Ahead of the 2018 midterms, Democrats in Congress have released a tax plan they will push for if they take control of the Senate and the House of Representatives. Senate Minority Leader Chuck Schumer, D-New York, said the Democrats “want to roll back the Republican tax giveaways to big corporations and the wealthy and invest that money instead in job-creating infrastructure.”
When you actually look at the proposed tax plan, there isn’t much of a rollback at all. Democrats have proposed raising the top income tax rate to 39.6 percent from the current rate of 37 percent. They want to increase the corporate tax rate from 21 percent to 25 percent. The individual alternative minimum tax and the estate tax plan will be returned to their pre-tax cut levels.
While these are tax hikes, they are a far cry from what Democrats have previously proposed. Hillary Clinton’s tax plan included a 4 percent surcharge on the wealthy, a 30 percent minimum tax on taxpayers with an adjusted gross income above $1 million and a higher capital gains tax. Sen. Bernie Sanders, I-Vt., wanted to add four new income tax brackets, raise the top income tax rate to 52 percent, create a 2.2 percent income-based health care premium and a 6.2 percent employer-side payroll tax.
Two years after the presidential election and several months after the passage of the Tax Cuts and Jobs Act, all they’re asking for this time is to bring the top marginal income tax rate back to where it was before President Donald Trump cut taxes. Before implementation of the tax cut, the corporate tax rate stood at 35 percent. The Democrats are asking for a rate a full 10 percent lower than that and only 4 percent higher than the rate under current law.
Democrats are in a position of weakness on economic issues and they know it. Let’s rewind and remember what the leadership said about the Tax Cuts and Jobs Act. Nancy Pelosi declared it was “the worst bill in the history of the United States Congress.”
In other words, a bill that gave Americans more money was worse than the Alien and Sedition Acts, the Fugitive Slave Act and the Volstead Act (among others). She also called it “Armageddon.” Schumer said it will be an “anchor to the ankles of every Republican” in 2018.
So what exactly was “Armageddon” when Trump finally signed the bill into law? Well, it has given a countless number of businesses the incentive to expand, raise wages and bring capital back to the U.S.
Boeing announced an investment of $300 million, which will be divided among charitable giving, workforce development and workplace betterment.
Apple is handing out bonuses of $2,500 and plans to bring back capital from overseas. They will invest $30 billion in the U.S. economy over the next five years to build a new technical support campus and more data centers, as well as create 20,000 jobs.
ExxonMobil is investing $50 billion into oil production at the Permian Basin in Texas and New Mexico over the next five years. These companies credit tax reform for growing their businesses.
For many years, Democrats have pushed for the city, state and federal governments to approve a higher minimum wage of $15 an hour. But this tax cut has counterpoised the issue. The government doesn’t have to artificially raise wages. Companies like BMO Harris, Charter, PNC Financial Services, MetLife and many others are making $15 their base hourly wages.
The latest jobs report has smashed expectations. The economy added 313,000 jobs last month, exceeding the 205,000 figure economists had predicted. More than 800,000 people joined the labor force, the largest one-month labor-pool increase since 1983. The Atlanta Fed is projecting GDP to rise by 5.4 percent in the first quarter of 2018, the largest increase since the third quarter of 2003.
All of that dark rhetoric made by Democrats about what a disaster the tax cut was going to be never came to fruition. Approval for the Tax Cuts and Jobs Act has increased from 37 percent in December to 51 percent in February.
Panic has arisen among Democrats. Pelosi has called company bonuses ranging from the hundreds to the thousands “crumbs,” even though she claimed a $40 payroll tax cut passed under President Barack Obama was going to be “a victory for all Americans” and would “make a difference.” Rep. Debbie Wasserman Schultz, D-Florida, believes the bonuses won’t go “very far” for the middle class.
For months, Democrats claimed Republicans were out of touch with the middle class and only wanted to help the rich, but with the economic boom benefiting everyone and popular opinion turning to the GOP’s favor, they are stuck in a difficult situation. That’s why they can’t roll out sky-high tax increases like they did in 2016. They know they’d be in deep trouble and at risk of losing the midterms.
John Graber ([email protected]) is a senior majoring in history and political science.