Reps. Nick LaLota, Andrew Garbarino, Elise Stefanik, and Michael Lawler, four House Republicans, are holding up the extension of the 2017 Tax Cuts and Jobs Act (TCJA). Good for them.
To understand why, it must be remembered that the 400 richest U.S. taxpayers pay more in federal taxes than the bottom 70 percent of taxpayers combined. That’s according to Glenn Kessler of the Washington Post. Kessler’s stats comport with what Republicans and conservatives have long said, that the top 1 percent of U.S. taxpayers account for 40 percent of total federal tax revenue collections. The rich are taxed way too much, period.
Stop and think about how detrimental the substantial over-taxation of the rich is to the U.S.’s economic health. The rich generally can’t spend what’s not taxed. Since they can’t, what they don’t spend reaches all of us through savings and investment.
There are quite simply no companies, no entrepreneurs and no jobs without savings and investment, and the rich have the capacity to increase both in enormous amounts. When the rich are taxed less, opportunities for those who aren’t rich expand thanks to the increased matching of talent with crucial capital.
It’s something to think about as the extension of the 2017 Tax Cuts and Jobs Act is potentially imperiled in Congress. The four Republicans mentioned are blocking easy passage because they quite reasonably want to revive the state and local tax deduction, which means citizens in high tax states can deduct taxes paid locally and to states against what they pay federally.
The typical response from Republicans has been one that resembled that of Rep. Tim Burchett of Tennessee. He told the Washington Post that “The taxpayers of Tennessee shouldn’t have to bail out somebody in New York.” Burchett gets it backwards.
As Republicans have stated repeatedly, the rich pay the vast majority of federal taxes. See once again the top 400 U.S. taxpayers, along with the top 1 percent. Easily a majority of the richest Americans live in high tax states, which means rich Americans in high tax states have long accounted for a massively disproportionate share of federal taxes. Which means the overtaxed rich have long been “bailing out” Americans across the country.
“Bailing out” was put in quotes crucially because a tax on rich people is a tax on us all. It’s more dollars of control that Congress has over the U.S. economy, and less investment in existing companies, new companies, and the work opportunities that expand from investment in both. Which is why Republicans should cheer what limits the tax burden on the rich. It means more investment in their poor and middle earning citizens.
Second, Republicans have long believed in a limited federal government. They’ve believed correctly, which is another reason why they should cheer the resumption of SALT. The latter limits the flow of dollars into Washington, and thus encourages cities and states across the U.S. to provide a little or a lot of government so that their people have choices.
The good news is that the TCJA can’t be extended without the four New York Republicans mentioned. As LaLota told the Post, “We have the ultimate walkaway position.” Yes they do. Either Republicans properly expand the SALT deduction in sizable fashion, or TCJA lapses such that the deduction is properly unlimited.
Either way, and thanks to four Republicans, Americans are soon to get a massive tax cut as those who pay most taxes see their burden decline. This is surely something to cheer.
