Exactly two years ago yesterday, Donald Trump put his signature on his most significant legislative accomplishment, making the Republican Party’s massive package of tax breaks law. At the time, the president and his party had high hopes for their creation and made bold promises about its effects.
Those assurances, we now know, were unwise. As regular readers know, none of what Republicans said about their tax cuts came true. The plan isn’t paying for itself; it’s not boosting economic growth; it didn’t fuel private-sector hiring; it didn’t help GOP candidates in the 2018 midterms; and it wasn’t the biggest tax cut of all time.
Meanwhile, progressive critics of the Republican plan said the corporate beneficiaries of the tax breaks would use their windfalls on priorities such as stock buybacks. That, among other Democratic predictions, turned out to be right.
It’s against this backdrop that the Washington Post’s Catherine Rampell welcomed the GOP plan into its “terrible twos,” noting that the toddler’s parents seem unconcerned that it is “way behind on nearly all its developmental milestones.”
Like most starry-eyed parents, the progenitors of this policy believe it can do no wrong. In fact, they’re keen on giving it a baby sibling soon: Trump’s economic advisers have floated yet more plutocratic tax cuts, with various proposals to slash capital gains and corporate income taxes. Trump’s co-partisans on Capitol Hill say they’re ready to help.
The Trump tax cuts may be failing to deliver on key promises. But on at least one developmental milestone – the terribleness of those “terrible twos” – this toddler has proved precocious.
Rampell’s point about the tax plan’s possible “sibling” is of particular interest, because it was just two weeks ago when acting White House Chief of Staff Mick Mulvaney said another corporate tax break is a top priority for Trump if Americans reward him with a second term.
It was, to my mind, a subtle concession that the first corporate tax break didn’t work – if the original delivered on its lofty goals, there wouldn’t be a need for a sequel – and an unfortunate pitch in light of the latest revelations about the real-world effects of the existing policy.
Indeed, it was just a couple of weeks ago when the Institute on Taxation and Economic Policy released the results of a detailed study that found of the Fortune 500 companies, about 400 paid an average tax rate of about 11% – roughly half of the current rate of 21% – thanks to a series of loopholes and giveaways Republicans made no effort to address.
Plenty of corporate giants didn’t pay any federal taxes last year at all.
Team Trump looks at results like these and concludes not only that the United States needs yet another corporate tax cut, but also that Trump and his agenda have transformed the Republican Party from “the wine and cheese party” to the “beer and blue jeans party.”
It’s like living in a Lewis Carroll story.