Economy & Business

The House GOP’s Tax Plan Embraces Class Warfare

House Ways and Means chairman Kevin Brady and fellow GOP congressmen discuss the GOP tax plan. (Reuters photo: Kevin Lamarque)
You never can out-Left the Left.

House Republicans have soiled the Tax Cuts and Jobs Act with the Democrats’ favorite economic elixir: class warfare. And yet this has bought Republicans even more ferocious Democrat resistance.

“Instead of following through with the promise of taking seven brackets and simplifying them to three, Speaker Ryan and Chairman Brady added in a fourth bracket exclusively for millionaires,” complains David McIntosh, president of the pro-market Club for Growth (a group I’ve addressed numerous times). This complex foolishness imposes an effective marginal tax rate of 45.6 percent on single filers who earn $1 million to $1.2 million and couples who make between $1.2 and $1.6 million. “That’s a real tax increase on successful people who invest and create jobs,” McIntosh lamented. Shamefully, this would be 15.15 percent, or six percentage points, above today’s 39.6 percent top rate.

The widely applauded 25 percent rate for small-business owners who file 1040s benefits only the first 30 percent of income. The balance would be taxed up to the proposed 45.6 percent rate. Warns McIntosh: “That means no tax cut at all for most small businesses and family-owned companies.”

And rather than kill the reviled death tax, Republicans placed it in an induced coma. The 40 percent death tax’s funeral is postponed for six years. The Tax Policy Center predicts that some 5,500 grieving families will endure this double taxation annually, even while bewailing their departed. That’s 33,000 needlessly miserable families across this needless delay. And if the death tax is not unplugged today, Washington tomorrow could defibrillate it and unleash it on mourners — more heartlessly than ever.

This Republican apostasy would be bad enough if it purchased Democrat votes or at least quiescence. But rather than applaud Republicans for internalizing the Left’s chief economic talking point, top Democrats now pound Republicans’ skulls with skillets, harder than ever.

‐ “This is a shell game, a Ponzi scheme that corporate America will perpetrate on the American people,” snapped House Democratic leader Nancy Pelosi of California. “But if you’re the wealthiest 1 percent, Republicans will give you the sun, the moon, and the stars — all of that at the expense of the great middle class.”

‐ “This bill is everything America doesn’t want,” snarled Senate Democrat leader Chuck Schumer of New York. “Like a fish, if it stays out in the sunlight too long, it stinks.”

‐ “This plan gives massive tax cuts to corporations and the wealthiest individuals while middle-class families are left behind,” Senator Dick Durbin (D., Ill.) hissed. “It is based on the mistaken belief that cutting taxes for the wealthiest will benefit everyone else — an assumption that has been proven false each and every time it’s been tested.”

‐ “Republicans claim their tax bill will spur economic growth, but all it really does is help people like Donald Trump, his cabinet, and wealthy Republican donors keep money in their pockets,” Rep. Maxine Waters (D., Calif.) pummeled.

Notwithstanding such Democrat catastrophism, this measure helps the middle class. According to a preliminary estimate from the Tax Foundation, this bill:

‐ “Increases the standard deduction from $6,350 to $12,200 for singles, from $12,700 to $24,400 for married couples filing jointly, and from $9,350 to $18,300 for heads of household.”

‐ It “would lead to 3.9 percent higher GDP over the long term, 3.1 percent higher wages, and an additional 975,000 full-time equivalent jobs.”

‐ “When accounting for the increased GDP, after-tax incomes of all taxpayers would increase by 4.4 percent in the long run.”

Top-flight tax fighters are delighted that middle-class taxes would drop but are aghast that Republicans would boost levies on anyone.

“If you let the other side set the terms of debate, you lose,” publisher and flat-tax guru Steve Forbes tells me. “The Republicans have been letting the Left define the terms of debate on health care and taxes and losing badly on both. Incredibly, when it comes to cutting taxes, the GOP turns out to have the backbone of a cream puff. Pathetic!”

“The GOP should stick to growth,” says Larry Kudlow, a free-market economist and co-founder of the Committee to Unleash Prosperity (of which I’m a member). He also advises Republicans: “Stop letting Dems mau-mau them on rich people and redistribution. And hammer away that corporate-tax-rate reduction helps wage-earners the most.”

Supply-side godfather Arthur Laffer worries that Republicans have made things unnecessarily convoluted.

Supply-side godfather Arthur Laffer worries that Republicans have made things unnecessarily convoluted.

“Everyone (of us) agrees that the corporate-tax-rate cut is the engine of growth in this bill,” Laffer says. “Why not just propose a cut in the federal corporate statutory tax rate from 35 percent to 15 percent and nothing else? After that passes, then we should introduce legislation to eliminate the estate tax. After that passes, then . . . ” Laffer recalls, “As James Carville stated over and over again, Congress should adhere to KISS: ‘Keep it simple, Stupid.’”

Lesson for Republicans: You never can out-Left the Left. The harder you try, the harder Democrats will bludgeon you with truncheons. So, just do the Right thing — always and forever. On taxes, that means cutting marginal rates for all Americans, regardless of income. Republicans should leave tax hikes to Schumer, Pelosi, and the Party of Confiscation.


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Deroy Murdock — Deroy Murdock is a Manhattan-based Fox News contributor and a contributing editor of National Review Online.