Most Americans, notably those who reside in New Jersey, loathed the Republican tax reform package passed last December. They disliked it because it was cloaked in a passel of lies, recited by legislators who aren’t so much economic custodians as bait-and-switch vandals in the drivers’ seat of democracy.
The whoppers included predictions of massive wage increases, which didn’t happen – wages have been flat for the past year when you factor in inflation, and corporations used their massive tax breaks not to reward workers but by showering stockholders with a historic round of stock buybacks.
The GOP also claimed the tax package would be revenue-neutral, when it actually added $1.5 trillion to the deficit over a decade.
And its champions clucked sympathetically during President Trump’s melodramatic wail that the bill “is going to cost me a fortune,” even when they knew the top 1 percent of individual earners would get 80 percent of the legislation’s gains.
This tax cut was not so much an economic boost as it was a betrayal of the middle class, which is why it polls in the mid-30s.
So since that worked so splendidly, House Republicans, including Rep. Tom MacArthur, R-3rd Dist., figure it’s time to float another tax cut, because they believe their constituents have the collective attention span of a flea.
This so-called Tax Reform 2.0 bill makes all the cuts from the previous bill permanent – they were scheduled to expire in 2025. More pertinent here, the bill makes permanent the $10,000 cap on the state and local tax (SALT) deduction, the provision devised to screw the high-tax blue states while compensating for massive cuts in the corporate and high-end individual tax rates.
New Jersey has 1.2 million households whose 2016 income placed their SALT deduction above that $10K threshold – that’s nearly one in three households filing returns – and among those filers, the deduction average is $18,092.
That’s well over the $10,000 limit that the GOP and MacArthur are trying to lock in.
So many New Jerseyans are going to take a bath on tax day, and overall, the cap will cost NJ taxpayers $3.1 billion a year, according to a lawsuit our state filed against the IRS and the Trump Administration.
Never mind that this bill has no chance of getting 60 votes in the Senate. It defines a Trumpian mindset; it is a political Hail Mary, grounded in neither history nor reason, to get GOP donors engaged in time for the election.
Of course, the bill’s authors will sell the trickle-down fantasy that cutting taxes will increase revenue and won’t expand the deficit. Actually, the Joint Committee on Taxation says this proposal would cost $650 billion over the next 10 years. The Tax Policy Center concurs, and says the measure would add another $3.2 trillion to the debt in the decade after 2028.
“We have urgent problems facing working people in this country,” says Rep. Bill Pascrell, D-9th, who tried to prevent the GOP-dominated House Ways and Means Committee from advancing the bill last week. “But we are looking the other way to give Republican donors and corporate executives more breaks. Pretending this helps the working people of this country is an insult.”
It’s only an insult if voters take them seriously, voters who still believe that providing for the very rich will produce loaves and fishes for everyone. As it continues to guzzle red ink and tax the future for the political present, the party of Trump and MacArthur is flying close to the flame.
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