"Regressive, unaffordable, or both": Why the GOP's "reformicon" tax plan is a plutocratic con

Marco Rubio says his tax plan has new ideas for the GOP. Here's why policy expert Eric Bernstein is calling BS

Published March 12, 2015 12:30PM (EDT)

Mike Lee          (AP/Justin Hayworth)
Mike Lee (AP/Justin Hayworth)

If you're a close observer of American politics — and if you're reading this piece, the chances are pretty good that you are — then you're quite likely aware of the supposedly extant and burgeoning "reformicon movement." The movement, of which this author is a definite skeptic, bills itself as a group of policy wonks and policy-minded politicians who are interested in "reforming" American conservatism by shifting the GOP's focus from cutting taxes on the 1 percent to using the tax code to support middle-class families. And because much of what ails America today would be mitigated if the Republican Party were less fanatic in its hatred of taxes, the reformicons have gotten some liberal commentators very, very excited.

Only time will tell if the reformicons have the policy substance to back-up the media's hype. Sadly, the recent release of a new tax plan from Sens. Marco Rubio and Mike Lee, who are both seen as at least reformicon-friendly, is not a good sign. In keeping with their stated desire to support middle-class earners with children, the two senators claimed in an op-ed for the Wall Street Journal earlier this month, that their reforms would "end the unfair treatment of our ultimate investor class: America's moms and dads." But when Eric Harris Bernstein of the liberal Roosevelt Institute took a close look at the plan's specifics, he found that while it did much to increase the income of the wealthy and corporations, the Lee-Rubio framework was much less concerned with giving workers more than lip service.

Recently, Salon communicated with Bernstein via email to talk about the Lee-Rubio tax plan, and whether it helped show that the reformicon movement was more than an attempt to rebrand conservatism for America's inequality-anxious elites. Our correspondence is below and has been lightly edited for clarity.

What were you keeping your eye out for when you read the plan for the first time in terms of judging the sincerity of the "reform" claims? And what did you find?

Well, first it is important to note that, although Rubio has consulted reformocons and credited their ideas, neither he nor this plan befit that label; his ideas – as exemplified by this plan – are still very much Reagan-era. The rhetoric might be different, but these are essentially the same policies conservatives have been selling for the past 30 years. They may have replaced “trickle-down” with more populist phrasing, but the policies are the same.

In one way they do depart significantly from classic conservative doctrine: By cutting all capital gains taxes, Republicans would add trillions to the national debt. In the sense that conservatives profess to abhor debt, this represents an enormous break from Republican policies.

Is there anything in the plan that's new that you'd consider a step in the right direction?

Let’s be clear — there is very little in this plan that helps anyone other than the wealthiest Americans. Five years ago, in the midst of post-crisis upheaval, few would have dared propose such an enormous tax break for the wealthy. Now Rubio and Lee think they have found an opening to twist the inequality debate into an opportunity to push extreme, regressive tax proposals.

There are a few areas that have potential but fall far short. Simplifying the corporate tax code could be a good step – Roosevelt Institute Chief Economist Joseph Stiglitz even mentioned this in his 2014 tax paper — but such changes would need to be accompanied by measures that ensure corporations actually pay the new rate, and that does not seem likely under this proposed regime.

And what are some of the plan's especially bad new ideas?

Aside from the exceptions noted in our blog piece, they’re all bad. Each is either regressive, unaffordable, or both. Having said that, here are the policies that appear the most outrageous and unfounded: Cutting capital gains and eliminating inheritance tax; more than 85 percent of the benefit of this tax cut would go to the richest 2 percent of Americans. The U.S. is already spending more than $500 billion on preferential capital gains rates over the next decade, eliminating the tax would put that figure through the roof.

With a $5 million exemption and the step-up basis, which essentially exempts capital gains, U.S. inheritance tax is already very low and extremely regressive. The idea of slashing it is truly absurd — especially when you consider that, because of that $5 million exemption, the benefits would go exclusively to the recipients of enormous estates. All of this is to say nothing of the complex legal maneuvers that many wealthy families currently undertake to avoid existing inheritance tax liabilities.

Reformocons have spent a lot of time telling folks that they're concerned with redistributing (they don't use that word, of course) some wealth downwards, toward the middle class. Does this plan place more of an emphasis on doing that or on redistributing wealth upward through tax cuts?

It is unarguably more focused on distributing wealth upwards. All observers should understand: If the government surrenders hundreds of billions in revenue, and all of that revenue goes to the wealthy, it is redistributing up. It is most focused on wealthy families, with corporations coming in a close second, and workers as well as average families nowhere to be seen.

Is there any policy in here you’d recommend Democrats seize on as a point of agreement? Or is the plan still too right-wing for even a qualified defense?

Democrats could certainly agree to talk about simplifying the tax code but, again, that is such a minor aspect of this plan, it scarcely seems worth mentioning. This plan will only exacerbate the staggering disparities of wealth we already face, and leave no money for the infrastructure and education improvements that will help rescue the middle class from the stagnation it is currently experiencing.

More generally, Rubio and Lee frame their entire plan as a benefit to average Americans, but do this while glossing over policies that will only continue our current trend of supporting the wealthy at the expense of the country as a whole. The Stiglitz tax reform plan, on the other hand, offers a blueprint for a tax code that would bolster the middle class while driving growth and opportunity.

It’s not that Rubio and Lee’s plan is too right-wing for a qualified defense; it’s that it’s too poorly plotted for a mathematical one.

By Elias Isquith

Elias Isquith is a former Salon staff writer.

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