Are Republicans the Party for the Rich?

The optics of the GOP tax legislation are not good.

Jon Miltimore | December 7, 2017 | 1,406

The optics of the GOP tax legislation are not good.
Are Republicans the Party for the Rich?

I grew up in a Republican family in a blue-collar town on the Wisconsin River. Our town produced paper, wrestlers, and Blue Dog Democrats. Every four years, during the bitter presidential election cycle, I heard these five words a lot: “Republicans are for the rich!”

I first heard the rejoinder in third-grade, when the blue-blooded George H.W. Bush was facing-off against Michel Dukakis. I found the charge peculiar and infuriating. After all, we weren’t rich, unless Mom and Dad were hiding something from me. By the time I reached high school, I came to believe that Republicans favored a fairer tax code, one that rewarded work and spurred capital investment.

I’d like to say I still believe this is true, but I’m not sure I can. The latest Republican efforts on tax reform are a case in point.

The United States desperately needs to overhaul its tax code, a 75,000-page behemoth filled with loopholes and colorful exemptions (all of which are bought and paid for). Alas, contrary to some of the bizarre hyperbole from Democrats, the GOP bills do very little. The legislation, however, does reveal that Republicans know who butters their bread.    

As Matt Labash at the Weekly Standard pointed out, roughly $300 billion of the GOP’s $1.5 trillion tax cut will go to individual taxpayers. The vast majority, however, would go to corporations ($1 trillion) and repeal of the estate tax ($200 billion).

The optics of all this are not good.

Repeal of the estate tax (full or partial, depending on the House or Senate version) has been the focus of much of the media’s coverage—even though the “death tax,” as Republicans like to call it, accounts for just 0.6 percent of federal revenue and reaches the wealthiest two-tenths of one percent of Americans ($10.86 million for married couples or $5.43 million for individuals, according to Robert Reich).

Now, there are reasonable arguments one can make in favor of repeal of the estate tax. The income has already been taxed. It penalizes savings and investment. It hits many family businesses. Yada yada yada.

Some of these concerns arguments are valid, but in my opinion, some are not. Either way, the problem is Republicans aren’t covering their tax cut with spending cuts; they are replacing lost revenues by eliminating deductions many Americans in the middle class use and benefit from.

This isn’t just bad policy; it’s really bad politics. A new Quinnipiac poll shows that Americans oppose the GOP tax plan by a nearly two-to-one margin.  

If one wonders why Republicans would try to pass an unpopular bill that will have little impact on economic growth, they fail to grasp the nature of modern American politics. Politics is not about passing policy that is in the public’s interest; it’s about placating donors who got you elected. And GOP donors are clamoring for repeal of “the death tax,” which they despise.  

This is how the party of “the forgotten man” ends up repealing tax deductions used by a broad swath of the middle class to finance repeal of a tax that doesn’t even affect anyone with less than $5 million in assets.

Many will, of course, argue that the wealthy pay the bulk of federal income taxes in the U.S (see below); hence they deserve a tax break. They might have a point. But such reasoning would only seem to reinforce the idea that Republicans are “the party of the rich,” in that they are fighting to allow wealthy individuals to keep more of their income.

 

Tax Breakdown

Is it true? Are Republicans “the party of the rich”?

I hesitate to answer in the positive because it simplifies the ideas and forces at work in modern American politics. But I’ll close by pointing out some of the thoughts from the Founding Fathers on inherited wealth: they despised it.

As famed historian Gordon Wood has noted, Thomas Jefferson in particular loathed the English pattern of aristocracy and inherited riches. Led by the Sage of Monticello, every single Revolutionary state abolished the twin pillars of inherited wealth and generational aristocracy (entail and primogeniture) either through statute or constitution.

Jefferson, ironically, cited Adam Smith, the godfather of capitalism, to persuade his colleagues.

"A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural." Smith said: "There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death."

If the GOP wants to shed the label “party of the rich,” Republican leaders would be wise to begin thinking broadly about what’s actually in the public interest instead of throwing bones to the check-writers.

 

 

 

 



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