In the United States, this celebrated land of opportunity, one percent of Americans own almost as much wealth as the bottom 90 percent.
But President Trump and the Republican Party apparently don’t think that’s enough. They think the rich should be richer.
They don’t say that, of course. That would not do. They carry water for America’s growing aristocracy of the ultra-rich while claiming to do something else. They say they are working for the middle class, though their policies favor the privileged. They say they are standing up for small business, though their notion of “small” seems to be AT&T and Walmart.
The sweeping federal tax code changes proposed by Trump and congressional Republicans on Wednesday may or may not benefit, ever so slightly, the middle class. It is impossible to say until the details are known. But there is no doubt the GOP plan is a giveaway to the wealthiest Americans, especially to their heirs.
There also is no doubt that this tax plan would drive our nation deeper into debt, which we thought was an electrified third rail for Republicans. It would add trillions of dollars to the deficit.
Republicans argue that the tax cuts they propose would pay for themselves by spurring the economy to faster economic growth, an average of 3 percent a year. But that didn’t work for presidents Ronald Reagan or George W. Bush, both of whom cut taxes on the wealthy and saw the deficit soar. Nor did it work in Kansas, which fell apart economically after a frenzy of tax-cutting in 2012.
Wealth in America is increasingly concentrated in a small number of hands, and a new and improved tax code should tackle that dangerous inequity before all else. We agree with Trump that America’s “wonderful workers” should “reap the rewards” of a revamped tax code; we just don’t see that happening with his plan.
Here are some of its key points:
- Trump and the GOP would eliminate the estate tax, which sounds nice. Gee, now Mom and Dad can pass the family hardware store down to the kids tax-free. But the current estate tax applies only to fortunes of $11 million or more, meaning its elimination would only speed up the pace at which the very wealthiest Americans lock their kids into the ruling class for life. In America, wealth should be earned, not inherited.
- Trump and the GOP would simplify the tax code by reducing the number of income brackets from seven to three, which sounds great. But the highest tax rate would be reduced from the current 39.6 percent to just 35 percent, so the wealthiest Americans could save a bundle, while it’s unclear who else might be a winner. Whether middle-class Americans would benefit depends entirely on where the income lines are drawn for the three brackets.
- Trump and the GOP also would allow Congress, should it see fit, to create a fourth bracket above 35 percent so that wealthier folks pay their fair share. But that would come down the road, if at all. For purposes of sizing up this plan, it means nothing.
- Trump and the GOP would abolish the alternative minimum tax, which is a supplemental tax imposed to make sure that the very rich, after taking advantage of every last loophole, still pay something. Trump says the AMT won’t be necessary because the GOP plan would eliminate those loopholes. But why not leave the AMT in place all the same? Who’s afraid of it?
A better tax code would be simpler. Trump’s got that right. The current code is impossibly complex. And the GOP plan includes small touches that are sure to appeal to most of us, such as a tax credit of $500 for families taking care of an elderly person.
But at a time when the rich grow richer while the middle class shrinks, lowering the top tax rate for America’s wealthiest people is more than unwise. It is immoral.
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