Yesterday the so-called “Big 6” (Mnuchin, Cohn, McConnell, Hatch, Ryan and Brady) released a framework for their tax plan. So I thought it was time to get informed on what it is we’re likely to be talking about for the next couple of months when it comes to Congress.
Dylan Matthews has the rundown. What I realized while reading his breakdown is that there are some intriguing elements to the framework—like the idea of doubling the standard deduction. There are also the obvious give-aways to the wealthy—like the elimination of the estate and gift tax. But other than that, it is impossible to analyze this framework due to the lack of details that have been provided.
For example, the plan proposes to consolidate the current individual income tax brackets from seven to three: 12 percent , 25 percent, and 35 percent. But we are told nothing about the thresholds for each one. So if the 35 percent bracket is huge and the 12 percent bracket is tiny, most of us will end up paying more. The opposite could also be true. The brackets tell us nothing absent information about where the thresholds will be.
The plan is clear that the corporate tax rate will be lowered from 35 to 20. But there is this interesting item about that being “territorial.” As Matthews notes, “foreign income by US companies will be tax-free.” I’m not sure how that fits with MAGA, but it raises a huge question: “How will the plan avoid having companies relocate operations to generate foreign income?” Apparently the designers plan to insert provisions to prevent that from happening, but so far they’re being mum on what that will look like.
All of that means that the Big 6 didn’t tell us anything yesterday. Brian Faler and Rachael Bade say that is the point.
It’s not that Republicans don’t necessarily know who they want to foot the bill for their plans. The game plan is to essentially launch a sneak attack on cherished tax breaks, in order to give opponents as little opportunity as possible to mount a counteroffensive.
There’s a fear that K Street lobbyists will launch massive campaigns to protect their breaks, effectively drowning the legislation.
That doesn’t simply apply to “cherished tax breaks.” It’s also true when it comes to who wins/loses under this plan, how much it will cost and how those costs will affect the rest of the budget. It also doesn’t just silence the lobbyists. It makes it impossible for Democrats to react with a coherent response. We’ll watch Trump travel around the country telling people that his administration has just produced the greatest tax plan any human being has ever concocted, when it’s nothing more than smoke and mirrors.
Some of the media reporting on this plan is abysmal, as reporters attempt to pretend that it is worth analyzing, when it’s not. The worst example comes from the headline in the New York Times: “Trump Proposes the Most Sweeping Tax Overhaul in Decades.” It isn’t until the twelfth paragraph that they finally get to the real story.
After months of secret talks, the proposal produced by the so-called Big Six working group provides as many questions as it does answers. Without those details, it is difficult to say whether middle-income families will see the most benefit from the tax overhaul or if it will favor the richest Americans.
But of course, Kevin Drum nailed it.
This whole thing is a huge nothing burger…It reminds me of a high school student who hasn’t done the work and tries to hide it in a term paper that uses wide margins, lots of prefatory throat clearing, plenty of space between paragraphs, and frequent appeals to “disagreements between experts.” This is not progress.
In the end, the important message we can learn from all of this is that the Republicans are worried about how the public will react to the details of their tax plan. The rollout of the framework yesterday was a sham meant to pretend they are putting something meaningful on the table, when they’re not.