Wouldn’t you think that something that will affect the economy as profoundly as tax cuts that add $1.5 trillion to the deficit over a decade deserves careful deliberation, thoughtful public review and discussion?
Isn’t it suspect that Republicans’ strategy is to cram it through so fast that people don’t have a chance to inform themselves and react?
Aside from the precarious and historically unvalidated theory on which the entire proposal depends — that cutting corporate income taxes stimulates the economy — there are many reasons for concern about the proposed tax bills in both the U.S. Senate and the House of Representatives.
The House bill has had more time to be analyzed and turns out to be dramatically biased in favor of rich households over middle-class households, with income increases for the wealthiest taxpayers being 16 times the benefits for any group in the lower half of the income distribution, according to the nonpartisan Center on Budget and Policy Priorities. The Congressional Budget Office determined last week that it would also increase the national deficit by $1.7 trillion. Even Republicans are expressing concerns about ways that the bill gouges middle-class taxpayers, such as eliminating current state and local tax exemptions. Various special interests oppose various provisions, such as the housing industry’s opposition to the bill’s halving of the mortgage interest deduction.
As of this writing, the Senate bill has just been introduced and so has been subject to less analysis. In general, though, it seems that its basic purpose remains to reduce corporate taxes dramatically — from 35 percent to 20 percent — even though this reduction would be delayed by a year to reduce the bill’s enormous increase to the deficit.
One concern that hasn’t received enough attention pertains to higher education. First, the Republican plans would make graduate students’ teaching and research assistantships subject to taxes; for many graduate students, this would knock them out of contention for graduate education. As all researchers know, graduate students are the lifeblood of academic progress in any institution offering graduate degrees.
Both bills pose a breathtaking threat to private colleges and universities by taxing endowment earnings, which are central to private schools' ability to offer financial aid and maintain operations. Add in the Republicans’ plan to end itemized deductions for most taxpayers, which would greatly dampen donations for these and other nonprofit institutions — and also remove access to the market for tax-free bonds, which are crucial ways that colleges and universities finance major capital campaigns — and the Republican tax plans constitute an existential threat to private education.
These proposals undermine higher education, which indisputably is a pillar of this nation’s historic economic growth; one example of this is that median lifetime earnings for people with undergraduate degrees are double the earnings of those with high school diplomas. These Republican plans would kill the golden goose in order to advance a spurious theory, debunked by history, of the trickle-down economic stimulation benefits of corporate tax cuts.
But most people don’t even know that these tax bills would eviscerate higher education in the multiple ways that they would. So I repeat my question: If we actually want a sound tax plan and not just to score hollow political points, wouldn’t it be prudent to take the time to air these proposals and ensure the public fully understands them, to encourage rather than discourage public debate on something so important?
Margaret Krome of Madison writes a semimonthly column for The Capital Times.
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