TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, April 5, 2018

Buchanan: What Will Republicans Do When Their Tax Cuts Fail?

NewsweekNewsweek:  What Will Republicans Do When Their Tax Cuts Fail?, by Neil H. Buchanan (George Washington):

The Republicans passed their regressive tax bill last year in the face of widespread public opposition, with defections by House members from suburban districts and a rushed legislative process that made a mockery of the idea of deliberative government.  Even so, they managed to deliver all of their votes in the Senate, including the self-styled deficit hawks who made a big show of concern before caving to party orthodoxy.

And despite their most fervent wishes and a brief blip in the polls, the new tax law is still not popular.  As I described in companion columns on Verdict and Dorf on Law last week, the public has very good reasons for hating a law that was very clearly designed to worsen already historic levels of inequality.  To their credit, people are not being bought off with a few extra dollars in take-home pay.

In spite of this, will Republicans convince themselves to try to pass another round of tax cuts? And if they do, how will they justify further cuts when the current round of cuts fails?

Republicans certainly face an uphill climb.  Although there was initially a flurry of news reports about businesses tying the tax bill to announcements of bonuses and wage increases that were almost certainly going to happen in any case, enough time has passed that we are now able to see that the law is doing exactly what liberals said it would do: make the rich richer and the rest of us less secure.

Paul Krugman summarized the unfortunate reality that businesses are using their tax cuts to make their owners richer, not to invest in new equipment or engage in activity to make the economy stronger.  He even noted the possibility that the bill could, for reasons grounded in mainstream economic theory but that are nonetheless quite counter-intuitive even to economists, decrease rather than increase workers' pay.  To his credit, Krugman does not trumpet that possibility by shouting that "tax cuts will decrease wages," saying instead that it is unclear what will happen but we should be aware of all possibilities. ...

[T]he larger point is that Republicans need to be working on some excuses to roll out when their tax cuts are revealed to have failed.  The party is absolutely certain that taxes are bad and tax cuts are good, so they will surely be motivated to find something, anything to explain it all away.

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Comments

The Republican tax cut cram-down is playing out just like the Obamacare cram-down. Most recently with Democrats promising to repeal it if we elect them. Then Democrats will fail to repeal it because they can't agree on anything better.

Posted by: AMTbuff | Apr 5, 2018 6:41:18 AM

"The Republicans passed their regressive tax bill last year in the face of widespread public opposition..."

By the strict fiscal definition, this was not a regressive tax bill. The standard deduction was doubled, which has the most effect on those households making the least amount of money.

And capping certain deductions affect high income earners, who have large mortgages and pay hefty state income taxes.

And widespread public opposition can be 50% in any survey. Whoop-dee-doo, survey respondents aren't the same as voters.

Posted by: MM | Apr 5, 2018 7:33:02 PM

What, pray, might "revealed to have failed" possibly mean?

If you are a Republican politician with responsibility for this dog's breakfast of a tax bill, you have already declared it a major success. Therefore, it IS a major success.

Criticisms alleging otherwise will be dismissed as hopelessly misinformed, partisan in nature or ill-disguised, sinister pleas for continued funding of the deep state to the detriment of "real Americans" (wink, whistle).

Posted by: John | Apr 6, 2018 2:41:22 AM