This holiday season, President Trump has promised to “give our country the best Christmas present of all — massive tax relief.” But in this case, “our country” mostly means “rich people.” When the Republican tax cut takes full effect, more than 80 percent of the benefits will go to households in the top 1 percent of the income distribution. Merry Christmas!
The heart of the bill is a massive cut in corporate taxes financed by more than a trillion dollars in new federal debt. When some loophole-closing threatened to produce tax increases for some top earners (along with a great many middle-class households), Republicans added another significant tax break for the very wealthy: a cut in the top tax rate from 39.6 percent to 37 percent.
[interstitial_link url=”https://www.washingtonpost.com/news/monkey-cage/wp/2017/12/20/the-republican-tax-bill-will-probably-make-rich-people-greedier-heres-why/”]The Republican tax bill will probably make rich people greedier. This is why.[/interstitial_link]
Republicans’ efforts to tilt the tax code in favor of the rich are nothing new, despite the party’s “middle-class rhetoric.” Over the past generation, households in the top 1 percent have paid almost 4 percent less of their income in federal taxes under Republican presidents than they have under Democrats. The rest of the richest 10 percent have also paid less under Republicans.
In stark contrast, households in the bottom 40 percent of the income distribution have faced higher tax burdens under Republican presidents, while middle- and upper-middle-class households have fared similarly under Republicans and Democrats.
Although the regressive Bush tax cut of 2001 enjoyed substantial public support — reflecting what I have called “unenlightened self-interest” on the part of inattentive citizens — the Trump tax cut is so bad that even inattentive citizens have mostly caught on. In fact, the bill is historically unpopular. Among major legislative efforts of the past quarter-century, only last spring’s abortive attempt to repeal Obamacare has polled worse.
[interstitial_link url=”https://www.washingtonpost.com/news/monkey-cage/wp/2017/12/19/americans-have-different-ideas-about-what-makes-taxes-fair-but-the-gop-bill-has-something-that-all-sides-oppose/”]The GOP tax bill has something all sides oppose — no matter what they think counts as ‘fair.'[/interstitial_link]
That fact has political observers scrambling to explain why Republicans are “amazingly … putting all their energy behind passing an unpopular tax bill.” “What gives?” As Ezra Klein of Vox wrote, “Politicians are meant to have an instinct for self-preservation, a sense of the public will, a fear of electoral consequences.”
But “fear of electoral consequences” seldom accounts for much of what happens in Washington. Just think of the federal minimum wage, which has declined in value over the past half-century despite strong, consistent public support for raising it.
That is by no means an isolated instance. Martin Gilens’s analysis of hundreds of issues over more than two decades found that the preferences of ordinary Americans had little or no impact on policy. “Influence over actual policy outcomes,” Gilens wrote, “appears to be reserved almost exclusively for those at the top of the income distribution.”
The two most powerful forces in contemporary Washington are the partisan ideological convictions of governing elites and the interests of the wealthy. The importance of party and ideology is clear from congressional voting patterns, which reveal vast differences in the policy choices of Republicans and Democrats even when they represent similar moderate constituencies. And while representatives from moderate districts tend to have less extreme records than their colleagues from more extreme districts, that difference is modest — and closer examination shows that it is mostly attributable to the influence of affluent constituents, not middle-class or poor people.
Wealthy interests moderate the liberal convictions of Democrats too. For example, in responding to the Great Recession, President Barack Obama and his congressional allies legislated stimulus spending, health-care reform and financial regulation, all of which benefited ordinary Americans — but they did it with considerable solicitude for health insurers and Wall Street bankers and even Republican deficit hawks (remember them?).
With Republicans now in control of the White House and Congress, partisan ideological convictions and the interests of the wealthy mostly reinforce each other. Some Republicans have been remarkably candid about the political forces impelling them to produce tax cuts for the wealthy. Rep. Chris Collins (N.Y.) told a reporter, “My donors are basically saying, ‘Get it done or don’t ever call me again.’ ” Sen. Lindsey O. Graham (S.C.) fretted that failure to pass a bill “will be the end of us as a party.”
The attempt by Sen. Bob Corker (Tenn.) to explain his 11th-hour abandonment of fiscal rectitude sheds unintentional light on another significant mechanism of unequal influence — the affluent world in which elected officials spend most of their time. Corker decided to support the bill “after many conversations over the past several days with individuals from both sides of the aisle across Tennessee and around the country — including business owners, farmers, chambers of commerce and economic development leaders.”
If Corker’s listening tour had included fewer business owners and economic development leaders and more nurses and autoworkers, he might have learned that Tennesseans overwhelmingly prioritize personal tax cuts over the GOP’s focus on corporate tax cuts. Of course, many elected officials are just as affluent as their affluent constituents. Corker’s wealth exceeds $50 million, and he has spent the past few days denying any role in a last-minute change to the bill that will benefit his own real estate holdings.
Republicans may believe that, despite the dismal poll numbers, their support for the tax cut will not significantly hurt them in future elections. They may be right. The argument that tax cuts stimulate economic growth could have substantial public appeal. A 2012 survey found 65 percent of the public favoring “cutting taxes on individuals and businesses to stimulate economic growth.” And by a 52 to 26 percent margin, the majority agreed that “business people would create more jobs if their profits were taxed at a lower rate.” Not surprisingly, those views were more strongly held by Republican voters — the ones whose views are most salient to Republican officials.
That’s not to say that there will be no electoral blowback. That’s where ideological conviction comes in. Most Democrats in Congress voted for Obamacare, despite knowing that it would cost some of them their jobs, because they thought it was good for the country. While Republicans in Congress may dislike some elements of the tax bill, most probably view it as good public policy, all things considered. As Corker put it:
I had concerns about deficits, but I also wanted pro-growth tax reform. … I just felt like this was a once-in-a-generation opportunity and if I looked at myself as the deciding vote, did I feel like our country was better having it in place or not better having it in place?
For those who want a government responsive to the preferences of ordinary Americans, the real “affront” is not that Republicans are forging ahead with their tax bill despite substantial public opposition. It is that the ordinary workings of American politics should make that fact utterly unsurprising.
Vox’s Ezra Klein described the assertion that elections do not produce responsive government as “the political science equivalent of being told Santa doesn’t exist.” Yes, Ezra, there is no Santa Claus. Not in Washington, anyway.
Larry M. Bartels holds the May Werthan Shayne Chair of Public Policy and Social Science at Vanderbilt University. He is the author of “Unequal Democracy: The Political Economy of the New Gilded Age” and co-author (with Christopher H. Achen) of “Democracy for Realists: Why Elections Do Not Produce Responsive Government.”