason is payback to the GOP’s mega-donors.

Selling the Trump-Republican tax plan should be awkward for an administration that has made patriotism its central theme.

That’s because patriotism isn’t mostly about saluting the flag and standing during the national anthem. It’s about taking a fair share of the burden of keeping America going.

But the tax plan gives American corporations a $2 trillion tax break, at a time when they’re enjoying record profits and stashing unprecedented amounts of cash in offshore tax shelters. And it gives America’s wealthiest citizens trillions more, when the richest 1 percent now hold a record 38.6 percent of the nation’s total wealth, up from 33.7 percent a decade ago.

The reason Republicans give for enacting the plan is “supply-side” trickle-down nonsense. The real reason is payback to the GOP’s mega-donors.

A few Republicans are starting to admit this. Last week, Gary Cohn, Trump’s lead economic advisor, conceded in an interview that “the most excited group out there are big CEOs, about our tax plan.” Republican Rep. Chris Collins admitted that “my donors are basically saying, ‘Get it done or don’t ever call me again.’” Republican Sen. Lindsey Graham warned that if Republicans failed to pass tax reform, “the financial contributions will stop.”

Republican mega-donors view the tax payback as they do any other investment. When they bankrolled Trump and the GOP, they expected a good return.

The biggest likely beneficiaries are busily investing an additional $43 million to pressure specific members of Congress to pass it, according to The Wall Street Journal. They include the 45Committee, founded by billionaire casino oligarch Sheldon Adelson and Todd Ricketts, whose family owns the Chicago Cubs; and the Koch Brothers’ groups, Americans for Prosperity and Freedom Partners.

They’re not doing this out of love of America. They’re doing it out of love of money.

How do you think they got so wealthy in the first place? As more of the nation’s wealth has shifted to the top over the past three decades, major recipients have poured some of it into politics – buying themselves tax cuts, special subsidies, bailouts, lenient antitrust enforcement, favorable bankruptcy rules, extended intellectual property protection, and other laws that add to their wealth. All of which have given them more clout to get additional legal changes that enlarge their wealth even more.

Forty years ago, the estate tax was paid by 139,000 estates, according to the non-partisan Tax Policy Center. By 2000, it was paid by 52,000. This year it will be paid by just 5,500 estates. Under the House tax plan, it will be eliminated altogether.

Why do Americans pay more for pharmaceuticals than the citizens of every other advanced economy? Because Big Pharma has altered the laws in its favor. Why do we pay more for internet service than most other nations? Big cable’s political clout. Why can payday lenders get away with payday robbery? The political heft of big banks.

Multiply these examples across the economy and you get a huge hidden upward redistribution from the paychecks of average working people and the poor to top executives and investors. All this is terrible for the American economy. 

More and better jobs depend on increasing demand for goods and services. This must come from the middle class and poor because the rich spend a far smaller share of their after-tax income. Yet the middle class and poor have steadily lost purchasing power. Partly as a result, a relatively low share of the nation’s working-age population is employed today and the wages of the typical worker have been stuck in the mud.

The Republican tax plan will make all this worse by burdening the middle class and the poor even more. A slew of analyses, including Congress’s own Joint Committee on Taxation, show that the GOP plan will raise taxes on many middle-class families.

It will also require cuts in government programs that middle and lower-income Americans depend on, such as Medicare and Medicaid. And the plan will almost certainly explode the national debt, eventually causing many middle class and poor families to pay higher interest on their auto loans, mortgages, and credit cards.

I don’t care whether the top executives of big corporations, Wall Street moguls, and heirs to vast fortunes salute the flag and stand for the national anthem. But they enjoy all the advantages of being American. Most couldn’t have got to where they are in any other country.

They have a patriotic duty to take on a fair share of the burden of keeping America going. And Trump and his enablers in Congress have a patriotic responsibility to make them.

This article first appeared on RobertReich.org

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Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time magazine named him one of the ten most effective cabinet secretaries of the 20th century. He has written thirteen books, including the bestsellers Aftershock and The Work of Nations. His latest, Beyond Outrage, is now out in paperback. He is also a founding editor of the American Prospect and chairman of Common Cause. His new film, Inequality for All, is now available on Netflix, iTunes, DVD and On Demand.

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