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Keith Ellison: Only the People Can Shut Down the Republican Tax Cut Sham

Upton Sinclair once said “it is difficult to get a man to understand something when his salary depends upon his not understanding it.” Americans across the country wonder why Republicans seem incapable of understanding that trickle-down economics don’t in fact trickle down. No matter how much evidence demonstrates that regressive tax cuts don’t lead to growth and jobs, they seem unable to admit it.  The answer is simple: their “salaries” depend upon them not understanding it.

Take the horror show that is the House GOP tax plan, which includes a provision that would reduce the so-called “pass-through” tax rate. There is no fathomable reason why President Donald Trump and Republicans in Congress would want to cut the so-called “pass-through” tax rate, if it didn’t improve the president’s own bottom line—and the bottom lines of Republican donors. Pass-throughs are used almost exclusively by the richest one percent of Americans to deduct losses outside their businesses and, by avoiding corporate taxation, to pay the IRS less than they would otherwise owe. The typical beneficiaries of this tax policy aren’t small business owners, they’re hedge fund managers, law firms, and real estate developers like Donald Trump–who personally owns 500 of these “pass-through” entities.

This plan is about what’s good for Trump and his friends. At a time of historic inequality, when the single richest family owns more wealth than the bottom 40 percent of Americans, Donald Trump has proposed raising taxes on the poor by 2 percent. At the same time, he wants to reduce taxes on the rich—by doing away with the estate tax, which only benefits the wealthiest 0.2 percent of Americans; by lowering the top marginal tax rate; by eliminating the alternative minimum tax. Consider this: If that tax had not existed back in 2005, Donald Trump’s own tax liability would have plummeted by almost 90 percent—from $38 million to just $5 million, or just 3 percent of his income for that year.

None of this is accidental, and it isn’t happening because Democrats and Republicans disagree about how to grow our economy. The House GOP tax plan was designed this way because Trump and the people around him want to exploit our tax system for personal benefit. Hiking taxes on the poor while slashing taxes for the ultra-rich is exactly the sort of unconscionable, morally bankrupt behavior we should expect from someone who only ran for President—and now primarily uses the White House—to enrich himself. The kind of person who hires friends, allows them to charter private jets for routine travel, and then sticks taxpayers with the bill.

Instead of sticking the working poor with higher taxes so the ultra-wealthy can buy bigger yachts, we should be looking at broadly beneficial reforms to ensure everyone pays their fair share. American corporations, for example, benefit from a taxpayer-funded military that protects their property, a taxpayer-funded education system that trains their workforce, and so on. They should pay their fair share of those costs, and if they were paying the statutory corporate tax rate of 35 percent, they might be. But because of loopholes enacted over the past fifty years, the average effective corporate tax rate is less than 25 percent and some corporations pay substantially less than that, and Republicans want to cut their taxes further. In the meantime, inequality has soared, and the corporate share of tax revenues has fallen. This is destabilizing, and speaks to why so many families across the country are struggling harder than ever to make ends meet, while corporate profits reach record highs.

We need to fix that. But the truth is, fixing it is not on the table, because it’s not what Donald Trump and Paul Ryan want this tax debate to accomplish. Their incomes and wealth depend on denying that trickle-down economics is a sham. On ignoring evidence that cutting tax rates for billionaires doesn’t help working people, or create jobs. On forgetting that the economy collapsed at the end of the last Republican tax cut regime. Never has an idea with less merit than trickle down economics outlived so many of its own failures. It survives only because the Republican Party’s lifeblood requires them to pretend otherwise. Because Upton Sinclair was right.

Here’s what I’ve learned: politicians who aren’t arguing in good faith don’t respond to arguments, they respond to power. We, as Democrats need to marshal all of the power we have to defeat this proposal, and people across the country who earn less than a million dollars per year should exert theirs as well, by demanding that their Senators and Representatives stand with them.

 

Keith Ellison represents Minnesota’s 5th Congressional District, and is deputy chairman of the Democratic National Committee.