Donald Trump Is Not Paul Ryan’s Only Roadblock

>This article first appeared on Dorf on Law.

As the Republicans in Congress try to drag their highly unpopular tax bill across the finish line, they have become ever more brazen in admitting what they really think about non-rich people who dare to complain about the feed-the-rich shamelessness of the Republicans' plan.

In case anyone had forgotten, Republicans are again making it clear that they think that non-rich people are lazy, shiftless leeches.

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An op-ed by two analysts at the New America Foundation cuts through the nonsense and points out the fundamental reality: "Republicans Are Bringing ‘Welfare Queen’ Politics to the Tax Cut Fight."

Senator Orrin Hatch's recent complaint about "people who won’t help themselves, won’t lift a finger and expect the federal government to do everything" merely reminds us of Speaker of the House Paul Ryan's "makers and takers" meme and especially of Ryan's former running mate's infamous "47 percent" comments.

These, in turn, were mere updates of Ronald Reagan's infamous (and completely imaginary) "welfare queen" in 1976, who supposedly worked the system to the tune of millions of dollars of undeserved benefits.

GettyImages-664554588 Charles Grassley (R-IA), Sen. John Barrasso (R-WY) (left) and Mitch McConnell (R-KY) at the U.S. Capitol April 4, 2017 in Washington, DC. Chip Somodevilla/Getty

Republicans also make arguments that, if taken seriously (which they should not be), would ultimately prove that all taxation (even regressive taxation) is immoral.

Although some Republicans might be willing to own up to that claim, a party that is obsessed with Pentagon spending and spending money to keep brown—and black-skinned people in their places—which often means out of the country entirely—needs to have some way of separating acceptable forms of taxation from unacceptable forms.

Republicans are stuck, because they have no way to justify tax cuts for the rich without insulting everyone else, and they cannot make choices among taxes because they are committed to the belief that all taxes are inherently bad.

What we end up with is the current mess of a tax bill and the shockingly bad salesmanship on display from the Republicans.

In a column last week, I joined in the criticism of a claim by Iowa's long-serving Republican U.S. Senator Charles Grassley, who took a great deal of heat for defending his party's insistence on repealing the highly progressive estate tax by saying, "I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies."

Again, Grassley was roundly trashed for that mindless comment, as he should have been. As I also noted, however, Grassley regrouped and soon issued a "clarification" of his comments:

My point regarding the estate tax, which has been taken out of context, is that the government shouldn’t seize the fruits of someone’s lifetime of labor after they die.

The question is one of basic fairness, and working to create a tax code that doesn’t penalize frugality, saving and investment.

That’s as true for family farmers who have to break up their operations to pay the IRS following the death of a loved one as it is for parents saving for their children’s college education or working families investing and saving for their retirement.

It is impossible to take seriously Grassley's claim that his initial comments were "taken out of context," because nothing that he says in his clarification changes the context. Instead, he simply changes his argument from insulting non-rich people to repeating the Republicans' tired lies about the estate tax.

And they are lies. As I noted in my column last week, there are no examples -- none, zero -- of a family farm breaking up its operations to pay for the estate tax, nor is there an example of a family-owned non-farm business doing so.

The law currently exempts nearly $11 million of an estate from taxation, but even at the much lower exemption amounts (on the order of one million dollars in inflation-adjusted terms) that existed before Republicans created today's overly generous levels, there were no farms or businesses being destroyed by the estate tax. In part, this is because the law already allows a fourteen-year payment plan for any estate taxes owed.

The point, however, is that Republicans continue to talk as if they have a long list of examples of family succession plans that have been destroyed by the evil taxman, but in fact they do not have even one such example.

And remember, Grassley is not only in his seventh six-year term in the Senate, but he has chaired the tax-writing Finance Committee. He is supposed to be the top-tier tax policy mind in the Republican caucus, yet even after he gave himself a mulligan on his "booze or women or movies" comment, the best that he could come up with was to assert again that the IRS is breaking up family farms.

Actually, it is even worse, because Grassley seems to have had a moment of near-honesty in which he almost admitted that he was spouting nonsense.

As The Washington Post reported:

Grassley and other congressional Republicans have long maintained that even if farmers are not affected by the tax directly, the planning involved is an additional strain.

'Many are forced into spending large sums of their hard-earned dollars on lawyers and accountants to avoid its impact instead of reinvesting in their business,' he told the Register. 'This means that while many don’t end up paying the tax, it still has a negative effect on the economy.'

Consider just how much Grassley has now walked back his original false claim: The estate tax breaks up family farms, but even though it doesn't, and even though some people with large estates pay no estate tax at all, the economy is harmed because they have to spend money on estate planning.

Even if there were no estate tax, every owner of a family business who had any desire to set up a succession plan would be "spending large sums of their hard-earned dollars on lawyers and accountants" to make it happen smoothly and without unexpected effects. It is true that estate planners charge extra for the tax aspects of their services, but those are so integrated into the planning process as to be mere add-on services.

In any case, the Grassley walk-back now relies for any remaining force on the idea that the additional cost of tax planning, as a subset of estate planning, is so large that it has a negative effect on the economy. As arguments go, this is beyond weak tea.

As I noted earlier, however, Grassley's revised (and apparently now in-context) argument is not limited to the estate tax. He argued that his party is "working to create a tax code that doesn’t penalize frugality, saving and investment" and fighting for "parents saving for their children’s college education or working families investing and saving for their retirement."

That makes us all think about mom-and-apple-pie, of course, but why is it limited to the estate tax? If Grassley truly believes that college savings accounts and estates are being built up by people who are being frugal (not spending money on wine, women, and song), then any tax at all is an impediment to their doing so.

The income tax reduces the amount that people can put in the bank. So does the sales tax. So do excise taxes, property taxes, wealth taxes, and transfer taxes. Any time that Grassley could say that, golly gee, if only people did not have to pay that tax they could end up with more money, his argument would be the same.

But maybe Grassley and the Republicans really want to argue that all taxes are always bad. Earlier this year, Donald Trump's budget director Mick Mulvaney argued that taking away money from programs like Meals on Wheels was not evil because "compassion" required us to think about "both the recipients of the money and the folks who give us the money in the first place."

By this (il)logic, money taken from a person via taxation is per se tainted, and we cannot make up for that despicable confiscation merely by spending the money compassionately. J.L. Gotrocks wants to leave an additional million dollars to his daughter Glenda, and if we stop that from happening for any reason (estate taxes, income taxes, property taxes, and so on), Mulvaney says that we lack compassion.

Even that argument, however, does not go where Grassley and Mulvaney need it to take us. If the argument is that government must not prevent people from accumulating more money, then the government is just as responsible for making sure that we are never cheated by private actors as it is for making sure that governments do not take our stuff.

This means that we have to worry about Wall Street's predations on people who would like to build college savings funds and to save for retirement. Mulvaney is loudly opposed to doing anything about that, however. And what about, say, the hit that people will take to their wallets with the end of net neutrality?

We must also not forget the out-of-pocket costs that people pay for health-related harms caused by pollution. For that matter, what about the incredible waste in our healthcare system? There are plenty of people whose wealth accumulation plans have been derailed by soaring medical costs.

Every dollar a person spends -- on taxes or on anything else -- necessarily reduces their bottom line.

Grassley and Mulvaney might point out that these non-tax examples have two sides: the people who are ripped off by payday lenders are making the investors in those lending companies wealthier. Big Pharma makes money from sick people, but shareholders make out all right. But again, this proves too much.

After all, the private-to-private redistribution happens because the government sets (or changes) rules to allow some people to profit at the expense of other people. Redistributive taxes similarly allow us to improve some people's lives while others pay more.

The question in both cases is whether there is a reason to believe that a there is an injustice from allowing someone to do better and another person to do worse.

And that leads us to ask variations on the most basic question in all of distributive justice.

Should Wells Fargo's investors be allowed to gain at the expense of customers who were charged fees on accounts that they never opened?

Should we take some of the money that a dead person leaves behind and use it to pay for healthcare, education, or infrastructure?

But lest we think that governments can never do anything but improve distribution, what about taxing middle-class people to pay for bloated defense contracts?

Grassley and the Republicans have a simplistic morality tale to tell. People who receive direct government assistance in the form of Medicare, Social Security, or (heaven forbid) welfare are simply assumed to be moochers. The much smaller number of people who become rich and stay rich by exploiting the laws that they paid Congress to pass are by definition brave wealth creators.

Like the false stories about family farms, these are easy tales to tell. In the end, however, they merely make it clearer than ever that Republicans are willing to ignore logic and evidence in order to change the legal system and the tax code to make the rich richer, no matter the consequences for everyone else.

>Neil H. Buchanan is an economist and legal scholar and a professor of law at > George Washington University>. He teaches tax law, tax policy, contracts, and law and economics. His research addresses the long-term tax and spending patterns of the federal government, focusing on budget deficits, the national debt, health care costs and Social Security.

Source : http://www.newsweek.com/trump-tax-plan-another-battle-class-war-745236

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