The tax bill the GOP is trying to foist on the country is not only an unfair and deficit-bloating hodgepodge written on the fly. It is also deeply corrupt. No matter how much they wring their hands ahead of time, all Republicans who vote for this bill will be joining their party’s festival of corruption.
Corruption is not a word to be used lightly, so let’s discipline its invocation by accepting the Merriam-Webster dictionary’s first two definitions: “dishonest or illegal behavior especially by powerful people” and “inducement to wrong by improper or unlawful means.”
We can stipulate that the tax bill is not illegal. But it is a dishonest power and money grab by – and on behalf of – the already powerful. And as for “inducements,” well there are those long-term investments of tens of millions of dollars in campaign contributions by wealthy individuals and regiments of interest groups. They will have a very merry holiday season if the bill passes.
This is the kind of legislation that proves Washington is, indeed, the “swamp” President Donald Trump described during the campaign. The problem is that he and his colleagues have not only jumped right in; they have polluted it further.
A prime example of this subtle corruption is how the “compromise” bill deals with the radical scaling back of the deduction for state and local taxes. Gutting what is known as the SALT tax break sets back the common good because doing so penalizes states that (a) have progressive income taxes, and (b) have somewhat larger governments and thus tend to invest more in education, infrastructure and programs for the needy. While California, New York and New Jersey are hit especially hard, many other states are hurt, too.
But instead of restoring all or most of the lost deduction, Republicans offered a fig leaf compromise. Originally, the Senate bill reduced the amount that could be deducted to $10,000 and restricted it to property taxes. The new version keeps the cap and allows the deduction to be used for sales and income taxes as well.
For most taxpayers who use the existing deduction, this doesn’t solve their problem. Estimates from the Institute on Taxation and Economic Policy found that 1.92 million Californians would still see their taxes rise under the new provision, only a modest drop from the 2.36 million who would have had a tax increase under the earlier version. Any California representative who votes for this bill is voting against the interests of the state.
Ah, but the Republicans did want to respond to very rich New Yorkers and Californians who were howling about their lost SALT deductions to their usual GOP benefactors, including Trump.
So rather than offer broad general relief, the Republicans sliced the top income tax rate from the current 39.6 percent to 37 percent. Rep. Kevin Brady, R-Texas, the House Ways and Means Committee chairman, could not really explain why only the best off got real help, arguing lamely that middle-income people got other benefits from the bill.
This is one of many instances in which applying the seasonal idea of a special-interest Christmas tree to this bill is appropriate. It gives lawyers at big firms all sorts of paths to lower taxes, but not much to the people who clean their offices. Soon, all Americans will demand the right to transform themselves into “pass-through” legal entities.
The bill’s champions claim that the big corporate tax cut will lead to massive new investment when, as former New York City Mayor Michael Bloomberg (no enemy of business) pointed out, corporations are already “sitting on a record amount of cash reserves: nearly $2.3 trillion.” Bloomberg added: “It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth.”
And imagine: The “Make America Great Again” crowd appears to have designed a corporate tax system that creates new incentives to “shift profits and operations overseas,” as former Obama administration economic adviser Gene Sperling argued in a careful analysis of the bill’s complex provisions. Trump probably doesn’t even know this.
The key to corruption is operating in the dark. This bill is a mess of opaque provisions that almost no one outside the ranks of tax lobbyists understands – because many of them were written or inspired by lobbyists themselves.
Needlessly rushing a massive special-interest tax bill through Congress is the antithesis of good government. This doesn’t seem to matter anymore, even to Republicans who built reputations as champions of clean government.
E.J. Dionne’s email address is firstname.lastname@example.org. Follow him on Twitter @EJDionne.