Tuesday, November 14, 2017

How Republican Tax Plan Restores Hereditary Plutocracy

Tax policy reveals the values of the political party that designs the policy.  Paul Krugman describes the ways in which Republican proposals runs counter to the values of our founding fathers.  They immigrated from a system in England in which wealth and social position were passed on from one generation to the next.  In France a revolution was directed at its system maintaining its hierarchical system of economic and social position.  The Republican tax plan makes it easier for wealthy families to pass on their assets to future generations and it makes it more difficult for those without great wealth to move up the economic and social ladder.

In order to pass a tax plan without any votes from Democrats, the Republican tax plan must find a way to raise taxes so that its plan does not add more than $1.5 trillion to budget deficit during a ten year period.  That is done my reducing or eliminating tax deductions that help low income families pay for college among other things.  For example, they will no longer be able to deduct the interest on student loans that help them to pay for college.  The Republican plan also eliminates the tax on estates exceeding $11 million for households with a husband and wife.  The Republicans sell this tax cut by claiming that it allows farmers and small businesses to pass their assets to future generations.  The number of small farmers and small businesses with assets above $11 million is minuscule.  On the other hand,  billionaires will be  able to pass on  their assets to their heirs, who will have no need to work for a living, when the estate tax is eliminated.

The other way to cut taxes and stay within the $1.5 trillion deficit increase over 10 years is to cut federal spending.  Of course, the favorite targets for Republican spending cuts are programs that benefit lower income Americans.  They love to play the role of fiscal conservatives when budget deficits increase by proposing cuts to popular entitlement programs like Medicare, Medicaid and Social Security.  Trump ran against cutting these programs during his campaign but he will do nothing to prevent current and future Republicans from cutting them in the future so that they can cut taxes today for their donors.  They have been playing that game for generations and it seems to work.  Tax policies are important for the super rich and they appreciate changes that reduce their tax burden.  The great majority of Americans do not caste their votes based upon an examination of tax and spending policies.  Hucksters like Paul Ryan and Donald Trump are good at justifying tax cuts for the rich.  They tell them lies that seem to have worked for decades.

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