The Republican tax scam is about to kick into overdrive
We knew from the beginning that the bill would be a massive giveaway to corporations and the wealthy, because that's what a Republican tax bill will inevitably be. But if you think this has anything to do with "tax reform," you're going to be sorely disappointed.
The New York Times' Jim Tankersley has a good description of the Republican strategy:
"Almost no one on or off Capitol Hill has seen the tax overhaul bill that Republicans are drafting behind closed doors. Congressional staff members have not settled on many key details. Yet party leaders are preparing to move ahead on a timeline even more aggressive than their unsuccessful attempts to repeal and replace the Affordable Care Act.
"The swift pace to complete, release and quickly vote on a tax cut is aimed at leaving little time for the type of dissent that has scuttled previous tax proposals.
"Senators approved a budget resolution for the 2018 fiscal year on Thursday night, setting up a rapid series of hearings and votes with the aim of getting a bill to President Trump by Christmas."
The most important thing to understand about this process is that Republicans are in a state of near-panic over the prospect of this bill not passing. Having failed to repeal the ACA - or pass any bill of real consequence - they feel that they need to deliver something they can call a victory, or their base will punish them mercilessly in the 2018 elections. They're already getting nervous about Stephen K. Bannon's project to run right-wing nut-bar challengers against Republican incumbents. Not passing this bill "will be the end of us as a party," said Sen. Lindsey Graham, R-S.C., "because if you're a Republican and you don't want to simplify the tax code and cut taxes, what good are you to anybody?"
As this bill hurtles through Congress, that anxiety will prod Republicans to punt on any tough questions they encounter. And that's going to produce a bill that, among other things, explodes the deficit.
The idea that what Republicans really want is to "simplify" the tax code is mostly baloney, but when it comes to corporate taxes, it actually has a reasonable rationale. We have a statutory rate of 35 percent, but because corporate lobbyists have been so successful at turning the tax code into a Swiss cheese of loopholes and carve-outs, the rate corporations actually pay is much lower, below 20 percent depending on how you measure it.
So if you lowered the statutory rate to 20 percent and removed all those loopholes, the code would be much simpler and revenue would be about the same. But here's where it gets complicated, because there would be winners and losers if you did that. The winners would be companies that right now aren't able to take advantage of the loopholes, while the losers would be companies that do - and the latter are some of the most powerful ones. If you're a giant conglomerate such as General Electric that makes billions of dollars in profits but often manages to pay negative taxes - meaning you and I give them a rebate - eliminating loopholes is the last thing you want. So you're going to send your army of lobbyists to Washington to make sure that your loopholes aren't touched.
Now imagine that you're the Republicans writing this bill. You desperately want to pass it. As the process goes along, you're hearing from powerful lobbyists that their clients, whom you not only have great affinity for (bless their job-creating hearts!) but who are the patrons who fund your campaigns, would be very displeased if you touched their loopholes. Do you want to fight them? Probably not, especially since you want to get this done quickly. Instead you'll start setting aside one loophole after another, saying, "OK, we won't touch that one; we'll just eliminate some other ones."
Where we'll end up is with a bill that lowers the corporate tax rate but only removes a few loopholes here and there - enough for them to claim that they "simplified" the code, but not enough to have actually simplified it, let alone made it impossible for big corporations to game the system and avoid paying taxes altogether. That means that revenue is going to plunge, and there will be a huge increase in the deficit that Republicans pretend to care so much about.
Of course, they'll say that doesn't matter, because once we give corporations a tax cut, the economy is going to explode in such an awe-inspiring supernova of growth that the only question the ordinary American will have is whether to buy a Ferrari or a Lamborghini. Their shamelessness in making this claim when it has been disproved by history over and over again is truly something to behold. But it's what will allow people like Sen. Bob Corker, R-Tenn., to say they won't vote for a bill that raises the deficit, and then end up voting for a bill that does just that.
At the end of all this, Republicans are going to have a Rose Garden ceremony vibrating with such celebratory joy that you'd think they just cured cancer, ended global warming and terraformed Mars. The actual bill will be nothing like what they describe - it won't be aimed at the middle class, it won't simplify the tax code and it won't be real "reform." Nor will it produce the spectacular trickle-down effects they promise. In other words, it'll be pretty much like every other Republican tax cut.
Paul Waldman is a contributor to The Plum Line blog, and a senior writer at The American Prospect.
TALK TO US
If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.