Tax reform is on track and Democrats want to derail it. Don’t believe these myths about the Senate’s bill
Democrats are desperate to derail long-overdue tax relief that is heading to the Senate floor for a vote this week – even if by doing so they take money from the pockets of their own constituents.
There are no good arguments against allowing hardworking Americans to keep more of their money. But that hasn’t stopped Democrats, who are intent on denying President Trump a victory at any cost – including lying about the Senate tax bill’s impact in an attempt to block its passage.
This deceit was on full display at a CNN Town Hall debate this week, where career politicians Sens. Bernie Sanders of Vermont and Maria Cantwell of Washington state leaned on shopworn Democratic talking points as the basis for the their opposition to the tax bill. These include the following five myths that have been making the rounds among Democrats and their media allies.
MYTH 1: The tax bill is a tax increase on the middle class.
Cantwell: “Raising taxes on the middle class is wrong, and that’s what this bill does.”
Recognizing the popularity of a middle-class tax cut, Democrats are trying to use the Bizarro-world argument that the tax cut bill is actually a tax increase. They cite a Tax Policy Center report claiming the bill would raise taxes on 87 million middle-class families.
What the Democrats don’t mention is that the Tax Policy Center is a project of the left-wing Brookings Institution and Urban Institute, funded by donors like George Soros who want to disrupt President Trump’s agenda by any means necessary.
The Tax Policy Center can only arrive at this eyebrow-raising conclusion by making the unrealistic assumption that the tax cuts would expire after 10 years.
In reality, the tax bill would provide significant relief for the middle class by doing the following: doubling the income threshold under which families pay no taxes at all to $24,000; doubling the child tax credit to $2,000; and eliminating the 15 percent tax rate in favor of an expanded 12 percent rate, among other provisions.
The above changes would save ordinary families thousands of dollars a year.
MYTH 2: The majority of the tax bill’s benefits go to the top 1 percent of earners.
Sen. Sanders: “60 percent of the tax benefits in the Republican plan would go to the top 1 percent.”
Democrats are trying to distract from the bill’s middle-class tax relief by claiming most of the benefits go to the super-rich. But in reality, the bill is targeted at the middle class.
In addition to the middle-class provisions mentioned above, consider the bill’s relief for Main Street small businesses. The bill offers a 20 percent small business tax deduction for all small businesses earning less than $500,000 a year.
This 20 percent tax deduction would allow small business owners to keep more of their earnings, helping them to compete with their big business and international competitors – as well as hire more employees, raise wages and expand.
According to the Tax Foundation, 97 percent of small businesses earn less than this $500,000 threshold, meaning the overwhelming majority of small businesses would see relief from this provision.
But who would see little-to-no relief from it? The top 1 percent, with annual incomes of roughly $500,000 and higher.
Given this clear middle-class relief, how do Democrats back up their 1 percent claim? By pointing to the tax bill’s provision to bring the corporate tax rate in line with international standards.
However, survey and economic
Even higher dividend payouts benefit the middle class, because the majority of corporate stock is owned by retirement plans, including IRAs, 401ks and government pension plans that help ordinary Americans save.
MYTH 3: The tax bill will grow deficit by $1.4 trillion.
Sen. Sanders: “This legislation will grow the deficit by $1.4 trillion. Mark my words.”
Democrats are suddenly pretending to care about the nation’s fiscal state by pointing to the tax bill’s $1.4 trillion of lost revenues on a static basis over 10 years. What isn’t said is that this is only a 3 percent drop from the $43 trillion Congressional Budget Office (CBO) revenue projection over this timeframe.
But in the real world – outside of simplistic Excel spreadsheets – people respond to incentives. With more money in their pockets and in their communities, consumers, businesses and investors will spend more, creating economic growth that will more than pay for the $1.4 trillion in lost revenues.
According to the CBO, every 0.1 percent increase in the gross domestic product adds over $250 billion in revenue over 10 years. This means that even returning to 2.5 percent economic growth – still well below the U.S. historical average – would more than pay for the tax cut.
MYTH 4: The tax bill won’t create economic growth.
Sen. Cantwell: “No, I don’t think (the tax bill) will grow (the economy).”
Given the dynamic effects on tax revenue from even minor economic growth, Democrats are at pains to deny the growth created by tax cuts. They cite left-wing economists to make their case – but historical evidence and commonsense undermine it.
The tax cuts enacted under Presidents Coolidge, Kennedy and Reagan, among others, all generated several years of supercharged economic growth. The principle is simple: More money in the wealth-creating hands of the private economy – and less in the wealth-destroying hands of government – creates economic growth.
Some 100 economists wrote an open letter to Congress with the following message: “Economic growth will accelerate if the Tax Cuts and Jobs Act passes, leading to more jobs, higher wages, and a better standard of living for the American people.”
MYTH 5: The tax bill will cause 13 million people to lose health insurance.
Sen. Sanders: “This bill… will result in 13 million people losing their health insurance.”
Given this scare tactic worked so well to kill health-care reform, Democrats are trotting it out in an attempt to do the same to tax reform. But the facts are very different this time around.
Far from kicking people off health insurance as Democrats imply, the tax bill would simply eliminate the health-care tax on those who choose not to purchase health insurance. This tax is borne mostly by working- and middle-class Americans: Nearly 80 percent earn $50,000 a year or less. In fact, this provision would reduce the middle-class tax burden even further.
The tax-cut bill currently before the Senate offers ordinary Americans the best opportunity for tax relief in a generation. But Democrats are putting their narrow political interests ahead of what’s good for the country and lying to try to sink it. Their agenda should be exposed.
Alfredo Ortiz is President and CEO of the Job Creators Network, a non-partisan organization founded by entrepreneurs.