- The GOP tax bill won’t crash the economy.
- But the worst part of it isn’t its economic impact, it’s what it tells us about ourselves.
- This bill tells Americans they have been corrupted, and that they prioritise the desires of the rich over creating an equal playing field for all.
If you hate the GOP tax bill because of what it will do to the economy, you’re thinking about it wrong.
If you don’t hate the GOP tax bill because of what it will do for the economy, you’re thinking about it wrong.
That’s because the biggest problem with the bill isn’t its economic impact, it’s what it tells Americans about who they are. And what we are, according to this bill, is a country of corrupted lawmakers, easily bought and sloppy in their dealings. It tells us we are willing to steal from the young to give to the old, penalise the poor, ignore the sick, and treasure the idle rich over the working man.
Taxes, after all, are about what a country invests in. Tax policies reflect its priorities and long-term vision of itself.
In this tax bill, American corporatism takes center stage. The bill slashes corporate tax rates to 21% while giving individual tax payers temporary cuts. Most of those cuts will eventually go the richest Americans, according to analysis from the Tax Policy Center, who will now be able to pass up to $US11 million on to their children tax free. To fund this, we’re adding $US1.5 trillion to the deficit.
A Quinnipiac poll put support for the bill as low as 25%. According to FiveThirtyEight it’s more unpopular than some tax hike bills over the past two decades. It’s given us a surreal moment where conservative “pundit” Ann Coulter is at times in agreement with economist and New York Times columnist Paul Krugman. Fox Business Network anchors are short circuiting, breaking with the GOP to decry tax breaks for private equity billionaires. The only person who looks remotely happy is House Speaker Paul Ryan.
This bill was, after all, the best the GOP could do with control of the legislature and the White House. It’s supposed to be the party’s greatest achievement and it was cobbled together so hastily, and its passage was so sloppy that the House had to vote on the final bill twice.
We like to think we’re better than this. But now we know we’re not.
They love us
So what does America care about according to this bill? Here are a few of our priorities:
- A short term nudge for the economy. Goldman Sachs thinks this will give us a pittance of growth in 2018 and 2019, but that’s about it. The Federal Reserve doesn’t think it will do much either.Economist Paul Krugman also told Business Insider it may not make much of a difference at all.
- Letting big corporations buy back stocks and pay down their debt. According to a survey of CEOs, that’s what they’re going to do with their tax money. Not hire more people. There was no shortage of voices screaming that out during this process either. In fact, a bunch of CEOs told White House adviser Gary Cohn as much to his face.
- Allowing the richest Americans pass on $US11 million to their kids tax free through a tweak to the estate tax.
- A big tax cut for people in the real estate industry, including a bunch of senators like Republican Bob Corker, who was a no vote until a provision helping his business was added to the bill.
- In fact, let’s just put it out there. This bill benefits Donald Trump.
- Loopholes for the rich – at least that’s what one billionaire Wall Streeter told me this week as his accountants poured over the bill. They’re still figuring it out though. This legislation, especially when it comes to pass through entities, is complicated, and thus rife with opportunities for gamesmanship. So it will be a while before the accountants come up for air.
They love us not
Here are a few of the things America doesn’t care about, according to this bill:
- Exploding the deficit by $US1.5 trillion. Or, put another way, shifting the burden to the young people who’ll have to deal with our national debt down the line.
- Making sure Americans have health insurance, since an estimated 13 million will lose coverage thanks to a provision in this bill removing the mandate for people to buy health insurance.
- Keeping health insurance costs low. Thanks to that same provision, premiums are expected to rise for Americans.
- Inequality. The International Monetary Fund, former CEOs, and the Federal Reserve have all said this bill will widen the gap between the haves and have nots.
- Corruption in our political system. Not only was this tax bill shoddily written, but the apparent horse-trading that went on with senators like Corker is an embarrassment to our entire system. Of course, Corker denies that the Senate bought his vote – but honey, no one is buying that.
It’s time to reconsider priorities
Now, there’s a “to be fair” here, and it’s that this bill could’ve turned out much worse. We could’ve revealed ourselves to be a much uglier country.
For example, we could’ve lost a deduction for interest on student loans. We could’ve made teachers pay out of pocket for school supplies. We could’ve fully repealed the estate tax. Thankfully we didn’t do those things, because we’re not that ugly – yet.
And we shouldn’t let ourselves get there. We need to reconsider our priorities fast, and it’s quite possible we’ll have the head space to do it. It’s not like Americans will be so enamoured with the money this cut provides them that they will be thrilled to watch the people they elected shunt their well-being aside again.
The temporary tax breaks most Americans will get won’t be life changing after all – a few thousand here or there isn’t enough to (as Cohn once suggested) “remodel your kitchen.”
Since these cuts won’t be life changing we’ll probably see the same phenomena we saw after the Bush tax cuts in 2004. That is to say, most people won’t even notice or remember they got a cut at all.
So if the economy does indeed shrug this tax cut off and continue plodding forward at its steady pace, Americans won’t remember this as a gift, they will remember this as a moment when they didn’t like themselves. They will remember feeling like they aren’t a part of the national plan.
And they will remember who put them through it too.
Business Insider Emails & Alerts
Site highlights each day to your inbox.