The tax-cut weapon in their one-sided class war

November 21, 2017

Nicole Colson analyzes the weapon of mass destruction otherwise known as the Republican tax plan--and how it fits in to the wider neoliberal offensive.

THE "END of all economic sanity in Washington." A "Ponzi scheme." A proposal "to make Scrooge McDuck proud." "All-out class war on the 99 Percent."

These were a few of the media descriptions of the Republicans' slash-and-burn tax cut plan passed by the House of Representatives on November 16. And the alarmism wasn't confined to left publications, either--it was the business mouthpiece Forbes that worried about the end of sanity.

The House bill will have to be reconciled with whatever version the Senate passes, and there are indications of enough opposition from Republican senators to put the Senate legislation in danger of collapsing, like the Trumpcare proposal earlier this year.

But if anything remotely close to the plan passed by the House or the one being cooked up by the Senate do end up being signed into law, you can be sure about a couple things.

First, the Republican tax rip-off will aid and abet a massive and flagrant shift of wealth to the already rich and superrich at the expense of working-class and poor people.

Donald Trump with House Speaker Paul Ryan
Donald Trump with House Speaker Paul Ryan (Caleb Smith | Office of the Speaker of the House)

Second, the inevitable deficit that results will be used as a justification to further starve already chronically malnourished government programs that working and poor people desperately need.


AFTER FAILING so far to get a single major legislative accomplishment, the Trump administration is pressing hard for the tax plan to make it onto the president's desk--and the bulk of the Republicans in Congress, despite their largely mutual fear and loathing of Trump, are on board.

Readers of SocialistWorker.org will likely be familiar with many of the low--and even lower--points of the House bill. In short, it's a massive giveaway to corporations and the rich and an unmitigated disaster for working and poor people.

According to an analysis by the Tax Policy Institute, those making less than $55,000 a year would see almost no change in their taxes, while those in the top 1 percent would receive nearly 50 percent of the total benefits.

Among other things, there are cuts to the estate tax starting in 2018--and its total repeal by 2024. That alone amounts to a $265 billion tax break for the top 0.2 percent--a handful of the wealthiest families in this country, like the Walton family, the Koch brothers...and, oh yes, Trump and his Village of the Damned brood.

In early November, Trump told reporters, "My accountant called me and said 'You're going to get killed in this bill.'" Either his accountant is an idiot or Trump is a liar.

In fact, under the House plan, the Trump family personally stands to save more than $1 billion in taxes--mainly through the repeal of the estate and alternative minimum taxes.

The plan also includes the largest one-time cut in taxes for large corporations ever--with the top tax rate dropping from 35 percent to 20 percent.

And that doesn't include all of the other boons to business--like the plan to give companies that currently shelter their profits in low-tax havens abroad a special 12 percent rate to bring those funds back to the U.S. Apple alone has an estimated $252 billion socked away offshore and stands to make a mint if the proposal passes.

Some of the provisions are such a naked giveaway to the wealthy that they seem like they could only have been dreamt up by a cartoon super-villain--like the provision in the Senate bill that would give those who lease or own private jets a tax break on the cost of their maintenance. Time to take the family jet in for an oil change!


"NO GOOD can come of this plan unless you are wealthy or a corporation," declared the Institute on Taxation and Economic Policy.

A lot of bad will almost certainly result for those who aren't, however.

Americans who are poor and even those considered middle class will see the miniscule tax cuts they might receive--on average, just $50 or less for those making less than $55,000 a year, according to the Tax Policy Center--evaporate in 10 years' time.

Under the House plan, by 2023, only 40 percent of Americans would be getting a tax cut at all. And the Senate proposal would actually raise taxes on families earning $10,000 to 75,000 a year over the course of the next decade, according to the Joint Committee on Taxation.

Older Americans will be particularly hard hit by provisions in the House bill that cut into the ability to write off medical expenses, as well as caps on mortgage interest deductions, property tax write-offs and cuts in personal exemptions.

In fact, the House bill is a masterpiece of nickel-and-diming ordinary Americans while throwing fistfuls of cash to the rich--like the provision to tax graduate students' tuition wavers as income, potentially increasing their taxes by an average 400 percent .

The House bill would also eliminate the $250 tax deduction that teachers are eligible to take for money spent on classroom supplies. And, predictably, if the legislation becomes law, union members will no longer be able to deduct union dues.

Blue states like New York and California will also be hit disproportionately hard since the House plan eliminates deductions for sales, income and property taxes at the state and local levels--potentially making it more difficult for some of the most populous states in the country to raise money for education, health care and infrastructure, among other things.

As John Wasik concluded at Forbes: "Welcome to middle-class tax reform. You pay more, corporations and the super-affluent pay much, much less. It's a hurricane coming to every town, only it will somehow spare the mansions."


THE RATIONALE for cutting taxes on the kind of people who own private jets while raising them on everyone else isn't new.

It's the latest version of the age-old lie: that tax cuts for the wealthy will stimulate the economy by prompting a wave of investment and growth. The old trickle-down mythology has been disproven for decades.

So why do it? It's not popular among ordinary Americans--according to a Quinnipiac poll, people disapprove of the current Republican tax plan by a two-to-one margin.

The answer--or at least one part of it--is that Republicans, faced with an exceptionally unpopular chief executive and a long-and-getting-longer list of legislative failures, are feeling the need to deliver to their base.

No, not the base that the media inaccurately describes as concentrated among white workers in Rust Belt states.

The Republicans' real base: the millionaires and billionaires who fund them.

You don't have to take Socialist Worker's word that this tax plan is about the GOP delivering to its wealthy backers--Republicans themselves have announced it to the world.

As White House chief economic adviser and former Goldman Sachs bankster Gary Cohn recently bragged to CNBC's John Harwood, "The most excited group out there are big CEOs, about our tax plan."

As Sen. Bernie Sanders recently told CNN's Jake Tapper: "What this is about is fulfilling Republican promises made to wealthy campaign contributors. There is a reason why the billionaire class provides hundreds of millions of dollars in campaign contributions to Republicans. And now is payback time."

Sanders' point was confirmed recently when Republican Sen. Lindsey Graham admitted to an NBC News reporter that if the Republicans don't deliver on a tax cut for Corporate America, the "financial contributions will stop."


BUT THERE'S more at stake here than simply scratching the backs of GOP donors. The Republican tax cut drive is part of a decades-long "starvation diet" for social services and other government programs--a deliberate strategy to advance an ongoing neoliberal agenda of privatization and tax cuts.

Calling it a "supply-side cult fantasy," Charles Pierce wrote in the Washington Post that, "in keeping with the lifelong goals of Speaker Paul Ryan, the zombie-eyed granny starver from the state of Wisconsin, the House budget was straightforward pilfering of the national wealth by the wealthy from the poor and the middle class and a mechanism to starve what's left of the social safety net."

Cutting taxes today will allow policymakers to claim tomorrow that there's just not enough government revenue to go around--and the first things on the chopping block, as always, will be the programs that poor and working-class people depend on the most. The tax cuts, if passed, will almost certainly be used down the road to justify cuts in the big entitlement programs of Social Security, Medicare and Medicaid--if not their outright privatization.

The Trump administration, despite its perpetual missteps and ineptitude, does present the 1 Percent with their best opportunity to further restructure the U.S. economy even more along neoliberal lines. This would increase inequality in a country in which three billionaires--Bill Gates, Warren Buffet and Jeff Bezos--now own more wealth than the entire bottom half of the American population combined, according to a November analysis from the Institute for Policy Studies.

In the U.S., notes Paul Buchheit, the average 1 Percent household made nearly $2.6 million in the 12 months up to mid-2017, largely from gains in the stock market.

In fact, says Buchheit, since the depths of the recession of 2007-08, the U.S. stock market has tripled in value--but about 90 percent of the $18 trillion dollars in increased value has gone to the richest 10 percent of Americans.

But despite this, the rich are demanding ever more.


WHILE HE was rightly taking Republicans and their 1 Percent backers to task, what Bernie Sanders didn't say is that the billionaire class also funds the party whose presidential nomination he sought last year: the Democratic Party.

The enormous transfer of wealth from ordinary people to the rich in the U.S. isn't a new phenomenon. Nor is the drive to cut and privatize government programs and services, slash workers' wages or bust what remains of U.S. unions. All of this has been taking place for decades, including when the Bill Clinton and Barack Obama occupied the White House.

In a 2012 series of articles on inequality, Reuters noted the trend of the Clinton and Obama administrations in directing:

trillions of tax dollars to private-sector contractors by outsourcing government operations and through record spending on war, national security, science and technology.

President Bill Clinton launched his "reinventing government" initiative in the 1990s. The federal money flowing to business rose 7 percent during his second term and 72 percent under Bush, who outsourced a record amount of national-security and defense work after the 2001 attacks by al Qaeda and through two wars. The upward trend continued under President Barack Obama until leveling off in 2010.

The fact that the Democratic Party doesn't represent the interests of ordinary working-class and poor people--remember Hillary Clinton's repeated bragging about the billionaires who supported her campaign, for example--leaves people with little real choice at election time and little room to express their political discontent the rest of the time.

Often enough, especially when the Republicans are in office, working people cast their ballots against the GOP class warriors for the 1 Percent, which means voting for the Democratic "opposition."

But the Democrats resist at all costs any real mobilization of class anger--because a party beholden to corporate interests doesn't want to risk the eruption of the kind of widespread protests and organizing that might also hold it accountable.

As Sharon Smith writes in the International Socialist Review:

[I]t is important to acknowledge that the "out of touch" Democratic Party establishment has played a key role in the entire neoliberal project and does not offer a viable alternative to the class and social status quo. Meanwhile, the working class is desperately seeking a voice in electoral politics.

All of this has helped lead to a polarized and volatile political climate--one in which millions can march against Trump and his agenda after his inauguration and thousands can mobilize to stop Obamacare from being repealed, yet the tax-slashing Republicans and their corporate backers remain in a position to try to push through a tax plan opposed by the vast majority of people.

The Republicans' openly stated plan to rob the rest of us could become another lightning rod for protest and grassroots organizing, like the demonstrations of opposition to Trumpcare.

Already, graduate employees on several campuses are mobilizing to oppose the House's plan to tax their tuition waivers, and some of the liberal organizations that helped publicize the health care protests are calling for local actions to challenge Republican lawmakers.

But the opposition that develops around non-economic issues also has a class dimension--because the neoliberal agenda that has driven inequality to historic heights is closely intertwined with a conservative social agenda.

Thus, millions of women today have been moved to say #MeToo--speaking out against rampant sexual assault and harassment they've faced in their workplaces and personal lives--and the upsurge has targeted a host of powerful men, including media mogul Harvey Weinstein and right-wing bigot Alabama Senate candidate Roy Moore, in particular for the ways someone like Weinstein could use his privileged position to abuse women.

As Republicans gear up to inflict another round of economic misery on ordinary people, our best hope to push them back is to seize on all these struggles--and build on every opportunity to create an independent opposition that is ready to fight.

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