One of the strangest things about this supremely strange moment in American political history is the resolve of the Republican Congress and White House to initiate sweeping policy reform without offering a clear and honest rationale for it.
We saw this time and time again in the spring and summer with the effort to "repeal and replace" the Affordable Care Act, which House Speaker Paul Ryan repeatedly described as an effort "to give every American access to quality, affordable health care," despite the fact that every analyst of every bill produced by the House or the Senate concluded that it would result in millions of Americans losing access to quality, affordable health care.
We're seeing it again now, with GOP leaders talking about tax reform as if the competing House and Senate bills that a conference committee is striving to reconcile really offered relief for middle-class taxpayers. As anyone who's looked at the bills is well aware, they actually accomplish something very different: steep cuts to corporate taxes combined with temporary modest cuts for the middle class and the elimination of a slew of deductions that will amount to significant tax hikes for many other taxpayers (including residents of high-tax, Democratic-voting states, especially New York and California, as well as the self-employed, independent contractors, and graduate students).
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No honest reading of the GOP tax bill could possibly conclude that it is intended primarily to help the middle class. So what's the real reason the GOP has opted for this mix of changes to the tax system? You won't get a straight answer by listening to recent public statements of actual Republicans. But those who've been paying attention to long-term debates on the right will grasp the rationale.
Many Republicans look back on the inequality-riddled Gilded Age of the late 19th century as a time of economic take-off, with soaring wages and rates of growth. They think the U.S. desperately needs to recreate this dynamic in our own time by sharply cutting back on the tax and regulatory burdens borne by businesses. Once the shackles are off, with corporations and entrepreneurs freed up to pursue maximal profits, the economy will kick into overdrive. And that will benefit everyone — yes, of course, those who own and run these businesses, but also those who work for them, those who have been frozen out of working for them, or those who hope to start a business of their own.
We all know that Republicans think this way. But what we don't sufficiently appreciate is how bold their ambitions are. Think they're just after lower income taxes rates on the highest earners? That's thinking way too small. Corporations themselves, which are already sitting on mounds of cash, also need to get a massive tax break. But that's not all.
The proposed elimination or capping of the SALT (state and local tax) deduction can perhaps be partly explained as an effort by the Republicans to screw over areas of the country with lots of Democratic voters. But it's also, and more fundamentally, an attempt to keep liberal regions from concealing from voters the true costs of expensive social programs and regulations.
This is critical to conservative efforts to dismantle the welfare state. If state governments in California and New York experiment with Scandinavian socialism, Republicans want voters in those states to be forced to bear the full burden of paying for it, instead of allowing them to skirt the cost by permitting them to deduct it from their federal taxes. Republicans suspect, perhaps rightly, that when the full cost is borne by taxpayers, they will revolt, demanding cuts in taxes and spending — which will do even more to encourage the economic takeoff Republicans long for.
The same can even be said about the proposed steep tax hikes that both versions of the tax bill would impose on graduate students (by forcing them to report tuition remission as taxable income). Once again, there may be some partisan culture warfare going on here — an effort to stick it to a staunchly left-leaning sector of the electorate. But it's also the case that many Republicans would greatly prefer that young adults go out and start businesses or begin climbing the corporate ladder instead of becoming professors and researchers who spend much of their careers dependent on federal largesse in the form of grant money.
Is the U.S. better off with more or fewer scholars? More or fewer businesspeople? This portion of the Republican tax proposal is unambiguous: They want fewer thinkers and more doers. This reflects the party's deep-seated conviction that the country benefits far more by encouraging as many people as possible to become as economically productive as possible.
Yes, as many liberals (including yours truly) are fond of pointing out, Republicans want to reward their wealthy donors with a generous tax cut. But they're also motivated by a ruthlessly capitalistic vision of the good life — even if their polling tells them that they're better off keeping it to themselves.
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