Opinion: No, Senate Republicans aren’t raising taxes on the poor

If you want to believe the worst about these Republicans, you’ll believe they’re trying to raise taxes on the poor. Or you could believe the truth. (AP File Photo / J. Scott Applewhite)

It seems the latest talking point from the left about GOP tax-reform efforts, specifically the Senate version of the bill, is that it will actually raise taxes on the poor. This is a perfect example of how to use partial information, flawed modeling and deceptive rhetoric to create a false narrative.

The basis of this claim is a score of the bill by the Congressional Budget Office that shows a positive effect on the deficit — that is, a tax increase — on those earning less than $30,000 starting in 2019, and for those earning less than $40,000 by 2025 (after which the bill’s individual tax cuts expire, for the artificial purpose of reducing the bill’s scored effect on the deficit). That sounds pretty bad, especially when higher earners continue to enjoy tax cuts, right?

Only if you completely disregard how those numbers were determined.

In truth, the only reason those numbers look that way is because the Senate bill includes a repeal of the Obamacare individual mandate. Now, as I’ve explained previously, this is not tantamount to “taking away” anyone’s health insurance; anyone who wishes to continue buying insurance on the Obamacare exchanges would have exactly the same subsidies available to them. That’s because the bill does not eliminate the subsidies. What it eliminates is the requirement, punishable by a tax penalty, that everyone buy health insurance. That would seem to increase deficits, because those tax penalties would no longer be paid. But the CBO says it would actually decrease deficits, because the government would no longer be paying a larger amount in subsidies — in the form of tax credits — to those who chose not to buy health insurance any longer.

The important words there are “chose” and “tax credits.”

Once some people chose not to buy health insurance any longer, the amount of subsidies paid out in the form of tax credits to them would decline. But ignoring for a moment the wisdom of reducing the number of insured people, this is not at all the same thing as raising taxes on these people. The tax credits, after all, end up with the insurance companies to pay for premiums. Although the CBO for accounting purposes allocates the credits to the people who benefit from them, they don’t lower people’s tax bills. Nor do people have the choice of keeping a portion of the money to spend on things other than insurance. On the contrary, in many cases these taxpayers might have more money in their pockets if they don’t have to incur the additional costs beyond the subsidies of buying the insurance. After all, if it doesn’t cost them anything to have coverage, why would they stop getting it just because they were no longer required by law to have it?

Answer: They probably wouldn’t. This most likely is another example of the CBO putting too much stock in the power of the individual mandate, which has led the agency consistently to overestimate how many people would become insured under Obamacare. (It also means most of the deficit “savings” from eliminating the mandate is probably bogus, but that’s another debate.)

So the appearance of taxes rising on the poor is a complete artifice based on whether people would choose to stop buying subsidized health care if the government doesn’t require them to buy it. But don’t take my word for it. When Sen. Orrin Hatch asked the CBO for a score without counting the (supposed) effects of eliminating the individual mandate, here’s what the agency sent him:

As you can see, so long as the individual cuts remain in place (through 2025), every income group has an aggregate tax cut. The only way that changes is if Congress and the president in 2025 allows them to expire. When the Bush tax cuts were due to expire several years ago, the lower rates were extended at the bottom end of the income scale but not at the top — meaning it most likely isn’t lower-income Americans who have to worry about the rates expiring. The certainty of permanent rates, the avoidance of a needless fight over extending them, and the honesty in budgeting of assuming they would stay in place in the end all argue for making the rates permanent.

Speaking of honesty: There are things to like and not to like about this bill, but it would be nice if Democrats and their allies could stick to those things without pretending it is something it’s not.

Reader Comments 0

211 comments
Lil_Barry_Bailout
Lil_Barry_Bailout

A “positive effect on the deficit” is not a tax increase. Although Justice Roberts might disagree.

SGTGrit
SGTGrit

Wow it seems that Matt Lauer, was a really bad guy sexual predator that many at NBC were well aware of for years including top senior management. Now the male left-wing MSM morning show anchors are down to only one, George Stapphococulus. The Democrats are losing their "icons" in congress and the media.

Eye wonder
Eye wonder

Patience, Sarge. They’ll get to President F——-g Moron in due course. That scumbag is going down and the mo fo knows it.

SGTGrit
SGTGrit

@Eye wonder 

Maybe you should ask the head mo fo on this blog if you can give a class on mo foing ebonics. Yo dig?

SGTGrit
SGTGrit

Third quarter GDP upgraded to 3.3%. Outstanding but keep in mind the optimism spurring growth is based on the assumption tax reform will get done.

SGTGrit
SGTGrit

Tax loophole deductions have been removed for wealthy tax payers. Will they prosper regardless by a revitalized economy? Of course but so will all Americans.

Jackinga
Jackinga

Mr. Wingfield, 

The penalty for not carrying insurance was put there because, if insurance companies are not allowed to refuse coverage for preexisting conditions, then why would anyone in good health such as a young person buy insurance at all?  Those people would just buy insurance if they got sick.


No preexistiing condition limits means that penalties are necessary to make the system work.  Insurance is based on the principle of shared risk.  There must be a substantial number of healthy people in the program in order to offset what is paid out for the ill.   If all that are left in the shared risk pool are sick people, then insurance rates will skyrocket.


You are ignoring this effect on what the GOP tax plan will have on the low to moderate income segment of the population.  It is not going to be pretty, if it is passed as common people will suffer so that billionaire oligarchs make even more money and GOP politicians keep getting handouts from the superrich.

McGarnagle
McGarnagle

@Jackinga


It does seem this bill based on the trickle down nonsense idea which I don't buy into.

Doomy
Doomy

@Jackinga


" if it is passed as common people will suffer so that billionaire oligarchs make even more money..."


As I read and read I figured it was only a matter of time before he got to a version of the "tax cuts for the rich" bumper sticker sloganeering. 


And on top of that he exposed his zero sum economic thinking where he apparently believes that a tax cut for a wealthy person somehow comes at the expense of a poor or middle class person. Its the usual fallacious thinking we've come to expect from the left. 

Starik
Starik

@Doomy @Jackinga "a tax cut for a wealthy person somehow comes at the expense of a poor or middle class person." Sure it does. 

Lil_Barry_Bailout
Lil_Barry_Bailout

Please let us know how the poor or middle class are hurt. Their income taxes (if they pay any) are going down. There aren’t any handouts going away. Where’s the downside to them?

SGTGrit
SGTGrit

It appears that all of the tax plan holdouts in the Senate have been appeased including even Collins. McCain remains a toss up.

McGarnagle
McGarnagle

@SGTGrit


So now they got to go back and appease the House folks with their changes. Still coming down to the wire.

bu22
bu22

@McGarnagle @SGTGrit  Wow!  2 comments without a personal attack.  I congratulate you two!!!  Seriously the comments are becoming unreadable.

Doomy
Doomy

@SGTGrit


Shame on McCain. This petty little man is letting his personal animus with Trump get in the way of doing the right thing.

SGTGrit
SGTGrit

@bu22 @McGarnagle @SGTGrit 

Typically McGarnagle doesn't go out of his way to attack anyone personally for disagreeing with him. That can't be said for Eye Wonder, MarkVV, bendedknee, headley and the one that got banned with Doomy over at Bookman's. Haven't seen him around for quite sometime forgotten his handle.

McGarnagle
McGarnagle

@SGTGrit @bu22 @McGarnagle


Do you mean robert. He was pretty consistent in calling Trump a racist. I try not to get into back and forth name calling. But this is the internet.

McGarnagle
McGarnagle

@Doomy @SGTGrit


I don't know McCain's reason but this process seems rushed. Once again Trump places an arbitrary deadline that has no meaning. Let it be vetted and re-vetted. Rushing it draws more suspicion.

SGTGrit
SGTGrit

@McGarnagle @SGTGrit @bu22 

Forgot about robert. No I was referring to breckenridge, don't know where he's been but he used to blog on here most of the day and night it seemed.

SGTGrit
SGTGrit

@McGarnagle @SGTGrit @bu22 

BTW...I think bu22 was talking about personally attacking fellow bloggers not public figures like politicians. 

Doomy
Doomy

@McGarnagle @Doomy @SGTGrit


Doesn't seem rushed at all to me. And quite frankly that doesn't seem like a valid argument considering that when ACA was passed we had very, very little time to peruse the bill. So little in time in fact to study the bill that Nancy's famous admonition that we had to pass the bill to find out what was in it was made. 

McGarnagle
McGarnagle

@Doomy @McGarnagle @SGTGrit


The last time we did tax reform, it took more than a year i believe. This didn't get started until late Sept. 


The optics is this being rush to appease the great leader. Else he will start bashing members of his own party. With the economy doing so well. Is there really a need to finish by years end.

Doomy
Doomy

@McGarnagle @Doomy @SGTGrit


I could be wrong but as I understand it the reason to push it through is so that it will pass under reconciliation. So I think it could be more due to budget rules and needing a simple majority as opposed to a super majority as being the reason to get it done before January. 


And the last time we did tax reform, 1986, the 2 parties worked together. The Dem party has zero interest in working with the Rs on this. Their sole purpose is simply to obstruct needed reform. Just like McCain what is good for the country seems to be taking a backseat to nothing more than denying Trump a victory for no other reason than to simply stick it to him. 


Trump may be a jerk, bully, and personally dislikable but I think people should be able to get past petty resentments and do what's right for the country. And lowering the corporate tax rate to reasonable levels is what's right and what will be good for all of us. 

McGarnagle
McGarnagle

@Doomy @McGarnagle @SGTGrit


Seems each side is waiting for the other side to be the bigger person. And I'll give credit to anyone who can work across the aisle.


But Trump has made (not just him but particularly him) this political climate very toxic. I would rarely concede to him. Mainly because he will troll you day and night. A little humility will go a long way. 

Doomy
Doomy

@McGarnagle @Doomy @SGTGrit


Not quite. Trump lacks humility, is petty, thin skinned, insulting, and probably a lot more. But a lot of this is simply him fighting back and reacting to a media and the Dems who have been openly hostile to him from the git go. I mean come on. When they're talking impeachment days or weeks into office and the media is creating fake news about him the anti-Trump sentiments from the media and the Dems have reached a level of absurdity. 


When the media is reduced to complaining about the way Trump dumped his fish food to the carp, which the Japanese prime minister did first, or when they're reduced to complaining about Melania wearing heels on a trip to a disaster zone when she had tennis shoes in her baggage then you know the media has gone wayyyy overboard in their hatred of the man. In fact its deranged and completely unhinged. 


And as long as they are so openly hostile to Trump he reserves the right to fight back. Seems a lot of people expect him to just take it. Well, he won't. 

Eye wonder
Eye wonder

@Doomy The U.S. became the world's largest economy due to limited govt. 


BLAHAHAHAHAHA

LMAO
ROFL

LOL


<coming up for air>


BLAHAHAHAHAHA 

LMAO

ROFL

LOL


Thanks for the chuckle, Doomy.  You're always good for a few guffaws (in a Ruprecht the Monkey Boy kinda way).

Doomy
Doomy

@Eye wonder @Doomy


Facts are facts, ma'am. The Federal govt only consumed 3% of national income as recently as 1928. We did not even have the permanent income tax until 1913. Facts are facts.

Doomy
Doomy

@Eye wonder @Doomy


Those are facts regarding the history of limited govt which you simply cannot refute. If you could you would. But you can't. And we both know it. 

MarkVV
MarkVV

It is quite remarkable how many people are tax policy experts. I do not pretend to be one.

Who knows better, the people at OCB or Kyle? I do not know.
The way it looks to me is as follows:

The Republican tax plans have been hailed (by them) as lowering taxes for the middle class. Why, then, do the rich get ANY tax relief?

When taxes are lowered, the government will get less money. Therefore, it will have to slash some programs. Programs benefitting whom? The rich? Don’t make me laugh.

Eye wonder
Eye wonder

@MarkVV


"When taxes are lowered, the government will get less money. Therefore, it will have to slash some programs."


This is not a bug of the GOP plan; it's a feature.

Doomy
Doomy

@MarkVV


The CBO has historically been wrong many times.


The rich get tax relief because naturally tax relief goes to those paying the taxes. It aint hard to understand. 

Doomy
Doomy

@Eye wonder @MarkVV


"Therefore, it will have to slash some programs."


Just what the framers wanted- a small and limited central gubment. Awesome!

bu22
bu22

@MarkVV  Well if you actually read and comprehended what Kyle said, he's using the OCB's numbers.  Just not the ones the media are trumpeting that include more than just the impact of the tax cuts.

TerryBeale
TerryBeale

And Senate Republicans are not using "partial information, flawed modeling and deceptive rhetoric "?  Give me a break Mr. Wingfield !  And now YOU are doing the same thing Trump and the Republicans do every time their hand is caught in the cookie jar: You are deflecting, claiming that the other party is doing what they (you) are in fact doing.

McGarnagle
McGarnagle

That 2027 column doesn't look right. Am I missing something?

Eye wonder
Eye wonder

@Doomy -- "They just can't stand that Goldman Sachs forecasting a blistering 4% GDP growth rate for 2018. They.Can.Not.Stand.It."


See, Doom. That's why I never even try to debate substance with you. Because you're a shameless troll and bald faced liar.


Here's the report in question, lest you try and continue the lie: http://www.goldmansachs.com/our-thinking/pages/macroeconomic-insights-folder/2018-global-economic-outlook-as-good-as-it-gets/report.pdf.


You're an embarrassment, Doomy. To humanity.  It's a good thing Jay permanently banned your sorry, lying, hypocritical a$$.  If Kyle had any integrity, he'd do the same.

Doomy
Doomy

@Eye wonder @Doomy


LOL! So it was 4% globally and not the U.S. rate. I'm cool with that, especially since everyone else seems to think we'll get between 3 and 4% GDP growth in the U.S. You just can't stand the success we're having under Trump can ya? 


Eye dunder with the meltdown on aisle 5. 

Eye wonder
Eye wonder

@Doomy @Eye wonder


If you had any shred of intellectual honesty you'd know that the "success" we are having wasn't produced in a vacuum.  If you had any shred of a rudimentary understanding of finance and capital markets, you'd know that the "success" we are seeing is also somewhat illusory.  If you had any shred of a rudimentary understanding of history, you'd know we are in a giant bubble and bubbles eventually pop.


You have a long history in these parts and therefore we also know you do not have any shred of intellectual honesty, not even a rudimentary understanding of finance and capital markets, and a blissful unawareness of history.  As Jay Bookman once said, you, sir, are a shameless troll.

McGarnagle
McGarnagle

@Eye wonder @Doomy


The stock market bubble does concern me. Its clearly based on expectation. Once the expectations start to tepid, it will come crashing down. Question is how much further down. Hopefully nothing too bad.

Doomy
Doomy

@Eye wonder @Doomy


And the meltdown continues...


Bless his heart. 


Intellectual honesty? Reminds me of the guy namejacking my handle on this blog and emailing Jay under the guise that he was me asking to be let back on his blog. Any idea who that was eye dunder??? Hmm? LOL!

Eye wonder
Eye wonder

@McGarnagle @Eye wonder @Doomy


It isn't just based on expectations. It has been driven very much by stock buybacks. Notwithstanding Goldman's rosy outlook, the indicators are all bad. Very bad.

Eye wonder
Eye wonder

@Doomy @Eye wonder


Sure, Doomy, when ya got nothing of substance to add, bleat about meltdowns and ghosts. Everyone knows you are now waving the white flag of surrender.  Backing out the door while declaring victory can't be far off...

Doomy
Doomy

@Eye wonder @Doomy 


White flag? Hardly. One mistake in reading a stat doesn't freak me out. You though...