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Republicans Are Trying to Pass a Tax Plan That Everybody Hates

WASHINGTON, DC - SEPTEMBER 27:  (L-R) U.S. Rep. Kevin Brady (R-TX), Speaker of the House Rep. Paul Ryan (R-WI), Sen. Orrin Hatch (R-UT), Sen. Michael Enzi (R-WY) and Sen. John Thune (R-SD) listen
during a press event on tax reform September 27, 2017 at the Capitol in Washington, DC. On Wednesday, Republican leaders proposed cutting tax rates for the middle class, wealthy and businesses. Key questions remain on how they plan to offset the trillions of dollars in lost tax revenue.Ê  (Photo by Alex Wong/Getty Images)
Except for these guys. Alex Wong/Getty Images

Republicans are starting to discover that, just like their failed attempt to repeal Obamacare, tax reform is going to be a slog. After months of buildup, House GOP leaders were finally supposed to unveil their tax bill Wednesday. Instead, it’s been delayed because nobody can agree on the major details—namely, how to pay for the tax cuts. (Update, Nov. 2, 2017: House Republicans finally released the text of the bill. Slate will have more coverage throughout the day.)

That, of course, is the hard part about tinkering with the tax code. Cutting rates is reasonably easy, so long as you’re not too worried about the deficit. But cutting popular deductions to cover the cost, as Republicans have promised to do, is extraordinarily hard. Just as repealing Obamacare would have been a breeze if voters didn’t actually want health care coverage, the political math on taxes would be simpler if voters supported the GOP’s basic goal of slashing taxes for large companies. But that’s the thing: They don’t.

Business tax cuts are the heart and soul of the Republican tax plan, the broad strokes of which have been public since the party released its framework several weeks ago. It would lower the top rate on corporations from 35 percent to 20 percent. It would create a special 25 percent rate for pass-through businesses, whose owners currently pay taxes on their profits as normal personal income. It would eliminate (or at least greatly reduce) taxes on overseas earnings.

All of this will cost the government trillions in lost revenue. Republicans are hoping to partially offset that massive expense by eliminating tax breaks that many people, and companies, currently enjoy, and will be very unhappy to lose. The entire home-building industry has already decided to go to war against the plan because it’s worried the bill will kill off deductions for homeowners. Northeastern and California Republicans are in open revolt over a proposal to curtail the deduction for state and local taxes, which their constituents rely on.

Meanwhile, virtually every credible bit of public polling suggests that, if anything, ordinary American think that taxes on big business should be higher, not lower. In September, the Pew Research Center found that 52 percent of Americans thought that corporate taxes should go up; just 24 thought they should go down. In April, 67 percent of adults told Gallup that corporations paid “too little” in taxes. This week, CBS News found that 56 percent of its survey-takers favored a corporate tax hike, while only 17 percent backed a cut.

Even among the GOP’s base, corporate tax cuts simply aren’t that popular. Pew found that just 48 percent of conservatives who either identify as Republican or lean towards the party think that corporate taxes should come down; 49 percent thought they should go up or stay the same. Among all Republicans and leaners, including moderates, just 41 favored lowering the corporate tax burden.

Pew chart on corporate tax cuts

Voters also seem skeptical of the Trump administration’s pitch that corporate cuts will trickle down to help their families. According to a recent Morning Consult poll, only 31 percent of Americans believe reducing corporate taxes will personally benefit them versus 47 percent who believe it won’t. (CBS got similar results.) This skepticism is entirely merited, by the way. While the Trump administration has touted optimistic forecasts suggesting that its business cuts will raise household incomes by thousands of dollars a year, there is lots and lots of disagreement among economists about whether and by how much lower corporate rates actually lead to higher wages for workers.

Given these poll results, you won’t be surprised to learn that vanishingly few people seem to think that corporate tax cuts are an urgent issue. Just 2 percent of Americans told Gallup that taxes are the most important issue facing the country. Only 27 percent of all Americans—and a bare majority of Republicans—told CBS that passing a tax cut should be the top priority for Trump and Congress. All of this seems to be reflected in the fact that the tax bill itself—which, again, hasn’t even been officially released yet—is already quite unpopular. The latest NBC/Wall Street Journal poll found 25 percent of the public thought the plan was a good idea, while 35 percent called it a bad one.

Making trade-offs on taxes is devilishly hard. Making them when practically nobody wants the thing you are trading for may turn out to be impossible.

And yet, Republicans seem to have convinced themselves that they must try. The prevailing idea among GOP lawmakers seems to be that tax reform is a do-or-die task—that if they don’t pass a tax cut, voters will abandon them come the midterms. “If we fail on taxes, that’s the end of the Republican Party’s governing majority in 2018,” South Carolina Sen. Lindsey Graham said recently, summing up the conventional wisdom.

This is similar to the position Republicans found themselves in on health care earlier this year—frantically charging into battle on behalf of a deeply unpopular political cause based on the logic that they need to notch some sort of win to placate their base. The difference is that this thinking at least made a modicum of sense when it came to health care. Republicans spent eight years promising to repeal Obamacare. It was the party’s unifying campaign pledge. Failing to even try would have been a betrayal of the committed activists they had spent the better part of a decade whipping into a frenzy over the issue.

There is no comparable frenzy for corporate tax cuts. Except, that is, among the GOP’s traditional donor class, particularly Wall Streeters who want to see stock prices continue their remarkable run. But the tax bill is even beginning to split the business community, and could end up making the GOP plenty of corporate enemies even as it rewards the party’s friends. Worse yet, some of the ideas being floated could lead to tax hikes on middle class families, which would presumably make voters question the next Republican who shows up promising to cut their IRS bill.

Given all that, you weirdly sort of have to admire this generation of Republicans. If political courage consists of trying to do the unpopular thing, they’re the bravest people in Washington.

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