“That Makes Us Smart” — Trumpcare Only Makes Sense as a Tax Dodge For The Super Rich.
During one of the Presidential debates, Donald Trump famously defended being a billionaire who pays no taxes: “That makes me smart.”
In Donald Trump and the GOP, you have a group of people who are committed — I daresay, passionate — about moving around numbers on government documents with a single goal in mind — to help rich people pay the least taxes possible.
It’s important to look at their actions, especially the ACA repeal and AHCA replacement, through this primary prism. You’ll hear lots about the mystifying details of the bill — replacing working subsidies with block grants, replacing mandate penalties with 30% insurance company markups if you have a gap in coverage. But it’s all a lot of noise and smoke intended to obscure the fact that it places a tax cut for the super rich above everything else — covering patients, paying doctors, saving lives, and giving people more choices.
This 3.8% tax is levied right at the super-rich who can already maximize every tax break in the system, and who pay lower capital gains taxes on long term investments than working people do on their income. It’s the closest thing we have to a tax that tries to turn the massive power of wealth consolidation inherent in American capitalism into a benefit for the millions of working class people who are its engine.
Not surprisingly, Republicans have made this tax their Voldemort. They never speak its name, but their #1 goal is to destroy it.
Repealing these two taxes will save the richest 2% of taxpayers about 36 Billion dollars a year. The lion’s share, and I mean most of these savings, will go to those in the top .1%. The richest 1% of taxpayers will save, on average, $33,000 a year. The richest 400 households in America would save $7 million dollars a year each.
On top of that, tax experts speculate that repealing the ACA will make it easier for the rich to create shelters for the tax they do owe.
But that’s not all. You see, Trump and the GOP also have big personal and corporate tax cuts planned in the year ahead. And one of the problems with these tax cuts is there is a rule that tax cuts must be “revenue neutral” over a ten year period if they are to pass with only 50.1% of the vote in congress and avoid a Senate filibuster.
So, by repealing Obamacare first and reducing the number of people covered by Medicare, the GOP will lower the baseline of the amount of government revenue that they will be judged against by more that a trillion dollars. They are, essentially, moving the goalpost closer to “pay for” the giant tax cuts they want.
Let me repeat that: the point of kicking old and sick people off health insurance isn’t just to give the richest 400 American families a $7 million dollar a year tax cut. It’s to pave the way for a 10 year tax cut that will net the top 1% trillions more in lower taxes. Trillions.
That’s why the Trumpcare bill is structured so weirdly — keeping lots of Obamacare stuff that was supposedly a disaster in the short term — such as the Medicare expansion. The tax credits for health insurance are set up to be worth the most on Day 1 of the law, and then effectively get worse every day from there as a percentage of costs. The law won’t kick people off health insurance right away, but the system will be structured, essentially, to fail slowly — once someone makes enough money to get off the Medicare expansion, they’ll be off it for good, and many others will lose it as State Budgets gaps explode when block grants don’t cover the actual costs. So, the GOP will be able to project “savings” from people who lose their health insurance before they actually lose it.
Rest assured, even with all this maneuvering, they will still need to use a bunch of bullshit math to ram their tax cut through.
Another thing the GOP plans to do is use a one time tax holiday for companies that park their money overseas to get a huge one time bump in government revenue. In other words, they will say to companies like Apple, that have between 2 and 3 Trillion dollars invested overseas so it doesn’t get taxed — “Hey, we’ll give you one year to bring that money in at a 10% rate instead of 25% or 30%.” Hillary Clinton proposed a lower tax window (although at a higher rate), and suggested the receiptsbe used to fund a massive infrastructure campaign to create jobs. But Republicans will use that one-time payday to make their decade-long tax cut works. Cutting taxes on corporations so they can cut taxes on rich people? That’s the ultimate Republican win win.
Here’s the most important thing — we know that cutting taxes in this way does not stimulate the economy over the long term. The George W. Bush administration rammed through two huge tax cuts. Reagan rammed one through before that. In both cases, the federal deficits exploded and growth, over the long term, did not increase.
The government, lead by Donald Trump and the GOP congress, is about to embark on a series of legislative moves that seem disconnected, but have a single goal in mind — the one Donald Trump privately gushed about a week after he won: getting taxes down for the super rich.
And the thing is, that wasn’t an issue that was ever talked about during the campaign. It’s not what anybody voted for, except maybe for the richest of the rich. When did this revolt against the elites turn into a billionaire welfare program?
Will the American people fall for the bait-and-switch? In 20 years, will we look back and say, “Wow. We went through the most contentious election in history only to be dragged through a series of budgetary backflips that bankrupted medicare and social security and allowed our infrastructure to decay… just so we could make super rich people 10% richer? How could the GOP do that? Are they nuts?”
And they’ll answer, “No. That makes us smart.”