One of the core problems with the Republican tax plan is that it intends to solve problems that don’t exist. For example, the GOP is predicted on the assumption that big corporations don’t have enough money to make capital investments, which is why it’s necessary to slash the corporate tax rate.
But the inverse is also true. Just as the Republican plan solves problems that don’t exist, it also ignores problems that do exist. The Washington Post had an item yesterday on the wealth gap.
The wealthiest 1 percent of American households own 40 percent of the country’s wealth, according to a new paper by economist Edward N. Wolff. That share is higher than it has been at any point since at least 1962, according to Wolff’s data, which comes from the federal Survey of Consumer Finances.
From 2013, the share of wealth owned by the 1 percent shot up by nearly three percentage points. Wealth owned by the bottom 90 percent, meanwhile, fell over the same period. Today, the top 1 percent of households own more wealth than the bottom 90 percent combined.
Those are, to be sure, dramatic findings. But they arrive at a time when Congress’ Republican majority appears determined to make this problem vastly worse.
“The [Republicans’ tax plan] is investing heavily in the wealthy and their children — by boosting the value of their stock portfolios, creating new loopholes for them to avoid tax on their labor income, and cutting taxes on massive inheritances,” Lily Batchelder, a New York University professor who worked as an economist under President Barack Obama, told Vox the other day. “At the same time, it leaves low- and middle-income workers with even fewer resources to invest in their children, and increases the number of Americans without health insurance.”
William Gale, co-director of the Tax Policy Center who served as a senior economist under President George H.W. Bush, added, “It exacerbates preexisting and longstanding trends, rather than aiming to partially compensate for them.”
Indeed, for all the rhetoric about benefiting the middle class, the GOP blueprint not only favored the wealthiest from the outset, it grew increasingly regressive as the legislative process continued to unfold.
Perhaps the most interesting sentence I’ve read during the tax debate was published by the New York Times last week, describing what we’d see when the Senate Republican plan is fully implemented: “By 2027, people making $40,000 to $50,000 would pay a combined $5.3 billion more in taxes, while the group earning $1 million or more would get a $5.8 billion cut, according to the Joint Committee on Taxation and the Congressional Budget Office.”
In other words, as a new Gilded Age emerges, Republicans believe the responsible thing to do would be to redistribute wealth to the top. It’s tempting to use a label the GOP is especially fond of: class warfare.