E.J. Dionne: The tax bill is worse than bad. It's corrupt.
WASHINGTON—The tax bill the GOP is trying to foist on the country is not only an unfair and deficit-bloating hodgepodge written on the fly. It is also deeply corrupt. Every Republican who votes for this bill will be joining a festival of venality.
Corruption is not a word to be used lightly, so let's be disciplined by the Merriam-Webster dictionary's definitions: "dishonest or illegal behavior especially by powerful people" and "inducement to wrong by improper or unlawful means."
We can stipulate that the tax bill is not illegal. But it is a dishonest power and money grab by—and on behalf of—the already powerful. As for "inducements," well, there are those long-term investments of tens of millions of dollars in campaign contributions (enabled by the collapse of all the guardrails around political money) from wealthy individuals and regiments of interest groups. They will have a merry holiday season if the bill passes as expected.
This legislation proves that Washington is, indeed, the "swamp" President Trump described during the campaign. But instead of draining it, he and his partisan allies have jumped right in. Actually, they have polluted it further.
A prime example of this subtle corruption is how the "compromise" bill deals with the radical scaling back of the deduction for state and local taxes. Gutting what is known as the SALT tax break sets back the common good because doing so penalizes states that (a) have progressive income taxes, and (b) have somewhat larger governments and thus tend to invest more in education, infrastructure and programs for the needy. While California, New York and New Jersey are hit hard, many other states are hurt, too.
But instead of restoring all or most of the lost deduction, Republicans offered a fig leaf compromise. Originally, the Senate bill reduced the amount that could be deducted to $10,000 and restricted it to property taxes. The new version keeps the cap while allowing the deduction to be used for sales and income taxes as well.
For most taxpayers who use the existing deduction, this doesn't solve their problem. One estimate from the Institute on Taxation and Economic Policy found that 1.89 million Californians would still see their taxes rise under the new provision, only a modest drop from the 2.36 million who would have had a tax increase under the version confined to property taxes. Any California representative who votes for this is voting against the interests of the state.
Ah, but the Republicans (BEG ITAL)did(END ITAL) want to respond to rich New Yorkers and Californians who were howling to their usual GOP benefactors, including Trump, about their lost SALT deductions.
So rather than offer general relief, the Republicans sliced the top income tax rate—for couples earning $600,000 or more—from the current 39.6 percent to 37 percent. Rep. Kevin Brady, R-Texas, the House Ways and Means Committee chairman, could not really explain why only the best off got real help, arguing lamely that middle-income people got other benefits from the bill.
The shamelessness of Treasury Secretary Steven Mnuchin's description of the bill on CNN Sunday as "a very large tax cut for working families" is quite staggering. Consider that this confection of loopholes gives lawyers at big firms many paths to lower taxes, but not much to the people who clean their offices. Soon, all Americans will demand the right to transform themselves into "pass-through" legal entities.
The bill's champions claim that the big corporate tax cut will lead to massive new investment. But, as former New York City Mayor Michael Bloomberg (no enemy of business) pointed out, corporations are already "sitting on a record amount of cash reserves: nearly $2.3 trillion." Bloomberg added: "It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth."
And imagine: The "Make America Great Again" crowd appears to have designed a corporate tax system that creates new incentives to "shift profits and operations overseas," as former Obama economic adviser Gene Sperling argued in a careful analysis. Trump probably doesn't even know this.
The key to corruption is operating in the dark. This bill is a mess of opaque provisions that almost no one outside the ranks of tax lobbyists understands—because many of these giveaways were written or inspired by lobbyists themselves.
Needlessly rushing a massive special-interest tax bill through Congress is the antithesis of good government. This doesn't seem to matter anymore, even to Republicans who built reputations as champions of moderation, openness and rectitude.