Power

We’re getting into French Revolution territory

What the passage of the Republican tax-reform bill might mean for you.
Power

We’re getting into French Revolution territory

What the passage of the Republican tax-reform bill might mean for you.

The Republican tax reform plan, with last-minute changes scribbled into its margins, passed the Senate on a mostly party-line vote last Saturday morning. The bill’s passage represented a culmination of a 50-plus-year political project to destroy the safety net and distribute wealth to the top, and it’s perhaps the clearest declaration of war on the working class that we’ve witnessed in modern American history.

It’s not clear when the backlash to this project will come, only that it has to. This particular piece of legislation promises to amplify the already deep structural inequality in this country into another stratosphere, redistributing wealth to the top on the back of a bill that will be ultimately footed by young people who are already saddled with enormous debt. With this bill, Republicans are reaffirming their commitment to helping the anger, frustration, and despair towards this broken system continue to fester and grow.

Let’s take a look at how bad this bill is for ordinary Americans. The major feature of both plans (the House passed its own plan in November, and now the chambers will have to hash out the differences) is a huge giveaway to corporations and to the rich. Corporate tax rates will be slashed to 20 percent (the Senate pushes this back until 2019, while the House plan would put it into place immediately), while the Senate plan moves down the top individual tax rate (which would be on income over $500,000) to 38.5 percent from 39.6 percent.

Macallan Rare Cask

The Senate bill made the individual tax cuts temporary through 2025, but made the corporate tax cuts permanent. Eventually, this means that people making between $40,000 and $50,000 per year would get a tax cut of 4.9 percent by 2021, but would eventually see a tax hike of 4.2 percent by 2027; those making $1 million or above will ultimately see their taxes cut from current rates even after the individual tax breaks end, due to the permanent corporate cuts.

It’s not clear when the backlash to this bill will come, only that it has to.

The Senate plan also repeals the individual mandate from the Affordable Care Act, which requires people to purchase health insurance. A Congressional Budget Office analysis showed that as a result, 13 million fewer people will have health insurance by 2027, and health insurance premiums will rise by “about ten percent in most years of the decade.” Former Clinton Treasury secretary Larry Summers, no friend to the working class, predicted on Monday that 10,000 people would die per year because of this provision.

The bill is enormously unpopular. While the American public has historically favored tax cuts — the extension of the Bush tax cuts in 2010 was supported by 54 percent of Americans — an average of November polls compiled by FiveThirtyEight indicates the tax cuts have the support from as few as a third of Americans, which is lower than the support that tax hikes in the early 90s had. One of those polls, by Qunnipiac, found that 59 percent of those polled believe “the Republican tax plan favors the rich at the expense of the middle class.”

All of this will, eventually, go horribly wrong. We’re still living with the effects of the Reagan tax cuts, which sought to end public services as we know them and replace them with charity. Trickle down economics have proven to be a miserable failure, as the idea that companies would pump more money back into the economy and hire more workers at higher salaries if they just had lower tax rate has been proven to be a complete myth. As Sarah Anderson noted for The New York Times in August, AT&T — whose CEO, Randall Stephenson, has been a major proponent of cutting the corporate tax rate to 20 percent — “enjoyed an effective tax rate of just eight percent between 2008 and 2015, despite recording a profit in the United States each year, by exploiting tax breaks and loopholes.”

That should mean more jobs, right? Wrong: AT&T downsized its workforce by nearly 80,000 jobs in the last eight years, according to Anderson and the Institute for Policy Studies, and spent $34 billion to purchase its own stock, money that could have been ostensibly used to hire more workers. In the same study, the IPS found that average CEO pay among 92 publicly held companies studied — all of which paid less than a 20 percent effective federal tax rate — rose 18 percent between 2008 and 2016; private sector worker pay, they noted, only increased by 4 percent over the same period. Corporations are making more money than ever before, and they’re keeping it.

Jobs, contrary to Trump’s central argument for the tax cuts, aren’t provided to people by corporations out of the kindness of their hearts when they have the extra money. It doesn’t matter how much money they make; if there’s no need to employ workers, a company like AT&T just won’t.

More jobs? Yeah right.

The past 40 years of American politics reflects this misunderstanding, in which politicians long before Trump have afforded corporations and the wealthy a god-like status for their role as “job creators” while they benefit from public resources and put less and less back into the public coffers. More recently, it’s allowed the ruling class unbridled control over the political process: the Republican tax reform bill being rushed through by the end of the year, for example, has been transparently driven by the need to please Republican super-donors such as the Koch brothers, ahead of an election where the Republicans may very well lose the House.

And as a result, we have this giveaway, which is coming at the same time that Republicans express disdain for the families of children they’ve kicked off health insurance and for the very concept of land that isn't meant for exploitation by energy companies. Throw in the possibility of a recession in the next few years (we’re due for one), in which conservatives will no doubt stress the need to rein in spending on essential programs like Medicare, Medicaid, and Social Security, and it’s a recipe for disaster.

The governing party in Congress, which no one likes, and a president, who no one likes and a plurality of Americans didn’t even vote for, are launching broadly unpopular legislation over the finish line which radically shifts wealth even further towards the people who already control the vast majority of it. This bill and the repeated near-misses to take health insurance away from millions can only be described as class war.

For most Americans, material conditions haven’t yet deteriorated to the despair of Russia in 1917 or France in 1789. But we are in uncharted territory when it comes to this kind of direct attack on the will of the people, and the only certainty in a patently uncertain economic and political future is that the ruling class will continue to make out like bandits. And if the entire Republican project was a ploy to ensure that the wealthy eventually can’t show their faces in public, the way the plan is being implemented wouldn’t look much different than it does now.

Paul Blest is a contributing writer at The Outline.