How Democrats Can Outplay the GOP on Tax Cuts |
How Democrats Can Outplay the GOP on Tax Cuts
Instead of proposing income-tax cuts for low earners who pay little or no income tax in the first place, how about FICA cuts—offset by taxing the rich?
A popular Washington game is to oversell tax cuts to lower-income people. Republicans have excelled at this for half a century. Now Democrats want to play, too.
In the most familiar version of the game, a Republican president promises to slash income taxes but ends up mainly doing so for rich people. Ordinary people may get a cut, but it’s very small. Thus President George W. Bush’s tax cuts in 2001 and 2003 boosted incomes for the top 1 percent by 6.7 percent but boosted incomes for the middle 20 percent only 2.8 percent, and for the bottom 20 percent a pathetic 1 percent. President Donald Trump’s 2025 tax bill actually lowered incomes for the bottom 20 percent when you factor in accompanying Medicaid and food stamp cuts, while incomes for the middle 20 percent rose only 1 percent or less. The wealthy made out like bandits; everybody else got table scraps at best.
Another Republican trick, perfected during the 2024 presidential campaign, is to eliminate taxes on stuff that scarcely gets taxed as it is. That’s what Trump did last year by eliminating taxes on tips. Only 4 percent of workers receive tips, and at least 37 percent of these people pay no income tax in the first place—and that’s before you figure in tax credits like the Earned Income Tax Credit. Also, let’s get serious, when the tip is in cash who’s going to report it as income?
A related Republican trick is to claim you eliminated taxes on something when actually you reduced them by not very much. That’s the gist of Trump’s supposed elimination last year of taxes on Social Security, about which he boasted in last month’s State of the Union Address. What Trump actually did was introduce a deduction of up to $6,000 for individual filers that’s phased out starting at incomes of $75,000. Given that people earning less than $75,000 pay little income tax in the first place, and that 15 to 50 percent of their Social Security........