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tax cuts for the rich
House Hearing Puts 'GOP Tax Scam 2.0' in Spotlight
Following "recent Republican chaos, we're now back to their regularly scheduled programming: Cutting taxes for millionaires," said Democratic Rep. Bill Pascrell. "They did it in 2017 and now Republicans are again pushing tax cuts for the rich."
Jun 13, 2023
House Republicans are poised to advance regressive taxation measures that would increase the federal deficit just weeks after they nearly blew up the global economy over ostensible concerns about the U.S. government's debt, eliciting condemnation from Democratic lawmakers and progressive advocates.
The Republican-led House Ways and Means Committee held a hearing Tuesday to mark up the so-called American Families and Jobs Act (AFJA), which packages three bills: the Tax Cuts for Working Families Act, the Small Business Jobs Act, and the Build It in America Act.
This trio of bills—dubbed the "GOP Tax Scam 2.0" by the panel's ranking member, Rep. Richard Neal (D-Mass.)—would expand Trump-era tax cuts whose benefits flow overwhelmingly to corporations and the wealthy. In the wake of demanding—and winning—sharp reductions in anti-poverty spending along with other reactionary reforms during negotiations to raise the debt ceiling, the GOP-controlled House is now moving to starve the federal government of essential revenue.
"It didn't take long for the MAGA majority's alleged debt 'concerns' to go right out the window in pursuit of more wasteful tax breaks for their billionaire donors and corporations."
"It didn't take long for the MAGA majority's alleged debt 'concerns' to go right out the window in pursuit of more wasteful tax breaks for their billionaire donors and corporations that ship jobs overseas," Liz Zelnick, director of Economic Security & Corporate Power at Accountable.US, said in a statement.
"If the recent past is prologue, the MAGA majority will try to pay for their trillion-dollar corporate tax giveaway on the backs of average Americans, including devastating cuts aimed at seniors, veterans, and the food insecure," said Zelnick. "Once again, the MAGA House majority has only corporations and the wealthy in mind."
Zelnick's sentiment was echoed by Democrats on the House Ways and Means Committee.
"This is the most ill-considered piece of legislation that I've witnessed in years in front of this committee," said Neal. "Just 10 days after our Republican colleagues were prepared to bring the nation to the brink of default... to the precipice, if not over the edge, they now come back with a tax cut."
"Apparently, the debt only matters if it's about spending, never about tax cuts," said Neal, who lamented "$10 trillion of tax cuts" enacted in 2001, 2003, and 2017—years when Republicans held both chambers of Congress and the White House.
\u201cRepublican tax cuts are a masterclass in failed promises, lip service to small businesses and working families, only for them to end up with pennies. \n\nWATCH Ranking Member @RepRichardNeal's opening statement at the markup of the #GOPTaxScam 2.0 \u2935\ufe0f\u201d— Ways and Means Democrats (@Ways and Means Democrats) 1686668744
Rep. Bill Pascrell (D-N.J.) derided what he called the GOP's "tax scam 2.0" as one of the worst sequels in history.
"After months of some of you actually liking the idea of keeping other people hostage, some of you are back to the single issue that unites your party: Tax cuts for the well-off," Pascrell said in a message to Republicans on the panel. "It's far past time to retire" the argument that "tax cuts 'pay for themselves.' They just don't. You can't prove it."
\u201cAmid recent republican chaos we\u2019re now back to their regularly scheduled programming: cutting taxes for millionaires. They did it in 2017 and now republicans are again pushing tax cuts for the rich. The gop tax scam 2.0 is a worse sequel than Caddyshack 2!\u201d— Bill Pascrell, Jr. \ud83c\uddfa\ud83c\uddf8\ud83c\uddfa\ud83c\udde6 (@Bill Pascrell, Jr. \ud83c\uddfa\ud83c\uddf8\ud83c\uddfa\ud83c\udde6) 1686674915
Among other things, the AFJA would expand corporate and business tax breaks enacted in the Tax Cuts and Jobs Act (TCJA) approved by congressional Republicans and signed into law by then-President Donald Trump in 2017.
If the new proposal were to pass, the richest 1% of U.S. households would receive $28.4 billion in tax cuts (an average of $16,560) next year, compared with $1.4 billion for the poorest 20% ($40, on average), according to Steve Wamhoff, federal policy director at the Institute on Taxation and Economic Policy. Because foreign investors own a substantial share of stock in U.S. corporations, they would also receive $23.8 billion next year under the legislation.
House Ways and Means Chair Jason Smith (R-Mo.) has claimed that the cost of the tax cuts would be offset through a repeal of the Inflation Reduction Act's clean energy tax credits. But as Wamhoff explained in an analysis published earlier this week, deliberately hindering the nation's renewable energy transition would impose additional costs "in the form of greater climate damage."
\u201cThis is the classic tradeoff for Republicans\u2014slash programs for working people to fund MORE tax breaks for big corporations and their rich owners.\n\nShameful.\u201d— Americans For Tax Fairness (@Americans For Tax Fairness) 1686663793
Moreover, "the true costs are hidden by budget gimmicks," Wamhoff noted. "The most important budget gimmick is that the legislation enacts the biggest tax cuts for only two years even though its proponents plan to extend them in the future, making them, in effect, permanent."
According to the Committee for a Responsible Federal Budget: "The bill would cost $80 billion over a decade with interest ($19 billion before interest), including $320 billion through the end of fiscal year (FY) 2025. The smaller 10-year cost is driven by several factors but mainly by the fact that most of the bill's tax cuts expire at the end of 2025. We estimate that the plan would cost over $1.1 trillion ($950 billion without interest) through 2033 if these temporary tax cuts and extensions were made permanent."
The benefits of the 2017 TCJA "never trickled down," Americans for Tax Fairness tweeted. "Instead, the rich got richer and corporations made bigger profits. We should be repealing the Trump tax cuts, not making them permanent."
In a blog post published Tuesday, Chuck Marr and Samantha Jacoby of the Center on Budget and Policy Priorities also urged lawmakers to "reject this bill and pursue tax policy that works better for the country as a whole—not just wealthy investors and high-income households."
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It’s Clear as Day the GOP Does Not Really Care About Debt or the Deficit
Republican tax cuts for the rich have been the single largest driver of the federal deficit over the last two decades, followed by bipartisan military spending.
May 25, 2023
The news sure makes it sound like President Joe Biden and Republicans have been haggling over the national debt. But that’s not what’s really happening—not at all.
Biden wants to spend more money and run up the deficit, the story goes. Republican House Speaker Kevin McCarthy (R-Calif.) wants to rein the Democrats’ “addiction to spending” and reduce the debt.
This is wrong—enormously so—for several reasons.
“If McCarthy wanted to reduce the debt, he could simply pass President Biden’s proposed budget.”
First, as my Institute for Policy Studies colleague Karen Dolan has written: “If McCarthy wanted to reduce the debt, he could simply pass President Biden’s proposed budget.”
She’s right!
Biden’s budget continues and modestly expands many important social services, jobs programs, and clean energy investments, Karen’s written. But because it also reverses some of President Donald Trump’s tax cuts for corporations and the very wealthy, Biden’s budget would reduce the deficit by $3 trillion over 10 years.
Republican tax cuts for the rich have been the single largest driver of the federal deficit over the last two decades. The Bush and Trump tax cuts together are responsible for 57% of the increase in our ratio of debt to gross domestic product, the Center for American Progress found—and 90% outside of emergency spending during the recession and pandemic.
But Republicans don’t want to raise taxes for the rich. In fact, they’re planning to introduce a bill to make those massive tax cuts for the rich permanent—at a cost of trillions. That’s a lot more debt.
The other major driver of debt? Unfunded wars and military spending.
Together with nuclear weapons, border enforcement, and so on, the IPS National Priorities Project found recently that “militarized spending” takes up nearly two-thirds of the budget Congress sets each year.
That’s a bipartisan problem—Biden’s own budget proposal unwisely hikes Pentagon spending even after the end of a 20-year war. But here again, Republicans have refused to cut any of this funding as part of their spending crackdown. In fact, they’re calling to increase it far above even Biden’s proposal.
So Republicans rejected a budget proposal that would bring down the deficit. And they rejected addressing either the high-end tax cuts or out of control military spending that drives the debt—in fact, they’re pushing for more debt in both categories.
What does that leave? The barely one-third of discretionary spending that covers education, corporate regulation, scientific research, many anti-poverty programs, and other worthwhile items.
Republicans are demanding deep cuts here that could mean more homeless veterans and hungry seniors, hundreds of thousands of Americans who can’t afford an education, tens of thousands of kids who can’t get into Head Start, more pollution, fewer green jobs, and worse besides.
And unless they get those cuts, they’ve threatened to default on America’s debt by refusing to raise the debt ceiling.
The debt ceiling doesn’t reduce the debt by one dime—it only determines whether we pay the debts we already owe. Republicans raised it three times under Trump without complaint even as he ran up one of the biggest deficits in history.
Defaulting would do nothing about the debt—but it would destroy millions of jobs, wipe out trillions of household wealth, and send interest rates skyrocketing for home, car, and credit card loans.
The current debate has nothing at all to do with debt. It’s about whether we invest in programs the American people count on—or if we kneecap those programs to fund more tax cuts for rich people and handouts to military contractors.
Let’s choose wisely.
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GOP Plans to Unveil Deficit-Exploding Tax Cuts for the Rich Two Weeks After Debt Limit X-Date
"This hostage crisis has never been about deficits for the GOP," said Rep. Ilhan Omar. "It has always been about wealth transfer—taking away food and healthcare from the poor and middle class to give away $3 trillion more in tax cuts to their rich friends."
May 24, 2023
With the U.S. careening toward a default crisis that they manufactured, House Republicans are reportedly crafting a major tax cut package that would overwhelmingly benefit the rich and corporations while blowing a multitrillion-dollar hole in the federal deficit.
The fresh push for tax cuts, according to Rep. Ilhan Omar (D-Minn.), further shows that "this hostage crisis has never been about deficits for the GOP."
"It has always been about wealth transfer—taking away food and healthcare from the poor and middle class to give away $3 trillion more in tax cuts to their rich friends," Omar, the deputy chair of the Congressional Progressive Caucus, tweeted Tuesday.
Politicoreported earlier this week that Republicans on the House Ways and Means Committee hope to finish work on their emerging tax legislation by June 16, just over two weeks after the so-called "X-date"—the day on which the Treasury Department expects the federal government to run out of money to cover its obligations unless Congress raises the debt limit or President Joe Biden acts unilaterally.
"Key parts of the [tax cut] package... will likely include a full restoration of research and development deductions, full bonus depreciation, removing caps on business interest expensing, and a doubling of the $1.08 million limitation on the section 179 deduction (which, like bonus depreciation, allows a company to deduct an asset's cost up-front)," Politico noted.
The outlet added that Rep. Vern Buchanan's (R-Fla.) legislation aimed at making the 2017 Trump-GOP tax cuts for individuals and some businesses permanent "also has a strong likelihood of getting marked up in a broader package." The bill, known as the TCJA Permanency Act, currently has nearly 100 Republican co-sponsors in the House.
Buchanan, one of the wealthiest members of Congress, personally benefited from the 2017 tax law that he's working to extend.
"Republicans are holding our economy hostage because they want to cut programs for working families," Sen. Tina Smith (D-Minn.) said Tuesday. "Their next big move? Massive tax cuts for their rich corporate buddies. They may call it fiscal responsibility—I call it extortion."
The Congressional Budget Office (CBO) estimated last week that extending the individual provisions of the 2017 tax cuts—which are currently set to expire in 2025—would add $2.5 trillion to the deficit over the next decade. The original law made the cut to the corporate tax rate from 35% to 21% permanent.
"The hypocrisy of Republicans in Washington is truly breathtaking," Sen. Bernie Sanders (I-Vt.) wrote in a Fox News op-ed on Wednesday. "Over and over again, we hear from the Republican leadership about how deeply concerned they are about the large deficit and national debt that we have. Really?"
"If that's the case," Sanders asked, "why are they pushing for an extension of the Trump tax breaks that disproportionately benefit the wealthy and large corporations and would increase the federal deficit by $3.5 trillion?"
The Institute on Taxation and Economic Policy (ITEP) estimated earlier this month that just 1% of the benefits of the TCJA Permanency Act would go to the poorest fifth of Americans.
The richest fifth, by contrast, would receive nearly two-thirds of the tax benefits, ITEP found.
"The average tax cut for the richest 1%," the organization noted, "would be 25 times that of the middle 20% and more than 250 times that of the bottom 20% of Americans."
\u201cNEW: The push by Congressional Republicans to make the tax provisions in TCJA permanent would cost nearly $300 billion in the first year and deliver the bulk of the tax benefits to the wealthiest Americans. https://t.co/6QgZbXjIfH\u201d— ITEP (@ITEP) 1683211388
Republicans are preparing to launch their push for new tax cuts as they continue to hold the U.S. and global economies hostage in pursuit of steep federal spending reductions, all under the guise of lowering the deficit.
"We're not going to raise taxes," House Speaker Kevin McCarthy (R-Calif.) said earlier this week. "It's a spending problem."
But research published in March by the Center for American Progress (CAP) found that the GOP austerity crusade "does not address the true cause of rising debt"—tax cuts.
"Tax cuts initially enacted during Republican trifectas in the past 25 years slashed taxes disproportionately for the wealthy and profitable corporations, severely reducing federal revenues," noted Bobby Kogan, CAP's senior director of federal budget policy. "In fact, relative to earlier projections, spending is down, not up. But revenues are down significantly more."
"If not for the Bush tax cuts and their extensions—as well as the Trump tax cuts—revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining," Kogan observed. "Instead, these tax cuts have added $10 trillion to the debt since their enactment and are responsible for 57% of the increase in the debt ratio since 2001."
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