Trump’s Tax Cuts Are the Biggest Wealth Grab in Modern History
On Nov. 2, Republicans in Congress finally released the details for their tax plan. The Tax Cuts and Jobs Act is a massive overhaul of the tax code and spending priorities—and nothing short of a boon to the very wealthy at the expense of everyone else.
I’m old enough to remember way back to Nov. 1, when CBS released a poll showing most Americans wanted to see the wealthiest households and biggest corporations pay more, not less, in taxes. This is in sync with poll data from Gallup, collected year after year since 1992, that shows a solid majority of Americans believe the wealthy pay too little in taxes.
Given such overwhelming support for raising, not cutting, taxes on the wealthy, it makes sense that President Donald Trump and his allies in Congress would present their tax plan as benefiting the middle class rather than the rich. It’s about “people who are low- and middle-income,” says House Speaker Paul Ryan, “not about people who are really high-income earners getting a break.” Trump has even claimed “the rich will not be gaining at all with this plan.”
Unfortunately, those are bald-faced lies.
The plan includes weakening and then eliminating the federal estate tax, a levy paid only by the wealthiest households in the country—it only kicks in on estates worth over $5.5 million for individuals and $11 million for couples.
It also eliminates the alternative minimum tax, which exclusively benefits households with incomes over $200,000. And it drops corporate tax rates to 20%, the overwhelming benefit of which goes to the very wealthy and—contrary to what the president might say—will not create jobs, as a study by my Institute for Policy Studies colleague Sarah Anderson found earlier this year.
The tax plan includes eliminating tax deductions that benefit many middle-class Americans as well. On the chopping block are the state and local tax deduction and the student loan interest deduction, among others.
It was just a week ago that House Republicans passed a budget proposal that paved the way for this tax cut plan. That budget included nearly $6 trillion in cuts to Medicare, Medicaid, education, and other public services.
Make no mistake, this will hurt. To understand just how much, consider the opportunity cost. The tax plan includes adding $1.5 trillion over 10 years to the national debt, or $150 billion a year that’s not accounted for by increasing revenue elsewhere or cutting spending.
The Center on Budget and Policy Priorities calculated that $150 billion would cover doubling Pell Grants for low- and middle-income college students, doubling cancer research funding at the National Institutes of Health, providing child care assistance to six million children, providing opioid addiction treatment to 300,000 people, funding the full backlog of needed maintenance at the National Park Service, and training 3.5 million workers for in-demand jobs—combined.
Instead of doing any of that, the plan proposes shoveling that money over to the already wealthy.
Given such tradeoffs, it’s a wonder this plan has seen the light of day, much less has a significant chance of becoming law. The more we learn about this proposal, the more there is not to like, which is an incentive for Republicans in Congress to pass it before the public understands what’s going on.
Don’t get caught sleeping on the biggest wealth grab in modern history.
Josh Hoxie is director of the Project on Opportunity and Taxation at the Institute for Policy Studies and co-editor of Inequality.org.