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.

Robert Reich

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)

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

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.

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 RobertRe​ich​.org

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.
Limited Time:

SUBSCRIBE TO IN THESE TIMES MAGAZINE FOR JUST $1 A MONTH