By Alex Macmillan
On December 20th, 2017, the Republican Party delivered what Donald Trump referred to as a “big, beautiful tax cut” for the American people. Trump gathered the who’s who of the Republican-led Congress in the White House Rose Garden, and Speaker of the House Paul Ryan congratulated Trump, saying, “Something this big, something this generational, something this profound could not have been done without exquisite presidential leadership. Mr. President, thank you for getting us over the finish line, thank you for getting us where we are.”
The irony of congratulating a president who has failed to execute a coherent political program cannot be overstated; from his failure to push through a repeal of the Affordable Care Act, to his botched transgender military rule, the endless overturn of press secretaries and cabinet members, to his repeated failure to implement the Muslim travel ban, Trump’s inability to lead even the swamp creatures he’s surrounded himself with has been a monumental embarrassment both for the Republican Party, and for the American state’s prestige internationally.
Nonetheless, simply by passing the largest tax cut since the Reagan era, and redistributing $1.5 trillion to the top of the income bracket, Trump has earned his stripes as a leader of American capital, however fleeting these stripes may be.
Such praise from the same congressmen who have been working to distance themselves from the comb-over catastrophe in the White House illuminates the core values of the Republican party: step on the poor, lavish the rich. More than any other executive order or bill passed through congress in 2017, the Republican tax bill is the most devastating attack on the working class in decades.
The Center on Budget Policy and Priorities predicts that workers making less than $75,000 will see their taxes increase within the decade, while those making more than $3.4 million will see tax cuts up to $193,000 each year. Furthermore, the bill caps the state and local tax deduction (SALT) at $10,000, and reduces the mortgage interest deduction from $1 million to $750,000 while eliminating the deduction for home equity loans. Together, these changes will have a catastrophic effect both on homeowners and public education by driving down property values, and pinching a key source of revenue for schools.
While initial versions of the tax bill would have turned graduate school fellowships and tuition into taxable income and eliminate teachers’ school supplies deductions up to $250, public outcry and grad student mobilization ultimately prompted Republicans to remove these measures. This, however, does not mean that education will escape unharmed: the bill allows for parents to use up to $10,000 of their 529 college savings accounts towards private or religious schools while the reduction in SALT deductions means many school districts will be under increased funding pressure. (Property taxes are the main way schools get funding, so reducing the deductions means taxpayers will be hit harder, and less likely to agree to higher taxes to cover the losses). The effects could be devastating on public schools already under incredible stress.
If the impact on income, housing, and education wasn’t enough to bring working people to the edge of the abyss, the bill also included a repeal of the Affordable Care Act’s individual mandate, which required Americans to purchase insurance. This repeal could result in as many as 13 million people losing their healthcare by 2027.
Beyond these large-scope impacts, the tax bill also removes a host of small tax benefits many workers rely on, such as deductions for union dues, work clothes, work-related education, medical examinations required by an employer, and tools and supplies used at work. All tax cuts with the potential to benefit workers will be cancelled out by the elimination of such deductions.
Removing all of these provisions that tend to help workers prepared the ground for the real meat of the bill: tax breaks for the wealthiest individuals and corporations. The top tax rate for American companies will be reduced from 35% to 21%, and the bill proposes for American companies’ income abroad to not be taxed by the U.S. and instead by the country where the income originated. Trump’s claim that the bill will bring companies pouring back into the U.S. really means that the largest corporations will get richer no matter where their income originates. And the richest Americans who own many of these companies will now be able to pass inheritances of up to $5.49 million as individuals and $10.98 million as couples to their heirs tax free.
In short, the Republican tax bill is Robin Hood in reverse, with the wealthy stealing from the poor in perhaps the most sudden redistribution of wealth in the United States in decades. The top 1% of income earners will see 83% of the tax benefits, while many Americans will end up paying higher taxes by the end of the decade.
The Trump administration has boasted that the tax bill will be like jet fuel for the U.S. economy, while Senate Majority leader Mitch McConnell and other congressional leaders expect that the tax cuts will be revenue neutral due to the economic growth expected.
It’s worth noting that historically, tax cuts do not end up paying for themselves. The Joint Tax Committee predicts that only $400 billion of the $1.5 trillion in tax cuts will be recouped by economic growth, with the Washington Post reporting that even private research firms found similar results in their analyses. Reagan’s 1986 tax overhaul led to a massive deficit that was not balanced until the economic boom of the 90’s and Bill Clinton’s “ending welfare as we know it.”
With this in mind, the next step will likely be an all out assault on entitlement programs that benefit low-income Americans. There are already bills in both the House and Senate that will gut Medicaid, the Supplemental Nutrition Assistance Program (SNAP), Social Security, and Pell Grants which help low income families send their children to college. The likes of Orrin Hatch (R-UT) and Marco Rubio (R-FL) are already sounding the alarm of the deficit, placing the blame on these vital programs that benefit workers. Furthermore, the Democrats will be ill-suited to respond and put up a credible resistance to what’s coming. Since the Clinton administration, the Democrats have branded themselves as being the fiscally responsible party, and we must not forget that Senate Minority Leader Chuck Schumer (D-NY) was among the first to say that the top priority of 2017 would be tax reform.
With a ballooning deficit and only the most deluded ideologues believing that the $1.5 trillion handout to the rich will be recouped by a growing economy, the next priority for Congress will be to move towards a balanced budget by eviscerating social programs that are already strapped to respond to the needs of the poor. Three out of five Americans spend more on their essential needs than they earn, and homelessness is already on the rise for the first time since the Great Recession.
Where do we go from here?
Perhaps the most outrageous piece of the whole tax nightmare has been the inaction of liberal institutions from these attacks. The Democratic Party called no coordinated mobilization against the bill, nor did organized labor, or progressive institutions like MoveOn.org, Our Revolution, or Indivisible. At the local level, many activists organized small demonstrations, but without the support of their national affiliates. The most prominent dissent came from graduate students, both union and non-union, who organized walkouts, grade-ins, and marches across the country in the weeks leading up to the bill’s passage. The Communications Worker of America (CWA) followed an interesting line of dissent when they took Trump’s comment that American families would see an additional $4,000 in income to task, and demanded that AT&T agree to give their workers a raise. AT&T settled with an average of $1,000 bonuses, and touted the idea as their own.
Unlike resistance to the proposals to “repeal and replace” the ACA, which saw Medicaid recipients, people with disabilities, and other sectors of civil society launch mass resistance, liberal institutions made no coordinated effort to beat back the tax bill, despite it having equally catastrophic results for their constituencies. It’s also worth noting that the ACA, above all else, ensures government money is transferred to private insurance companies, so sectors of the capitalist class also had a stake in defeating its repeal.
The theme of this meager resistance to the tax bill seems to lie in the Democrats’ electoral strategy for 2018 which will likely be along the lines of Hillary Clinton’s 2016 presidential run: “look at how bad those other guys are.” Democrats will capitalize on pointing to the Republicans’ legislative record without offering anything substantial for working people. We shouldn’t forget that Obama, who campaigned in 2008 to end the Bush-era tax cuts, preserved the vast majority of the corporate handouts.
What the whole debacle indicates is that at this point in time, we do not have substantial movements or institutions in the United States willing to fight for working people. Any illusions that the Democratic Party is the vehicle to improve the lot of the working class should be shattered due to their complete ineptitude and unwillingness to act on behalf of the constituency they claim to represent. A party that is willing to see people lose their healthcare, their ability to buy a home, and their access to social programs just to use popular discontent as cannon fodder in elections must be abandoned outright.
In the short term, the goal of the Left needs to be to build links between the groups of workers most negatively impacted by this bill, including people who get their healthcare through the ACA, public school teachers, union members, SNAP recipients, and students, to prepare for the next wave of attacks on social programs. We need mass education on the impacts of the bill, and coordinated action in the streets to channel public rage into sustained activity in our communities. In the long term, we need to begin fighting now to peel the institutions that are supposed to represent the interests of workers (labor unions, Planned Parenthood, and community organizing institutions) away from the Democratic Party. Independence from both the party who attacks us, and the party who sells us out is a necessary precondition for mounting a meaningful opposition to the robber barons of the 21st century.
We need movements focused squarely on the interests of the working class and oppressed, and aimed at positive programs such as universal healthcare, divestment from the carceral state into social programs, reduction of the military budget, union rights, social housing, and free education as an alternative to the cynical visions of Democrats and Republicans alike who are more beholden to their funders than their voters. This cannot be done without the democratic participation of an activated mass of people aware that their only means to attain a better future is through struggle.
This is no easy task, but if there’s one lesson we can take from 2017 it’s that struggle works. Between the airport occupations against the Muslim travel ban, to the civil disobedience that squashed the repeal of the ACA, to the mass demonstrations following Charlottesville that forced alt-righters across the country to cancel their events, we should take confidence in the fact that we can win these battles. Due to our current atomization and lack of independence, we can expect to lose much more than we win at the beginning, but the steps we take now to build an independent opposition will clear the road for future victories for our side.
Alex is a member of the ISO and an organizer in Greensboro.