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politics

The Big Republican Lie About Their 'Middle-Class' Tax Cut

The GOP has wanted to cut taxes on the rich for years. Now they're finally doing it—and telling everyone they actually aren't.

by Harry Cheadle
Dec 20 2017, 7:23pm

Paul Ryan is happy. Photo by Andrew Harrer/Bloomberg

As the most important tax bill in years lurches toward passage in Congress, the Republicans who almost unanimously support it are rediscovering their populism. Donald Trump is promising a "giant tax cut for Christmas." Texas Republican Senator John Conryn said on Sunday that they were "giving everybody in every tax bracket a tax cut." In the right-leaning Washington Examiner, the policy director of the anti-tax group Americans for Tax Reform wrote, "While the bill is not perfect, it is indisputable that the Tax Cuts and Jobs Act reduces taxes at every income level with the biggest benefits being borne by the middle class." And House Speaker Paul Ryan published an op-ed in the Wall Street Journal Wednesday asserting that the tax bill "provides real relief to middle-income families and realizes policy goals conservatives have sought for decades."

The tax bill is a complicated piece of legislation that will have far-ranging effects no one can predict with absolute certainty (already accountants and others are scrambling to figure out its provisions). According to the nonpartisan Tax Policy Center, which has generally been against the bill, an average household making $50,000 to $75,000 will get a tax cut of $870, while wealthier people will benefit much more. Depending on where they live, some wealthy people will suffer under the new tax regime, while the ultra-rich will be able to take advantage of new incentives. These cuts, despite Republican assertions to the contrary, will almost definitely cost the government hundreds of billions, though economists disagree about exact amounts.

But let's set aside granular specifics for a moment, and ask a basic question: Why won't Republicans simply say that what they really want to do is cut taxes on the rich?



That's not a misrepresentation of right-wing thinking, that's an honest summary of what prominent Republicans have been saying for a long time. In 2014, Ryan told the conservative Weekly Standard that it was "even more urgent" to cut top tax rates (a.k.a. taxes on the wealthy) than it was in the Reagan era. "I believe that the best way to help families, the best way to help the economy is to reduce rates across the board" Ryan said when asked why he didn't support an expanded child tax credit pushed by some Republicans. In 2012, before he was speaker, Ryan pushed a budget proposal that would have massively reduced taxes on the wealthy.

Every Republican running for president in 2016 was united around the idea of cutting taxes for rich people on the grounds that it would stimulate the economy. "We have to jump-start the economy so that people can have more money to make decisions for themselves," Jeb Bush said when defending a tax plan that would disproportionately benefit the wealthy. “My object is a minimum of 5 percent GDP growth," Texas Senator Ted Cruz said on CNBC while touting a proposal to drastically slash taxes on the rich. "The wealthy are going to create tremendous jobs, they're going to expand their companies," Trump said in a debate with Hillary Clinton when asked to defend his own tax plan.

The idea that tax cuts create growth which in turn boosts everyone's wages is so important to the GOP that it might as well be etched into stone tablets. That's why the tax bill's major permanent feature is a corporate tax cut while the individual rate cuts are set to expire (Republicans claim that they won't actually let those cuts expire in a bit of having-it-both-ways rhetoric). "We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that's good for the economy," is how White House economic adviser Gary Cohn explained it last month.

Cohn is a former Goldman Sachs banker, not a politician, and it seems clear he messed up that talking point. Cutting taxes on corporations is very unpopular, so Republicans have spent the last several months arguing that their bill, which primarily helps corporations and the wealthy, is supposed to help the middle class. “The entire purpose of this is to lower middle-class taxes,” Ryan said in October. White House Press Secretary Sarah Huckabee Sanders told reporters Tuesday, “Our focus has been on the middle class, and that is what we think is delivered in this tax package." That night, Cruz took to the Senate floor to declare, “The only people whose taxes are going up are the really rich. The middle class, their taxes are all going down."

If the Republicans were more concerned about the middle class than rich people, they could have not reduced the top tax rate. They could have attempted to craft a bill that would have made individual tax cuts—rather than corporate cuts—permanent, possibly by courting moderate Democrats. They could have backed Florida Senator Marco Rubio's proposal to modify the Child Tax Credit so that it benefits more poor families. (Rubio agreed to a compromise and voted for the bill.) They could have used this opportunity to close the carried interest loophole beloved by hedge funders, a move Cohn said the White House was pushing for but that Republicans in Congress blocked.

The Republicans did not do any of this. Instead, when given control of the House, Senate, and White House they focused on cutting taxes for the rich and corporations, because that is what they care about.

It's likely that Republicans will go on saying that they are working on behalf of the middle class or Trump's "forgotten men and women," because being the party of the rich is a toxic, unpopular thing to be these days. If anyone still believes that line after this tax bill, it's because they haven't been paying attention.

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