But as the Republicans construct their tax plan, there is a large and under-appreciated fact they would do well to keep in mind. Over the past decade or so, fewer and fewer Americans have been paying income taxes and still fewer have been paying a significant percentage of income in taxes. While we would opt for a perfect world in which everybody paid far less in taxes, our increasingly two-tiered tax system is undermining the political consensus for cutting taxes at all.
.. Even the barest of glances at tax data reveal a system that is steeply progressive. Tax revenue has been increasingly squeezed out of top earners. According to the most recent data, from 1999, the richest — with income above half a million dollars — constituted 0.5% of taxpayers but accounted for 28% of total tax revenue. Simply put, a tiny group of people (553,380) were responsible for more than one-quarter of the income tax take of $877 billion.
.. Who are these lucky duckies? They are the beneficiaries of tax policies that have expanded the personal exemption and standard deduction and targeted certain voter groups by introducing a welter of tax credits for things like child care and education. When these escape hatches are figured against income, the result is either a zero liability or a liability that represents a tiny percentage of income. The 1986 tax reform, for example, with its giant increase in the personal exemption and standard deduction, took six to seven million people off the tax rolls.
.. And as fewer and fewer people are responsible for paying more and more of all taxes, the constituency for tax cutting, much less for tax reform, is eroding. Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else. They are also that much more detached from recognizing the costs of government.
All of which suggests that the last thing the White House should do now is come up with more exemptions, deductions and credits that will shrink the tax-paying population even further.
What Has Mitt Romney Learned?
Romney’s rhetoric on China and immigration was a more restrained version of Trump’s nationalist pitch, and here and there he tried to imitate Franklin Roosevelt’s promise, updated crudely by Trump, to be a traitor to his successful class.
.. the defining pitch of the Romney campaign was the tone-deaf “you built that,” which valorized entrepreneurs and ignored ordinary workers; the defining policy blueprint was a tax reform proposal that offered little or nothing to the middle class; and the defining gaffe was the famous “47 percent” line, in which Romney succumbed, before an audience of Richie Riches, to the Ayn Randian temptation to write off struggling Americans as losers.
.. that failure lay the opportunity that Trump intuited — for a Republican candidate who would rhetorically reject and even run against the kind of corporation-first conservatism that Romney seemed to embody and embrace.
.. Trump has mostly turned his back on his own economic populism
The best of the current Republicans (the Paul Ryans, the Ben Sasses, the Mitt Romneys) have certain common features that should be appealing to the electorate. They seem to have the home life of the family man. They have the discipline and diligence of the organization kid. They have the looks of the pretty boy. Yet the public still rejects them, because the voters find their ideas even more unpleasant than Donald Trump’s odious personality.
.. But he could also perform a service by showing that he has learned something from watching Trumpism succeed where his own campaign failed — which would mean steering a different and more populist course than those NeverTrump Republicans who pine for a party of the purest libertarianism, and those OkayFineTrump Republicans who are happy now that Trump has given them their corporate tax cut.
.. Right now there is a small caucus in the Republican Party for a different way, for a conservatism that seeks to cure itself of Romney Disease by becoming genuinely pro-worker rather than waiting for a worse demagogue than Trump to come along.