‘Hurtling’ Republican Tax Bill Actually Serious
“The Republican tax bill hurtling through Congress is increasingly tilting the United States tax code to benefit wealthy Americans.” That’s the beginning of a 37-word first sentence in a stage-setting front-page story in The New York Times on the tax bill under consideration in the Senate this week.
It’s a nice illustration of creatively phrased advocacy journalism. “Hurtling” suggests irrational, uncontrolled, threatening movement; “tilting” suggests abandoning upstanding fairness; spelling out “the United States tax code” suggests an ominous attack on a respected national institution. And all this “to benefit wealthy Americans.”
This is less reportage than it is advocacy journalism, written to advance the argument, with which many people agree, that Republican tax bills are harmful because they make federal taxation less progressive. But it’s also an argument against any tax cut at any time. After all, if you start off with a progressive system that imposes higher rates on high earners and doesn’t tax low earners at all — as is the case with the current federal income tax — then every tax cut takes that shape.
Missing from the arguments of Republicans’ critics is acknowledgment that we already have what is, by most measures, the most progressive national tax system in the world. Other advanced countries tend to rely more heavily on regressive sales (value-added) taxes, and many have less steeply graduated income taxes.
Currently, the top 1 percent of earners account for about 40 percent of federal income tax revenue; the next 9 percent provide about 30 percent more. You could make the system more progressive with more progressive income tax rates or by raising the amount of income subject to the payroll tax, but at the risk of redirecting high earners’ attention from productivity to tax avoidance. Such changes tend to reduce economic growth, just as tax cuts tend to increase it.
In fact, this year, Republican tax writers have devoted much less attention to cutting income tax rates for high earners than their predecessors did in 1981 and 2003 or their presidential nominees in 2008 and 2012. Instead, they want to increase the child tax credit and double the standard deduction. That would reduce taxes for many modest earners and get the government out of the business of encouraging some behaviors and therefore discouraging others. This could reduce the scope of lobbyists larding up the tax code with special exemptions and favors.
The Republican plan attacks two of the three largest “tax expenditures” by limiting or eliminating the deductions for home mortgage interest and state and local taxes. The monetary benefits of this would largely come from “wealthy Americans,” especially in high-tax, high-housing-cost states, where they vote heavily Democratic. These progressive changes could only be made by Republicans, who have few House members and zero senators from such constituencies.
Sophisticated critics of the Republicans’ plan, such as former Treasury Secretary Lawrence Summers, avoid arguing against any tax cut ever but say that with low unemployment and increasing growth, this is the wrong time — that economic policy should depend on the economic, not the political, calendar.
Michael Barone is a senior political analyst for the Washington Examiner, resident fellow at the American Enterprise Institute and longtime co-author of The Almanac of American Politics.