Late Thursday night, just before the Finance Committee passed the Senate’s version of the tax bill slashing taxes on corporations and the rich, a remarkable moment unfolded that perfectly captured the GOP’s whole handling of the tax debate — in all its dishonesty, misdirection and bottomless bad faith.
Sherrod Brown, D-Ohio, engaged in extended sparring with committee chairman Orrin Hatch, R-Utah, over who would benefit from the Senate bill, with Brown insisting that it fundamentally represents a tax cut for the rich, and not the middle class. This drew an enraged response from Hatch, even though Brown’s argument was 100 percent correct.
Brown’s reference to an amendment offered by Senator Ron Wyden. D-Ore., at the beginning of his exchange with Hatch is crucial to what transpired. That amendment would undo the tax cuts on corporations if wages don’t grow. The Senate bill would cut the corporate tax rate from 35 percent to 20 percent — permanently — and one of President Donald Trump’s and the GOP’s chief stated rationales is that it will unleash massive wage growth. The amendment called the GOP’s bluff for messaging purposes.
And it worked. Indeed, Brown’s questioning of this Republican argument is exactly what ticked Hatch off. Brown claimed that “this tax cut for really is not for the middle class, it’s for the rich,” and that the GOP argument about tax cuts on corporations leading to “higher wages” is just a “good selling point.” Brown pointed out: “Companies don’t just give away higher wages just because they have more money. Corporations are sitting on a lot of money. They’re sitting on a lot of profits now. I don’t see wages going up. Just spare us the bank shots.”
All this made Hatch angry. “I come from the poor people,” Hatch said. “And I’ve been here working my whole stinkin’ career for people who don’t have a chance. And I really resent anybody saying that I’m just doing this for the rich. Give me a break. You guys overplay that all the time, and it gets old. And frankly, you outta quit it.” When Brown pushed back by suggesting that previous tax cuts for the rich haven’t produced the results Republicans are once again predicting, Hatch silenced him.
Now, Hatch was probably angered by the questioning of his motive — the idea that Republicans are disingenuously packaging a tax cut for the wealthy and corporations as a tax cut for the middle class. But, whatever is in Hatch’s heart, this is exactly what the Senate bill does. It frontloads the benefits for non-wealthy people by making its various tax preferences and its cuts to individual income tax rates temporary and subject to expiration, while making the corporate rate cuts permanent. It also ties tax brackets to an alternate inflation measure in a way that will result in out-year tax increases for everyone but the top one percent. The nonpartisan Joint Committee on Taxation has concluded that in 2027, most poor and working class people will see a tax hike, while upper-income earners (who benefit from corporate tax cuts) continue to pay less.
Hatch, like other Republicans, claims to have “no intention” of raising taxes on lower-income people, meaning Congress will renew their tax cuts later. The suggestion otherwise got Hatch angry. But there is zero guarantee this will happen, and indeed, this claim actually ratifies the objections of Brown and Democrats.
It reveals in a backdoor way that the whole reason for making all these provisions temporary is to pay for permanent tax cuts on corporations, which is necessary to comply with the procedural need to avoid raising the deficit later. Indeed, the bill’s repeal of the individual mandate is also designed to cut health spending on less fortunate people precisely to fund those corporate tax cuts — which shows, as Brian Beutler points out on Crooked.com, that this bill partly represents another version of the massively regressive Obamacare repeal efforts that have already been defeated, in a new packaging of grift.
As it happens, there is good reason to doubt Hatch’s motives — or, at least, those of the GOP more broadly. Multiple Republicans have admitted on the record that if Republicans don’t pass these tax cuts, their donors will stop giving them money. If Republicans wanted to cut taxes for the middle class, they could cut taxes for the middle class, and remain within deficit and procedural constraints by limiting the bill’s massive giveaway to their corporate donors, which would not necessitate hiking middle class taxes later. Yet Republicans aren’t doing that.
Hatch claimed that pointing this out “gets old.” But this week’s Quinnipiac poll finds that Americans say by 59-33 that the GOP plan favors the rich at the expense of the middle class, which means they are on to the GOP game.
The bottom line is that Brown engaged with Hatch’s substantive case for the cuts, by insisting they aren’t going to produce the wage growth Republicans promise, which happens to be an argument supported by many economists. But Hatch angrily shut him down, anyway, with an outpouring of high dudgeon about his own background and a mighty swing of his little wooden gavel.