Schumer’s ‘Compromise’: No Tax Cuts
Senate Democrats save negotiating time by ruling out everything not on their agenda.
Captaion: Senate Minority Leader Democrat Chuck Schumer holding a copy of a letter he sent to Republican leaders on Tuesday.
By James Freeman Aug. 1, 2017 4:53 p.m. ET
“After Health Care Victory, Senate Democrats Seek Compromise on Tax Plan,” announces a New York Times headline today. Doesn’t that sound refreshing? Especially after the unanimous refusal of Democrats to support any of the three Senate bills considered last week to address the failure of ObamaCare, it would certainly be a welcome change to see a bipartisan approach to boosting economic growth. But the Times allows in paragraph six that “bipartisanship will not come easy,” which turns out to be more accurate than the headline.
To their credit, Senate Democrats have generously decided to save everyone’s time by ruling out anything that deviates from their agenda of raising more government revenue and maintaining high marginal tax rates. In a six-paragraph note on “tax reform” signed by 45 of the Senate’s 48 Democrats, the pols don’t propose any particular measures to simplify or cut anyone’s taxes. But the signers, who include Minority Leader Chuck Schumer and Finance Committee Ranking Member Ron Wyden, make clear who should definitely not get a tax cut. The Democrats endorse an ill-advised comment by Treasury Secretary Steven Mnuchin —which he later walked back—that there would be ”no absolute tax cut for the upper class.”
Depending on how one defines “upper class,” this could rule out relief for Americans paying nearly all of the country’s federal individual income taxes. In February the Tax Foundation highlighted IRS data showing that the top one percent of income earners pay more than 39% of income taxes, and the top 5% pay nearly 60%. The government has become so efficient at soaking the one percent—even as Democrats have become expert in stoking hatred against this hard-working group—that even a die-hard Sandernista would have to be impressed. The Tax Foundation explains:
In 2014, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $543 billion, or 39.48 percent of all income taxes, while the bottom 90 percent paid $400 billion, or 29.12 percent of all income taxes.
You’d never know it from the standard harangues from Democrats about the rich paying their fair share, but the top quarter of income earners, which is perhaps a reasonable definition of the “upper class,” pay nearly 87% of federal income taxes. If the party’s most hysterical class warriors want to rule out relief for the top half of U.S. income earners, then they’re talking about the group paying more than 97% of income taxes. The bottom half of income earners are of course paying much less, but would surely welcome tax cuts just like people in higher brackets. They’re getting no assurances from Democrats. Today’s letter does vaguely call for “real relief for working families,” but elsewhere in the letter the Democrats signal that the status quo is acceptable when they write, “we believe that tax reform should not increase the tax burden on the middle class.”
Just in case Republicans hadn’t gotten the point that the signatories had no interest in tax relief, the Democratic lawmakers rejected any “deficit-financed tax cut,” suggested no willingness to accept spending cuts to offset such a cut and added that “tax reform should be focused on providing a revenue base.”
With the legislative calendar slipping away, Republicans should appreciate the favor they’ve just been done. As they draft a plan to boost economic growth and provide taxpayer relief, GOP lawmakers now know that the three Democrats who didn’t sign today’s letter—coincidentally all up for re-election in states Donald Trump won in 2016—are the only ones interested in negotiating. From the Wall Street Journal
