WASHINGTON ― The GOP tax overhaul overwhelmingly benefits the wealthiest people in America, according to several estimates. But Republicans say you can’t trust any of those.
Over 47 percent of the tax changes in the legislation would benefit the richest 1 percent of households over 10 years, a report released Wednesday by the Tax Policy Center said.
Wednesday’s report closely resembles an analysis TPC issued on Monday, which the group quickly retracted because of an error ― which Republicans have said is all the more reason not to believe them.
Two controversies dominate the debate over how to analyze a tax bill: debt and distribution. Tax changes affect the amount of revenue the government collects, and Republicans disagree with most experts, who say their tax reform legislation would reduce revenue by more than $1 trillion over 10 years. GOP lawmakers would rather just take it on faith that tax cuts create growth and pay for themselves.
The other controversy Republicans take issue with is the question of whose taxes would go down and whose would go up. Republicans say their bill would reduce taxes for everybody, but TPC says 7 percent of households would face higher rates next year and 25 percent would pay more in 10 years.
Rather than debate the merits of their tax proposal based on these facts, Republicans want to debate the facts themselves.
Rep. Kevin Brady (R-Texas), chairman of the tax-writing House Ways and Means Committee, blasted the “liberal Tax Policy Center” in a radio interview Tuesday morning, noting that the group withdrew its analysis after a mistake. Later that day, in an interview with HuffPost, he didn’t let up.
“You know, they’re the gang that can’t compute straight,” Brady said. “They had a tax analysis before there was a bill. Now they have one they had to abandon within hours. I don’t know how many strikes you get before you’re out.”
When HuffPost asked whether it said anything about the organization that it was upfront about its mistake ― that TPC withdrew its analysis entirely when it discovered an error ― Brady pointed to what he called the earlier “imaginary analysis” TPC did when Republicans released their tax framework in September.
“They didn’t even admit that there was no tax bill to score,” Brady said. “So, look, there’s a lot of credibility that’s gone there.” (In fact, TPC was very transparent about how it analyzed the tax framework Republicans put forward. The center used similar Republican proposals from the past year to fill in gaps in the plan.)
In its Monday report, the center underestimated the amount that some households would benefit from an expanded child tax credit in the Republican bill. The updated report reduces the number of households that would face a tax increase a decade from now by about 3 percentage points. Also in the new report, the total tax benefit accruing to the richest 1 percent of households has declined from 48.4 percent to 47.2 percent.
Brady isn’t the only Republican criticizing TPC. President Donald Trump’s top economic adviser, Kevin Hassett, said in October that it was “scientifically indefensible” for TPC to downplay the positive economic feedback that tax cuts could create, despite a consensus among most economists that tax cuts don’t spur the kind of growth Republicans are hoping for. In response, Larry Summers, a former Treasury secretary under Bill Clinton and a top economic adviser to President Barack Obama, said he no longer took Hassett seriously after his “absurd attacks on the Tax Policy Center.”
While Republicans like Brady criticize TPC for putting forth a score of the GOP bill when there wasn’t yet a bill, Republicans themselves were making wild claims about economic growth way before there was legislation.
Treasury Secretary Steve Mnuchin said the GOP tax proposal would generate so much growth and extra tax revenue that it would reduce the national debt by $1 trillion ― an estimate seemingly based more on gut than math. A number of Republicans in Congress have also told HuffPost for weeks that their tax cuts would pay for themselves ― although, again, there’s no evidence that tax cuts replace lost revenue with economic growth.
The TPC isn’t out on a limb with its estimate of large budget deficits resulting from the proposal. The conservative Committee for a Responsible Federal Budget, Fitch Ratings, and Congress’ own Joint Committee on Taxation and Congressional Budget Office agree.
Even the GOP-friendly Tax Foundation ― even when using the GOP’s preferred “dynamic scoring,” which accounts for macroeconomic effects in the cost of legislation ― said the Republican tax proposal would increase the national debt by nearly $1 trillion over the next decade.
But Republicans refuse to believe it. When HuffPost asked Rep. Lynn Jenkins (R-Kan.) about the tax proposal and her vote against the budget setting up tax reform, Jenkins explained that she voted no on the budget because “it didn’t balance.” (The budget allows Republicans to increase debt by $1.5 trillion in the name of tax cuts.)
But Jenkins told HuffPost she supports the tax proposal now because revenue won’t decrease in a dynamic score. When we noted that the Tax Foundation’s dynamic score said debt would still increase by $1 trillion, Jenkins said, “You’ll have to wait until the accurate one is out.”
When the Tax Foundation found in a separate study that temporary expensing of assets ― which allows businesses to write off the cost of new investments ― would have a limited effect on economic growth, House Speaker Paul Ryan (R-Wis.) refused to believe that was a Tax Foundation finding.
“I haven’t read that study, but I’d be kind of shocked if the Tax Foundation said that,” Ryan said. He suggested that a reporter had confused the Tax Foundation with TPC.
“I think TPC has shown their ideological and partisan colors with the fact that they put out an estimate on a mythical tax plan that hasn’t been written,” Ryan said in early October.
A few weeks later, Bloomberg reporter Jonathan Nicholson, who wrote his own story on Republicans attacking TPC, asked Ryan about his office describing the Tax Foundation as “nonpartisan” when the board is stacked with Republicans.
Ryan cited disagreements with TPC’s economic modeling, but he also praised the Tax Foundation for having a number of Republicans on staff.
The Tax Policy Center also has plenty of prominent Republicans in its ranks. Two of TPC’s fellows are former Congressional Budget Office directors who served under Republican presidents ― Donald Marron (under George W. Bush) and Rudy Penner (under Ronald Reagan). And N. Gregory Mankiw, a Harvard economics professor who is on the TPC board, served as the chairman of George W. Bush’s Council of Economic Advisers.
The Tax Policy Center may get its left-leaning reputation because it’s a joint venture of the Brookings Institution and the Urban Institute, two respected think tanks that are also (perhaps unfairly) seen as left-leaning. But neither think tank is a bastion of ideology, and both are known for their policy-minded analysis ― as well as for having well-known Republicans serving in major positions.
As Ryan said, part of the problem may just be that TPC uses a distributional analysis, which divvies up the percentage benefit of tax changes among income groups. The percentages seem politically unfavorable to Republicans because the wealthiest Americans currently pay the most taxes by far, so when a piece of legislation lowers taxes across the board, the rich benefit the most.
But Democrats think this goes to a more fundamental problem with the Republican Party ― one that isn’t based on some intellectual argument over economic models.
“A very nasty, bad habit of Donald Trump has now infected the Republicans, which is, anyone who disagrees with you, attack ad hominem,” Senate Minority Leader Chuck Schumer (D-N.Y.) told HuffPost on Tuesday when asked about Republicans deriding TPC. “It’s not what America is about, it’s not what the Founding Fathers wanted us to do. It’s become an overwhelming tendency in their party.”
Like TPC, the Joint Committee on Taxation has found that not everybody would benefit from Republicans’ proposed changes to the tax code. The committee has reported that, under the legislation, nearly 20 percent of households would face higher taxes a decade from now.
But Republicans say nearly everyone will benefit from their plan ― you just need to trust them. That’s what Rep. Dave Brat (R-Va.), a former economist, told HuffPost, even though he wasn’t sure what he was supposed to think of TPC.
“I get them all confused,” Brat said, in an extremely relatable moment. “Too many acronyms.”
Amanda Terkel contributed reporting.
This article has been updated to include Schumer’s comments.