There is a reason that Donald Trump was elected president last November. It’s called the American middle-class.
So, it came as something of a surprise last week when President Trump announced a sweeping tax-reform plan that essentially sweeps much of that middle class into the gutter.
To make matters worse, after several days of reviewing various takes on the Trump/Republican tax-reform proposal, it appears the biggest winners will be people like Trump himself, the rich, privileged upper-economic class of Americans who, despite being a minority, speak loudly and wield a big stick.
To put it bluntly, the tax proposal shows an alarming lack of fiscal restraint, heavily favors the nation’s wealthiest taxpayers, and perhaps most damaging, fails to identify how the GOP’s proposed tax reductions will be paid for. We believe we know how, but more about that in a moment.
In a stunning demonstration of misdirection, Trump has claimed the tax plan, if approved, would cost him millions. Several analyses of the plan reckon billions of dollars in tax savings would go directly into the Trump family’s already-deep pockets, thanks to a lower corporate rate and elimination of the estate tax.
The GOP’s long-term strategy has been that enriching corporations will create more jobs, thus allowing greater profits to trickle down to average American workers. It’s a pleasant theory, but in reality those extra profits tend to only make corporation owners and their executives all the wealthier.
The Committee for a Responsible Federal Budget estimates the overall price tag for the proposed GOP tax cuts would be about $2.2 trillion. Republican leaders, including Trump, insist the costs of lowering taxes will be offset by various tax increases. There has been no mention of which taxes will be raised to pay for the loss of revenue from taxes that have been cut.
In fact, history indicates that with Republicans in control of the White House and both chambers in Congress, when push comes to shove and our elected leaders are compelled to find money to replace the revenues lost to tax cuts, they will inevitably turn to federal entitlement programs.
In other words, the very neediest Americans will lose valuable federal programs and services, by footing the bill for another trickle-down blunder.
As one might expect, top Democrats have been vocal in their opposition to the tax proposal. Senate Minority Leader Chuck Schumer is on-point about this issue: “It seems that President Trump and Republicans have designed their plan to be cheered in country clubs and corporate board rooms. Repealing the estate tax? How does that help middle-class people?”
One proposal in the plan doubles the standard deduction, a major cut for many middle-class income tax filers. However, the National Association of Realtors points out that doubling the deduction would discourage many filers from itemizing deductions — including the coveted mortgage deduction — which could devastate the nation’s housing market.
We will be fair and await more details on the proposal. Perhaps GOP strategists have details, but are waiting for the right time to share them with Americans. Our guess is they don’t have such details, and last week’s announcement by the president was more or less a trial balloon.
The Trump administration desperately needs a policy victory after two failures of the GOP effort to repeal and replace the Affordable Care Act. This tax scheme as presented is not such a victory, or at least it shouldn’t be.
A true tax-reform plan should work for all Americans, not just a wealthy minority.