Republicans don’t care about budget deficits, and never did. They only pretend to care about deficits when one of two things is true: a Democrat is in the White House, and deficit rhetoric can be used to block his agenda, or they see an opportunity to slash social programs that help needy Americans, and can invoke deficits as an excuse. All of this has been obvious for years to anyone paying attention.
.. And it was also predictable that they would return to deficit posturing as soon as the deed was done, citing the red ink they themselves produced as a reason to cut social spending.
.. Hatch declared his support for the program, but insisted that “the reason CHIP’s having trouble is because we don’t have money anymore” — just before voting for a trillion-and-a-half-dollar tax cut that will deliver the bulk of its benefits to the richest few percent of the population.
He then went on to say, “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything.”
.. The House version of the big tax cut would eliminate the estate tax entirely; the Senate version would double the level of wealth exempted from the tax, to $22.4 million for a couple. How can this be justified if it’s supposedly hard to find money for children’s health care?
.. The important thing to realize, however, is that the hypocrisy and contempt for the public we’ve seen in the past few days is just the beginning.
.. offsetting those deficits will require going after the true big-ticket programs, namely Medicare and Social Security.
.. Republicans have given their donors what they wanted — and now they’re coming for your benefits.
Inheritance Tax: A hated tax but a fair one
surveys suggest that opposition to inheritance and estate taxes (one levied on heirs and the other on legacies) is even stronger among the poor than the rich.
.. Yet this trend towards trifling or zero estate taxes ought to give pause. Such levies pit two vital liberal principles against each other. One is that governments should leave people to dispose of their wealth as they see fit. The other is that a permanent, hereditary elite makes a society unhealthy and unfair. How to choose between them?
.. The positive argument for steep inheritance taxes is that they promote fairness and equality. Heirs have rarely done anything to deserve the money that comes their way. Liberals, from John Stuart Mill to Theodore Roosevelt, thought that needed correcting.
.. Annual flows of inheritance in France have tripled as a proportion of GDP since the 1950s. Half of Europe’s billionaires have inherited their wealth, and their number seems to be rising.
.. However, in 2017, it is not clear exactly how decisive a role inheritance plays in the entrenchment of the hereditary elite. Data from Britain suggest that people tend not to lose their parents before they reach the age of 50. In rich countries the advantages that wealthy parents pass to their offspring begin with the sorting mechanism of marriage, in which elites increasingly pair up with elites (see /react-text article react-text: 2518 ). They continue with the benefits of education, social capital and lavish gifts, not in the deeds to the ancestral pile.
.. The trusts they create as a result can last even longer than the three generations
.. If avoiding double taxation were a requirement of good policy, then governments would need to abolish sales taxes, which are paid out of taxed income.
.. However disliked they are, they are some of the least distorting. Unlike income taxes, they do not destroy the incentive to work—whereas research suggests that a single person who inherits an amount above $150,000 is four times more likely to leave the labour force than one who inherits less than $25,000.
Trump and Ryan Versus the Little People
First is the poster child family Paul Ryan keeps talking about, a family with two children making $59,000 a year. In the first year of the Cut Cut Cut Act, such a family would indeed receive a tax cut. But this cut comes from several special tax credits that are basically loss leaders to help sell the plan; they all either expire in later years or will get eroded by inflation. By 2027, with the plan fully phased in, that exemplary family would actually be facing a significant tax increase relative to current law.
.. it’s not just Wall Street stiffs who would find themselves in that situation: So would doctors, lawyers, engineers, and other well-paid professionals. Overall, the Tax Policy Center estimates that more than a quarter of the population would see taxes go up, not down, under the G.O.P. proposal; for those with incomes between $200,000 and $500,000, that fraction rises to more than 40 percent... Finally, let’s imagine a very lucky individual — let’s arbitrarily call him Eric Trump — who stands to inherit a stake in a business he doesn’t run, plus a bunch of stock. He’ll get his inheritance tax-free, because the estate tax gets phased out in the G.O.P. bill. He’ll get to pay a low tax rate on his business income. And his stocks will pay higher dividends, because the G.O.P. bill also sharply cuts corporate tax rates, and most of the benefit of those cuts will probably flow to shareholders... So when Gary Cohn, Trump’s top economic adviser, says that the bill’s goalis “to deliver middle-class tax cuts to the hard-working families in this country,” he’s claiming that up is down and black is white. This bill does little or nothing for the middle class, and even among the affluent it’s biased against those who work hard in favor of the idle rich... You might wonder how Republicans imagine that they can get away with this. But anyone who has paid attention to U.S. politics knows the answer.
- First, they will lie, unashamedly, about what their bill actually does.
- Second, they will try to distract working-class voters by stoking racial animosity.
Mnuchin Says Estate Tax Repeal Will Help ‘Rich People’ Most
Mr. Mnuchin said the estate tax should be eliminated for both philosophical and economic reasons. He said that many taxpayers give the government half their income during their lives and that they should not have to give away a big chunk when they die — even if their families are wealthy.
“Obviously, the estate tax, I will concede, disproportionately helps rich people,”
Mr. Mnuchin’s comments contrasted starkly with his boss, President Trump, who pilloried the estate tax in a speech in Indiana last month by saying it is a drag on the working class.
“To protect millions of small businesses and the American farmer, we are finally ending the crushing, the horrible, the unfair estate tax, or as it is often referred to, the death tax,” Mr. Trump said.
.. Couples can leave their heirs as much as $11 million, none of it taxed, meaning only a few thousand wealthy estates are subject to the tax a year.
.. Just 80 small farms and closely held businesses are expected to pay an estate tax in 2017, the center, a right-leaning think tank, projected.