Nation

Democrats seize on tax plan’s inequities

President Donald Trump speaks to the media before speaking with members of the armed forces via video conference at his private club, Mar-a-Lago, on Thanksgiving, Thursday, Nov. 23, 2017, in Palm Beach, Fla. (AP Photo/Alex Brandon)
Alex Brandon/AP
President Donald Trump.

WASHINGTON — President Trump this week called the Republican tax overhaul plans wending through Congress America’s “big, beautiful Christmas present,” but critics say the bills, especially the newly released Senate version, give many middle-class taxpayers a mere lump of coal.

The Senate version gives additional firepower to the Democrats’ messaging war that contends Trump has betrayed the white, working-class voters who launched him into the White House. He had promised to improve the lot of average Americans — including a pledge of a middle-class tax cut.

Though analysts say both the House and Senate versions would immediately cut taxes across the board for all income groups, only the tax cut to 20 percent from 35 percent for corporations is permanent in the Senate’s version of the bill.This, for taxpayers, would mean that after the temporary personal cuts expired in 2025, taxes for those in lower income brackets would actually increase, according to the nonpartisan Joint Committee on Taxation and the Tax Policy Center.

Advertisement

“Compared to current law, 9 percent of taxpayers would pay more in 2019, 12 percent in 2025, and 50 percent in 2027,’’ according to a separate study, by the nonprofit, nonpartisan Tax Policy Center, a Washington analysis group.

Get Ground Game in your inbox:
Daily updates and analysis on national politics from James Pindell.
Thank you for signing up! Sign up for more newsletters here

Democrats quickly pounced.

“Call it a con, a scam, or even a gimmick — just don’t call the GOP tax plan a tax cut for middle-class families,” tweeted Senator Patty Murray, a Washington Democrat, on Tuesday.

In response to a question from the Globe, the White House insisted the tax overhaul matches Trump’s populist campaign promises.

“The president’s top priorities are delivering tax cuts for the middle class and making our businesses competitive again, both of which will jumpstart our economy. Everyone will benefit when our economy is performing at its best,” said deputy press secretary Raj Shah.

Advertisement

The political opening for opponents of Trump and the GOP is the direct result of the difficult math faced by tax-cutters. To mitigate the huge budget-busting effects of slashing government revenue, they limited the benefits to working-class Americans while favoring what they call the “job creators’’ at the top of the economic ladder and in corporate boardrooms. The moves reflect Republican supply-side economic policy.

Independent policy analysts agree there’s a gulf between the populist principles Trump espoused on the campaign trail and the reality of the GOP’s current tax overhaulproposals, which recently passed the House and are now being debated in the Senate.

On the trail, Trump vowed to rewrite and simplify the tax code, decrease taxes for the middle class, and not add to the deficit. Candidate Trump also said that “hedge fund guys” would be “paying up” under a Trump administration, due to the elimination of several capital gains tax loopholes.

“I am proposing an across-the-board income tax reduction, especially for middle-income Americans,” Trump declared in Detroit in August 2016. “The rich will pay their fair share, but no one will pay so much that it destroys jobs, or undermines our ability to compete. As part of this reform, we will eliminate the ‘carried interest deduction’ and other special interest loopholes that have been so good for Wall Street investors, and people like me, but unfair to American workers.”

Neither the recently passed House bill nor its Senate companion closes the carried interest loophole. That tax break refers to profits by financial executives such as those in private equity or hedge funds for their services.

Advertisement

The Tax Policy Center, which regularly estimates impacts of tax proposals, said that both the House and Senate bill would significantly add to the nation’s deficit, because the modest increase in economic growth would not offset the dramatic loss of government revenue.

Only the tax cut for corporations is permanent in the Senate’s version.

“The bill would raise the level of debt by about $1.5 trillion in 2027 and by about $3.8 trillion in 2037,” said Howard Gleckman of the Tax Policy Center. “That additional government borrowing would lead to higher interest rates that, in turn, would reduce private investment. Over time, investment would fall below levels that would occur without the tax bill.”

White House officials, though, have shrugged off any suggestion that the overhaul violates Trump’s populist appeals.

Press secretary Sarah Huckabee Sanders said in a briefing this week that the bill is a “tax cut for the middle class” and said the administration was still hopeful of receiving Democratic support.

Most nonpartisan analyses show the large share of tax savings in both the House and Senate bills would go toward the wealthy but that has not stopped White House officials from characterizing this bill as a boon for the working person.

“Our tax plan will bring urgent relief to hard-working families,” Trump said in a Cabinet meeting this week. “We’ll reduce rates, increase the amount of income taxed at a rate of zero, expand the Child Tax Credit — very important — and simplify taxes as most families will be able to file on a single sheet of paper.”

Even as traditional Republicans have backed the tax bill and its traditional trickle-down conservative economics, there is an understanding that Trump swept to the Oval Office with populist rhetoric, and the “economic nationalism” of Steve Bannon and others has power in the modern Republican Party.

Polling at this point indicates that Democrats are winning the battle of popular opinion.

A Quinnipiac poll recently released estimated that 61 percent of voters thought the plan would mainly help the wealthy and a majority did not believe the bill would lead to increased economic growth. A Wall Street Journal/NBC News poll found that only 25 percent of voters thought the plan was a “good idea.” Another showed that less than 40 percent of Americans want corporations paying less in taxes.

Democratic groups are taking to the airwaves as they hope unpopular aspects of the plan will help them win back seats in the House and Senate next year.

“The choice: millionaires or middle class,” reads one newly released television advertisement targeting Maine Republican Bruce Poliquin, the only remaining House Republican in New England. “He chose the tax breaks and millions in giveaways for the rich and big corporations.”

In the background, wealthy-looking figures pour wine and smoke cigars.

Astead W. Herndon can be reached at astead.herndon@
globe.com
. Follow him on Twitter @AsteadWesley