When Mitch McConnell released the new version of the Republicans' health-care bill on Thursday, it contained a surprise, one that might have caused cries of despair to echo through the canyons of lower Manhattan. While the savage cuts to Medicaid were still in the bill, the latest iteration retained many of the Affordable Care Act's taxes, including a 3.8 percent tax on investment income for those with incomes over $200,000 a year. Alas, our nation's selfless job creators will continue to suffer the crushing burden of taxation that turns their days dark with a despair that not even weekends at summer houses in the Hamptons can salve.
But worry not, my tender plutocrats. Your deliverance is coming, if you can wait a little longer.
Keeping those ACA taxes was a move profoundly out of character for the GOP, and one they undertook only reluctantly; the health-care bill they passed in the House and the initial version of the Senate's bill both send the taxes hurtling back to the pits of hell from whence they came. But as they came to realize, the Democrats' argument — that Republicans want to take health care away from tens of millions of people of modest means in order to fund a gigantic tax cut for the wealthy — turned out to be remarkably persuasive to a public less than convinced of the Republicans' good intentions, not least because the argument was true. That helped make this the most unpopular major piece of legislation in the history of survey research, with some polls showing its approval as low as 12 percent.
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So out of desperation, McConnell took the tax cuts out of the bill, if nothing else to deprive Democrats of their potent talking point (and maybe leave some money he can use to buy senators' votes with as things get down to the wire). And something tells me that when he presented it to his caucus, he told them, "Don't worry. We'll get the tax cuts. We just need to get this health-care monkey off our back."
After spending seven years telling their constituents that ObamaCare was nothing less than a poison-soaked dagger plunged into the very heart of liberty, they had little choice but to begin their legislative work with an effort to repeal it. Then they discovered not only that "nobody knew that health care could be so complicated" (in the words of their fearless leader), but also that the public actually likes most of the things the ACA does. So now they just want to get health care behind them — even if their bill goes down to defeat — and move on to what they're really stoked about: tax cuts.
Or tax "reform," depending on how ambitious they want to be. The difference is that "reform" would mean a total overhaul of the tax code, changing all kinds of provisions and potentially eliminating all those loopholes that make the code so complex. Trouble is, most of that complexity is the result of corporate lobbying and special interest pressure — which as a general rule Republicans like. Once you start eliminating loopholes, you'll wind up goring the oxes of some very influential people and entities, and that means a long, drawn-out fight.
We don't know whether McConnell and Paul Ryan have the stomach for that, let alone the skill to guide it to completion. So they may fall back on the simpler solution, which is to leave most of the tax code intact and just cut taxes for rich people and corporations. Because after all, isn't that the whole point?
But they'll start with the more ambitious goal of reform, and we have a pretty good idea of what they'd like to do. You might remember that back in April, President Trump blurted out that his White House was about to release its tax plan. That was news to the people who work for him, so they immediately scrambled to come up with a page of bullet points stating their intentions. Well the nonpartisan Tax Policy Center just released an evaluation of the plan, and the results would be shocking, if you weren't familiar with what Republicans usually propose on taxes.
First, the plan would reduce revenues by nearly $8 trillion over the next decade, and by $13 trillion in the decade after that. Republicans claim that this cannot be true, because cutting taxes for the wealthy inevitably delivers us all to a utopia of infinite prosperity in which the government brings in more revenue than it knows what to do with. If that were true, however, the Bush tax cuts would have brought us to that utopia, which as you may recall didn't quite happen.
But who gains from the Trump plan? Nearly 40 percent of the benefits would go to the top 1 percent of income earners, with 21 percent of the benefits going to the top one-tenth of 1 percent. Those in the lowest income quintile would get a tax cut — a princely $130 on average. As they spend their windfall, perhaps on a nice dinner or a new tire or two for the car, they can contemplate how someone in that top one-tenth of 1 percent will spend the average tax break they'll get: $1.4 million.
But the Trump plan is just the White House's idea, and legislation gets written in Congress. What would they do? We don't know for sure yet, but to get the outlines we can look at the plan that Paul Ryan has proposed. Last month, Ryan went before the friendly lobbyists of the National Association of Manufacturers and told them, "We need to get this done in 2017. We cannot let this once-in-a-generation moment slip." He shared his plan to lower individual and corporate rates, eliminate the inheritance tax (the Trump kids will breathe a sigh of relief), eliminate the Alternative Minimum Tax meant to keep the rich from paying nothing, and get rid of unspecified loopholes (but not the mortgage interest deduction). It was enough to make any captain of finance quiver with glee. And according to the Tax Policy Center's analysis of his ideas, even more of the benefits of his plan — a full 76 percent — would go to the top 1 percent.
So fear not, oh noble job creators. You may have suffered a momentary setback on the health-care bill. But if there's one thing we know, it's that for Republicans there is no higher priority — none — than cutting taxes for the wealthy. If they do nothing else with their time in power, they will do that. Your salvation is coming.
