Democrats should hold the line, oppose additional tax cuts for the wealthy
© Thinkstock

Rumors have been circulating around the halls of Congress that Republicans are planning to celebrate this year’s tax filing deadline by giving the richest Americans a big, fat present: even more enormous tax cuts. It seems that Republicans are unsatisfied with the first round of tax cuts that gave billions to CEOs, hedge fund managers, and corporate lawyers in December, so they’re coming back for more.

Round two’s cuts are aimed at exactly the same people as the first round – Americans who need them the very least – but it seems that Republicans are hoping that a new coat of lipstick might make this pig more attractive.

ADVERTISEMENT
Well, they better keep hoping. You can already see their script forming: If they only  push harder, buy more ads, and improve their sales pitch that these are “middle-class tax cuts,” the American people will believe them. But the fact is, that’s just not true. Making the individual tax cuts permanent would not be a boon to the middle class, but yet another giant gift to the wealthy. And just like every Democrat in Congress stood firm throughout the fall against even one penny in tax cuts for millionaires and billionaires, they should stand up to Republicans again.

The tax bill that Republicans passed in December – written behind closed doors with the help of over 6,000 lobbyists – overwhelmingly gave its benefits to the wealthy, both the richest individuals and most profitable corporations. The Tax Policy Center found that in the first year alone, the richest 0.1 percent of Americans would each get a $193,000 tax cut, on average. The law included a 40 percent rate reduction for corporations and preferential treatment for business income earned overseas. Those aren’t just esoteric provisions in a tax code – they translate to giant tax cuts for major corporations: So far, ExxonMobil has seen $5.9 billion in savings due to the law, Wells Fargo has saved $3.4 billion, Walmart has gotten $207 million, and the list goes on.

And this tax law has not just been a windfall for corporate executives — the TrumpTax has lined the pockets of already-rich investors and shareholders while workers have been left even further behind. Since its passage, corporations have already spent over $200 billion in stock buybacks, and some Wall Street analysts expect about 60 percent of the corporate tax cut to flow to corporate shareholders, and just 15 percent to employees. Far from the Republican pitch that this would help raise wages for working families, the rich are hoarding the benefits.

This includes major cuts for wealthy individuals in addition to those being handed to corporations – including a reduction in the top tax rates, a significantly higher threshold for those who have to pay the estate tax, a reduction of the Alternative Minimum Tax, and a 20 percent income deduction for those who own S-Corporations. Those four changes – the biggest tax cuts in the individual portion of the law – almost exclusively help America’s highest earners. The estate tax change, for instance, helps only those with estates worth over $11 million – not exactly a group hurting for a tax cut.

Adding insult to injury, Republicans made their changes to the business code permanent while changes to the individual code expire in 2025 — a choice that shows the American public what Republicans’ priorities are. But now Republicans are proposing extending those individual cuts permanently, giving even more of a tax cut to the richest. If these tax cuts get extended, 40 percent of the benefits included in the extension package would go to the top 5 percent of earners. The top 1 percent of earners would get a tax cut of roughly $30,000, and those in the top income bracket – people earning more than $600,000 – will receive a permanent cut on their taxes.

So, what does making the individual tax cuts permanent mean? It means that Republicans take their Democratic colleagues in Congress – and the American public – for fools.

But congressional Republicans are the true fools. This tax law is unpopular – historically so. It had the lowest approval rating of any piece of major legislation passed in a generation when it was signed into law in December. And since then, Americans are not seeing Republicans’ promises come true – they’re not seeing a bump in their paycheck, or more jobs, or an easier time paying bills.

If Republicans wanted to design a tax cut that would help working families, they could easily do that. But they are again choosing the rich over everyone else, while endangering services so deeply ingrained in the American way of life – critical programs that help save lives and help families make ends meet like Medicare, Medicaid and Social Security.

Giving more tax breaks to the highest earners is bad politics and bad policy for growing our economy — and progressives need to hold Republicans accountable for forcing this terrible law through Congress.

This is a fight that Democrats can win if they stick to their principles – tax policy that puts families first. After all, working families, not the wealthiest Americans and corporate stakeholders, are the true engine of our economy.

So, if Republicans are relentless in campaigning on misinformation and falsely promising middle-class tax cuts, we will be relentless in holding them responsible for the disastrous tax policies they’ve worked to enact. Bring it on.

Nicole Gill is the Executive Director of Tax March.