The Orwellian doublethink of GOP tax "reform"

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BY DANTE DALLAVALLE | DECEMBER 3, 2017

The Senate narrowly pushed through the GOP’s tax bill early Saturday morning, passing one of the most sweeping overhauls of the US tax code in favor of cuts for the wealthy and corporations in decades.

But let’s take a step back and look at the US Treasury’s website, where there’s a document that’s worthy of the attention of anyone who is concerned about the future of the US. It’s the press release that outlines the goals of the new Republican-sponsored tax “reform.” I put “reform” in quotations, because the word usually implies change associated with improvement in quality or amending something for the better. Yet, like with most of the rhetoric that characterizes this administration’s agenda, George Orwell’s concept of “doublethink” is particularly appropriate. (Listen to our LEFT OUT podcast on Orwellian doublethink with Michael Hudson).

That’s because the steps it would take would harm rather than help ordinary Americans. Admittedly, the name of the proposed bill, the “Unified Framework for Fixing Our Broken Tax Code,” is an upgrade from the more accurate, yet shameless, title put forward by the president himself: the “Cut Cut Cut Act.” Regardless of the name, it’s the content that evinces a clear trajectory of deepened inequality and more special privileges for a small, wealthy elite at the expense of working and middle-class Americans.

The four stated principles of the bill from the Press Release seem noble enough: make the tax code simple and fair; boost income for families; create and bring jobs back to the US with an attractive corporate rate; and repatriate money held offshore by corporations and the wealthy. There’s an emphasis on the middle-class and small businesses that evokes the campaign trail speeches that ultimately helped elect the current president. The aim, as the press release clearly states, is to not, “…shift the tax burden from high-income to lower-and middle-income taxpayers.”

A cursory analysis reveals the stark contradictions in the language surrounding the proposal and the actual effects it would have if a final bill gets to the President's desk and is signed into law. Josh Bivens of the Economic Policy Institute provides a breakdown of the bill. To begin, the administration’s Council of Economic Advisors declare that the reduction of the corporate rate from its nominal 35% currently to 20% would increase average household earnings by $4,000 annually. Yet, if history is any guide, it’s clear that periods of higher corporate rates have benefitted boosts in both productivity and wage growth. There’s little to no evidence that post-tax profit rates correspond to increases in the average worker’s standard of living. In fact, since the ‘70s, growth in productivity has grown 5.9 times more than wages. Also, the idea that the administration and their tax cuts will somehow reverse the historic, structural trends in the economy due to globalization is feeble and the stuff of fairy tales.

The implications for the state of New Jersey, for example, are particularly worrying. Jon Whiten of New Jersey Policy Perspective finds that the senate’s version of the tax plan would raise taxes for middle-and low-income families while cutting taxes for wealthier people and corporations. The top 1%, defined as households with income over $1.4 million, would see an average of $8570 of reduced tax receipts. The bottom 60%, or those with incomes under $111 thousand, would have an average tax hike of $120. Under the senate’s bill, 29% of NJ households’ taxes would increase.

Snuck into the bill is a proposed repeal of the Affordable Care Act’s individual mandate. If this were to occur, it would mean 340,000 people uninsured by 2027 in NJ alone. For the nation as a whole, this number would be 13 million. For those still receiving insurance, they will experience increased premiums.

For a party that popularized slogans like “spending within your means” and prides itself on “fiscal responsibility,” Republicans willfully ignore the $1.5 trillion increase to the federal deficit the plan would cost over a decade. This surely will be followed by more spending cuts on social programs that will already be compromised by the lack of revenue resultant from this very tax plan.

And to pay for these massive tax cuts for the wealthy, eliminations of some of the most vital deductions for working people are on the chopping block. State and local tax deductionsa feature of the tax code that disproportionately affects working-and-middle-class familieswill be removed. In New Jersey, approximately half of families that deduct property taxes each year make under $100,000. Union members will be unable to deduct their dues and school teachers will no longer be able to deduct costs of supplies. Perhaps most distressing, the bill calls for tuition waivers that many low-income graduate students rely on when going to graduate school to be taxed as income. This, mind you, is money that they never actually receive, but that defrays the (extremely expensive) costs of a higher education. This will further deepen inequality by making college less affordable for low-income people and diminishing opportunities for upward mobility.

The winners of the tax bill are clear. We need tax reform that prioritizes the majority of us, not just a wealthy few. Yet as long as those in power are beholden to those wealthy few, the outlook is dim. 

— With editing by Paul Sliker


Dante Dallavalle is a d@w contributor, the co-host of LEFT OUT, and a graduate student in Economics at John Jay College of Criminal Justice. Follow him on Twitter: @Drax138

Paul Sliker is an editor and commentator at d@w, the co-host of LEFT OUT, and a member of the Coordinating Committee at Democracy at Work - New York (d@w-NYC). Follow him on Twitter: @psliker

LEFT OUT, a podcast produced by Paul Sliker, Dante Dallavalle and Michael Palmieri, creates in-depth conversations with the most interesting political thinkers, heterodox economists, and organizers on the left. Listen to their most recent episode, with Professor David Harvey.


Showing 1 comment

  • commented 2017-12-03 22:44:55 -0500
    Hopefully the Republicans hopeless disingenuousness will be clear to everyone by this. Democratics, Green Party supporters, Independents, and all those who can organize for economic democracy – have to create a viable and accessible action plan that people can easily see would enable society advance.
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