We fully support tax reform that helps the middle class succeed, promotes economic growth, simplifies our tax code, increases fairness, and reduces special interest loopholes. Regrettably, the current proposal the Republican leadership in Congress has presented completely fails to meet these goals.
Instead, the GOP tax plan would provide a huge giveaway for the wealthy and for large corporations while dramatically increasing the federal deficit. Ultimately, the middle class will get stuck with the bill for this tax plan in the form of cuts to programs like Medicare, or higher taxes in the future — a deficit tax. This will hurt families in Michigan and around the country.
You don’t have to take our word for it. A recent analysis by the nonpartisan Tax Policy Center (TPC) shows the “framework” for tax legislation put forward by congressional Republicans would raise our deficit by $2.4 trillion over the next decade. Taxpayers in the top 1 percent (with incomes over $730,000) would receive 80 percent of the total tax cut by 2027 under the GOP tax plan. And the very wealthiest taxpayers, the top 10th of 1 percent, would individually receive a $1 million tax break under the Republican plan. At the same time, the GOP plan would force many middle-income Americans to pay higher taxes, with nearly 30 percent paying an extra $1,290 in taxes in 2027, according to the TPC analysis.
At a time when there is increasing concern about growing levels of inequality in our nation, the GOP tax proposal would only further that divide. Core provisions of the Republican tax plan, including eliminating the tax on multi-million dollar estates, cutting the top income tax rate now only paid by the top 1 percent of households, and providing a lower top rate for “pass-through” business income, would all provide huge tax giveaways to the wealthy.
This tax plan follows recent GOP efforts to repeal the Affordable Care Act. House Republicans supported a bill that repealed health insurance assistance for moderate-income families, in order to cut taxes for wealthy individuals and corporations. Two of the largest tax breaks in that bill would not have provided a single penny of tax relief to couples earning less than $250,000 a year, while households earning more than $1 million would have received an average tax cut of more than $50,000.
We believe tax reform must focus on helping the middle class and those struggling to get into it by making work pay through expanding the Earned Income Tax Credit, by increasing assistance for families raising children, by making post-secondary education more affordable, and by promoting saving for the future. At the same time, we should close loopholes that allow the very wealthy and well connected to avoid paying their fair share, including ending the current carried interest provision that allows millionaire investment-fund managers to avoid paying regular income taxes on their earnings.
We stand ready to work with our Republican colleagues to pass a fiscally responsible tax reform plan that works towards these goals of strengthening the middle class. But they have made no real effort to include us in their discussions, and their initial proposals mirror the same trickle-down policies that have failed in the past. There is still time to work on tax reform in a bipartisan way that focuses on building the middle class, rather than just the bank accounts of the wealthiest among us.
The authors, all Democrats, represent Michigan in the U.S. House of Representatives.