In his column published April 17, Kevin Cramer attempted to sell the GOP's recently passed tax plan. His analysis of it missed three profoundly important points. These three points are going to have negative impacts on the U.S. economy for years to come.
First, he talked about how everyone will be getting a tax break. That is not true. According to the Tax Policy Center (the same one that Cramer cited as an accurate source, which I agree is) the reform will see a tax deduction for only 65 percent of U.S. households, and actually raise taxes for 6 percent of U.S. households. Only 27 percent of the households in the lowest quarter of the tax bracket will get a tax break, with the rest seeing no change. Those households making between $49,000 and $86,000 will get an average $800 tax break per year (a 1.4 percent decrease).
However, the greatest benefit will go to the top 95th and 99th percentile of households. Those making between $308,000 and $733,000 will annual get a tax break of $11,200 (a 3.4 percent decrease). The households making more than $733,000 will get an average tax decrease of $33,000 (a 2.2 percent decrease). This favorable bias for the already wealth will only make income inequality even worse than it already is.
Second, Cramer completely avoided the fact that all of these tax breaks are being put on the credit card that has become the U.S. federal deficit. According to the Congressional Budget Office, the 10-year cumulative federal deficit is now up to $12.4 trillion. Yes, trillion. How can Cramer and the Republicans claim to be the party of fiscal responsibility when they are producing the largest deficits in U.S. history? When inflation is taken into account, the coming deficits are even greater percentages of domestic GDP then the ones created after World War II.
And third, Cramer avoided the fact that the Republicans eliminated the Individual Health Insurance Mandate. At first glance one might think this is a good idea. I, too, don't like being told what to do. However, if we are going to have affordable health insurance in this country we must pool all insurance risks together to lower prices for everyone. This is the basics for how all insurance works. By getting rid of the mandate, the Republicans have guaranteed that by 2027 there will be 13 million more uninsured people in this country. This will produce an insurance pool that consists of sicker, higher risk people. This would be like only insuring houses that are already on fire. This is hypocritical of Republicans, as the Individual Mandate was an idea originally put forth by them as a free market way to keep people accountable.
These are just three main points that Cramer and his fellow Republicans will have to answer for. Make no mistake, over the next decade the Republican tax plan will be seen for what it really is.
Stanley lives in Grand Forks.