Fake math fuels Trump’s lousy tax reform

“Rightful taxation is the price of social order. In other words, it is that portion of the citizen’s property which he yields up to the government in order to provide for the protection of all the rest. It is not to be wantonly levied on the citizen, nor levied at all except in return for benefits conferred.”– Journal of the Senate of the State of Ohio, December 6, 1847

Regardless of your political stripe, tax reform enjoys near universal support, but the devil is in the details. Like most public positions or legislative efforts endorsed by President Trump, comprehensive tax code reform is heavy on hype and light on details.

Given what we do know of the president’s work-in-progress proposal, it is lopsided.

The vast majority of its benefits, including “historic” tax cuts and a repeal of the estate tax, will fatten the pockets of the wealthiest one percent of Americans. And that’s a lousy deal for low-income and middle-class families – including Trump’s working-class supporters – who will ultimately foot the bill and bear the brunt of enriching the already rich.

He will benefit
To hear Trump tell it – or sell it – any payouts to the top one percent (of which he is a card-carrying member) would be incidental to nonexistent. During Trump’s announcement of his skeletal nine-page framework to rewrite our nation’s tax code, Trump insisted his proposal included an “explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected.”

Perhaps it would be easier to believe the president if he had released his own taxes during his 2016 presidential run. We have no way of knowing how Trump’s tax code revisions would benefit him, his family, his associates and his global network of businesses. But virtually every nonpartisan analysis of his still-in-development framework arrives at the same conclusion: the plan profits wealthy Americans and barely tips the scale for low-income and middle-class families.

Rich get the breaks
The Tax Policy Center, a think tank of nationally recognized experts in tax, budget and social policy, estimates that the top one percent of households would get close to 80 percent of the framework’s tax cuts, adding up to an annual, after-tax boost of close to $200,000.

The top 0.1 percent of households would receive 40 percent of the framework’s tax cuts, giving our nation’s wealthiest Americans an annual $1 million boost in after-tax income. Middle-class and lower-earning families in the bottom 80 percent would get almost 13 percent of the tax cuts and see less than half a percent increase in after-tax income.

Tax cuts are not free and cannot pay for themselves. Traditionally, tax cuts are paid for through a combination of spending cuts – think Medicaid. The president’s outline includes the elimination of personal tax breaks and itemized deductions (excluding mortgage interest and charitable deductions) that have likely benefited you in the past.

And think tax increases. An analysis by the Tax Policy Center predicts nearly 30 percent of those in the middle class could see their taxes increase. Bottom line: fake math only arrives at unequal outcomes.

Our nation does not benefit from tax cuts that widen income inequality and unfairly burden families struggling to get by. We need tax reform with a focus on fairness. Reform must raise revenue to bring desperately needed relief to poor, working and middle-class Americans, and it should reduce our stubbornly wide income inequality gap.

Things to do
The National Urban League has longed believed in – and advocated for – tax reform that prioritizes economic mobility for low-income families and strengthens the middle class. A constructive approach would increase the Earned Income, Low-Income Housing and New Markets tax credit programs while reining in tax and special interest loopholes and expenditures that solely benefit wealthy individuals and corporations.

Our nation deserves more than a hastily cobbled-together plan that cuts taxes for the top one percent, drives up the deficit, adds a checkmark in the “win” column for congressional Republicans looking ahead to the 2018 midterm elections, and allows Trump to finally make good on at least one campaign trail promise.

Marc Morial is president and CEO of the National Urban League.

SHARE

LEAVE A REPLY

Please enter your comment!
Please enter your name here