Jamelle Bouie writes an opinion column for The New York Times, and he is my favorite on that site. His insights are clear and sharp. In this column, he reminds us that Republicans have a long history of promises about tax cuts for the middle class that have ended up enriching the wealthiest and increasing inequality.
He writes:
It’s 1981. A Republican president and his allies in Congress are promising large, broad tax cuts that will benefit the middle class and strengthen the economy.
It’s 2001. A Republican president is promising broad tax cuts that will benefit the middle class and strengthen the economy.
It’s 2003. That same president is promising another round of broad tax cuts that will benefit the middle class and strengthen the economy.
It’s 2017. Yet another Republican president is promising broad tax cuts that will benefit the middle class and strengthen the economy.
With each new Republican administration, it is the same promise. With each round of tax cuts, it is the same result: vast benefits for the wealthiest Americans and a pittance for everyone else. There is little growth but widening inequality and an even starker gap between the haves and have-nots.
President Ronald Reagan’s 1981 tax cuts, which inaugurated the pattern, slashed the top tax rate on investment income to 50 percent from 70 percent and the capital gains rate to 20 percent from 28 percent. “New tax benefits for business were so generous,” Michael J. Graetz writes in “The Power to Destroy: How the Antitax Movement Hijacked America,” “that corporate tax receipts declined from about 15 percent to less than 9 percent of federal revenues.” The law, he continues, “substantially cut taxes on income generated from wealth, increased opportunities for tax-free savings by upper-income Americans and greatly expanded tax-shelter opportunities for high-income individuals and corporations.” It also “reduced taxes on transfers of wealth from the richest Americans to their descendants by exempting all but a small fraction of the wealthiest 1 percent” from the estate tax.
Over the next decade, Reagan and his successor George H.W. Bush were forced to raise taxes as a result of this profligacy. Reagan signed deficit-reducing tax increases in 1982, 1983, 1984 and 1987. Bush signed a significant tax increase in 1990, breaking his “Read my lips” election-year promise not to raise taxes.
George W. Bush rejected his father’s fiscal heterodoxy in favor of the unrepentant supply-side orthodoxy of Reagan’s first year. Sold as middle-class tax relief, the $1.7 trillion George W. Bush tax cuts — passed in 2001 and 2003 — were by and large a handout to the wealthiest Americans. As Graetz notes, they “reduced federal revenues from 20 percent of G.D.P. in 2000 to 15.6 percent in 2004,” and when all the changes were phased in, “they raised the after-tax incomes of people in the top 1 percent by nearly 6.5 percent — $54,000 on average — compared to about 1 percent, or an average of $207, for the bottom 40 percent.” In a 2017 analysis of the legacy of the George W. Bush tax cuts, the Center on Budget and Policy Priorities found that the top 1 percent of households received an average tax cut of over $570,000 from 2004 to 2012. Not surprisingly, it also found that these cuts “did not improve economic growth or pay for themselves, but instead ballooned deficits and debt and contributed to a rise in income inequality.”
We can basically copy and paste this dynamic from Reagan and George W. Bush to Donald Trump, who sold his 2017 tax cuts as — you guessed it — middle-class relief. “Our focus is on helping the folks who work in the mailrooms and the machine shops of America,” he told supporters in the fall of 2017. “The plumbers, the carpenters, the cops, the teachers, the truck drivers, the pipe fitters, the people that like me best.”
Except — surprise! — a vast majority of the benefits of the $1.9 trillion Tax Cuts and Jobs Act went to the highest earners — millionaire chief executives and billionaire owners of large companies. Americans in the middle received an average tax cut of $910. Americans in the top 1 percent received an average cut of $61,090. The 2017 law also cut estate taxes and gave new advantages to real estate investors, direct benefits for Trump and his family.
We are now looking at another round of Republican tax cuts. Yet again the claim is that this will benefit most Americans. “The next phase of our plan to deliver the greatest economy in history is for this Congress to pass tax cuts for everybody,” Trump said in his March 4 address to Congress. But as Paul Krugman points out in his Substack newsletter, this latest package is both a shameless giveaway to the rich and a ruinous cut to safety net programs for lower-income and working Americans.
The tax and benefit cuts are, in fact, two sides of the same coin. To pay for the more than $1.1 trillion in tax cuts for people with incomes above $500,000, the House Republican framework would cut $300 billion from the Supplemental Nutrition Assistance Program — snatching food assistance away from millions of low-income families — and $800 billion from Medicaid and the Affordable Care Act, leaving an estimated 10 million or more Americans without health insurance, according to the Congressional Budget Office. The top 0.1 percent of earners would see their income grow; the bottom 20 percent would see it plummet.
It remains to be seen whether Republicans can pass their bill in the form they want. They have had some trouble moving it out of the House of Representatives and into the Senate. But if they can, it’s hard to imagine that there will be much appetite to kill the president’s “big, beautiful bill.”
Which is all to say that it’s 2025, and a Republican president has promised a broad tax cut that will help the middle class and strengthen the economy. I think we know what is going to come next.
