The GOP’s pyrrhic tax victory

“Another such victory and we are lost,” King Pyrrhus of Epirus lamented after suffering staggering losses in defeating the Romans in 279 B.C. This bit of ancient history seems relevant now as President Trump and the Republicans celebrate a pyrrhic victory of their own on taxes.

In ramming through Congress a huge package of tax cuts the Trump Republicans finally racked up their first and only major legislative “win” of 2017. But at what a cost: the betrayal of their professed principles and political commitments, all to achieve a result likely to be fleeting because Republicans spurned every opportunity to anchor tax changes in solid, bipartisan support.

With this sorry excuse for a tax bill, Trump might as well be slapping working Americans in the face. Wall Street, on the other hand, should be purring contentedly since Republicans couldn’t even bring themselves to close the egregious “carried interest” loophole for hedge fund and private equity investors. There’s no way to reconcile Trump’s populist rhetoric with a bill that lavishes the lion’s share of its benefits on the rich and powerful.

{mosads}So Majority Leader Mitch McConnell (R-Ky.) and House Speaker Paul Ryan (R-Wis.) are claiming unctuously that average working families are the main objects of their concern and the true beneficiaries of their bill. Never mind that every credible evaluation of the bill’s distributive impact has found otherwise. In yet another baleful sign of Trump’s corrupting effect on his enablers, party leaders are basically dispensing with facts and evidence and lying to the American people.

That’s also true of their assertions that the tax cuts will pay for themselves by triggering miraculous growth. In fact, the bill will add nearly $1.5 billion to the national debt, shattering whatever is left of the GOP’s reputation for fiscal responsibility.

Republicans hope to redeem their tarnished image by calling for big cuts in public spending, especially on low-income families. But the GOP conceit that fiscal discipline applies only to the spending side of the federal budget and not to taxes is nonsense. It’s also dishonest, because Republicans know there isn’t nearly enough money in “welfare reform” to offset the revenue losses from their tax cuts. Since they want to boost military spending, their only realistic option would be to scale back spending on Social Security and Medicare, and it’s clear neither they nor Trump have the stomach for entitlement reform.

The GOP bill violates another key principle of sound tax policy: simplicity. On the contrary, it adds new layers of complexity to an already byzantine federal tax code. Here the main offenders are new rules for deducting from taxes earnings that “pass-through” companies. They create incentives for people to set up bogus companies or become independent contractors so they can pay taxes based on corporate rates, which are now much lower than personal rates.

This then, is what has Trump and his party dancing in the endzone and exchanging high-fives: A slapdash package of tax giveaways, hastily cobbled together without public hearings or normal deliberation, bereft of rigorous analysis, passed on a strict party-line vote, that is regressive, a “borrow and spend” budget-buster and even more insanely complicated than the status quo.

Nice job, Republicans!

No wonder the GOP tax bill is unpopular, drawing support from only about a third of the public. Trump Republicans say that will change as people see their tax bills go down next filing season. More likely, they’ve misread the public temper. What Americans really want is for their leaders to cooperate in crafting a simpler, more progressive tax code that asks the wealthy to pay more, not less. 

Showing they learned nothing from their own crusade against ObamaCare, the GOP refused to engage Democrats in real tax reform. To independents and moderates, that makes their bill look more like a partisan power play than a sincere effort to strengthen the U.S. economy, which in fact is already strong. And Democrats will be only too happy to run against the GOP’s tax giveaway to plutocrats in next year’s midterm elections.

Finally, the GOP’s ham-fisted partisanship is likely to discredit the one legitimate reform in the tax bill — bringing U.S. corporate tax rates down to the levels of our main economic competitors abroad. 

In the end, the Trump Republicans put their party’s desperate desire for a “win” above the country’s interest in a genuine tax reform that would have helped working and middle class Americans as well as U.S. businesses – and the U.S. workers that they employ.

That’s not what you’d call patriotic — and it’s the main reason Republicans will come to rue their pyrrhic victory on taxes.