For years, Republicans have promised to make our tax code simpler, fairer, and more supportive of economic growth. Yet their agenda, both in Washington and Richmond, suggests they’re really only interested in one thing: giving big tax cuts to their wealthy donors and leaving the rest of us to pick up the tab.
Last week’s proposal by Donald Trump and Congressional Republicans was essentially to give millionaires and billionaires over $2 trillion in tax cuts while claiming that “closing loopholes” and “economic growth” will make it cost nothing. No credible economist believes these claims, especially when Republicans pledge to hold harmless three of the most expensive provisions in the tax code.
People protest against Trump’s tax cuts in Los Angeles
But that doesn’t mean these tax cuts are entirely unpaid-for. The few offsets mentioned in the latest framework, such as increasing the bottom income tax rate from 10 percent to 12 percent, are primarily tax increases on lower- and middle-income Americans.
A preliminary analysis from the non-partisan Tax Policy Center highlights just how regressive the GOP’s tax proposals are. After these policies are fully implemented, TPC estimates that roughly 1-in-3 households with incomes between $55,000 and $155,000 would see annual tax increases averaging almost $2,000. Meanwhile, 97 percent of households with annual incomes over $5 million would have their taxes cut by an average of nearly $1.1 million.
Quite simply, Washington Republicans are proposing to raise taxes on the middle class just so they can cut taxes for the richest of the rich.
This charts shows how the wealthiest benefit from Gillespie’s tax plan, just like Trump’s proposed tax cuts at the federal level.
Ed Gillespie, the Republican nominee for Governor of Virginia, is no different. According to an analysis by the non-partisan Commonwealth Institute for Fiscal Analysis and the Institute for Taxation and Economic Policy, his proposals would give the wealthiest Virginians a tax cut nearly 50 times the size of those he would give to the middle class. This is particularly egregious given that the wealthiest 1 percent of Virginians already pay a much smaller share of their income in state and local taxes than those in the middle class.
Neither the state nor the federal government can afford these expensive giveaways to wealthy individuals who don’t need them. Governor McAuliffe worked hard with the Virginia legislature earlier this year to close a budget shortfall significantly smaller than the one Gillespie’s tax cuts would create. Meanwhile, our national debt – which recently passed $20 trillion for the first time in history – will grow even faster if the tax cuts proposed by Washington Republicans become law.
For the price of Ed Gillespie’s proposed tax cuts, Virginia could hire 4,000 more public school teachers, returning our state’s student-teacher ratio to the levels they were in 2009.
We could hire 2,000 mental health and substance abuse counselors to make real progress in combating the opioid epidemic, which President Trump pledged to address before abandoning it once he got into office.
Or we could increase investments in our roads and public transit systems to ensure that Virginians are spending more time with their families and less time wasted in traffic.
The tradeoff is even more stark at the federal level: for $2 trillion, we could triple federal spending on transportation infrastructure for the next 10 years, quadruple spending on all non-military scientific research, or make two years of community college free for every child in America. This is money that can and should be used to invest in the future of our country.
As a small business owner and former professor of taxation, I would welcome fiscally responsible tax reform that creates a more level playing field. Our tax code is riddled with over 200 credits and deductions. These loopholes don’t favor a growing economy – they favor special interests that hire armies of lobbyists to create preferential tax breaks and accountants to take advantage of them. The rest of us pay for these giveaways in the form of higher tax rates and fewer public services.
Moreover, this complex tax system is incredibly expensive: according to the National Taxpayer Union Foundation, Americans spend over $260 billion a year on tax compliance. That’s money our businesses could be using instead to grow their operations, hire new workers, and raise their wages. Bipartisan tax reform that eliminates these unfair carve-outs and reduces compliance costs without growing budget deficits would be a boon to our economy.
But that is not what these tax “reform” plans are offering Virginia or the rest of the country. Instead, they starve our communities of critical investments just to rig the playing field further.
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