Idea at the heart of GOP tax plan: ‘Trickle down’ economics
WASHINGTON (AP) — The House Republicans’ tax-cut plan springs from a core argument: What’s good for big business and the moneyed elite is inevitably good for the economy and everyone else.
Their plan would slash corporate tax rates, end inheritance taxes for the ultra-rich and create new tax advantages for business owners. To help pay for some of those breaks, the plan would end tax deductions for college loans, high medical bills, moving costs and state and local income taxes.
It would also add $1.4 trillion to the national debt over 10 years.
Taken as a whole, the tax plan would drastically lighten the burden on the powerful groups that Republican leaders say would strengthen the economy while eliminating some benefits for the middle class they’ve called their top priority.
Some new benefits for ordinary households — like a family credit — would expire in five years. And some existing benefits would erode with inflation.
But the Trump administration and Republican lawmakers argue that the goodies they would bestow on corporations and the wealthy would, in the political parlance of the 1980s, inevitably “trickle down” to everyone else.
Analyses from the White House contend that cutting the tax rates that corporations pay would ultimately result in $4,000 in additional income annually for the average U.S. household. It’s a claim that many mainstream economists have disputed as improbable. And it’s provided Democratic lawmakers with a rhetorical line of attack against the tax cuts: They’re fundamentally unfair.
On Monday, as the House Ways and Means Committee worked its way through the bill, Rep. Suzan DelBene stressed what she described as the inequality at the heart of the bill.
“If a worker in my district had to move because his employer is forcing him to relocate his family or potentially lose his job, can he deduct his moving expenses under this plan?” asked DelBene, a Washington state Democrat.
No, she was told by Thomas Barthold, chief of staff for Congress’ Joint Committee on Taxation.