Tax Policy Center Propaganda

The media’s go-to think tank trashes GOP reform without evidence.

 
 

Speaker of the House Paul Ryan, R-Wis., talks about the Republicans' proposed rewrite of the tax code for individuals and corporations, at the Capitol in Washington, Wednesday, Sept. 27, 2017.
Speaker of the House Paul Ryan, R-Wis., talks about the Republicans’ proposed rewrite of the tax code for individuals and corporations, at the Capitol in Washington, Wednesday, Sept. 27, 2017. PHOTO: J. SCOTT APPLEWHITE/ASSOCIATED PRESS
 

Republicans face an uphill battle on tax reform, not least because opponents are willing to invent evidence to stop it. Take Friday’s Tax Policy Center report claiming to be clairvoyant about details of the Republican reform “framework” that haven’t been proposed.

The Tax Policy Center is a joint project of the left-leaning Brookings Institution and the Urban Institute that the media routinely labels “nonpartisan.” Its record of hostility to any GOP tax reform that cuts tax rates shows the opposite. And the latest evidence of bias is its willingness to jump to conclusions about the GOP plan before crucial details are known.

The center’s progressive economists released a “preliminary” estimate of the GOP tax plan that claimed the proposal would “reduce federal revenues by $2.4 trillion over the first ten years and $3.2 trillion over the subsequent decade.” Also: The top 1% of taxpayers would “receive about 50 percent of the total tax benefit.” The press immediate broadcast this with headlines like “Republican Tax Cut Would Benefit Wealthy and Corporations Most, Report Finds.” Political mission accomplished. 

Yet the analysis is impossibly specific, given that last week’s blueprint excluded the income ranges for the individual brackets of 12%, 25% and 35%; the value of the expanded child tax credit, and when that would phase out; rates for pass-through businesses, or safeguards for abuse that may limit who can claim the income or how much; the discount rate at which cash and other corporate assets will be invited back to the United States; which deductions will be eliminated; and many other details that would be essential for any honest score.

The report says it based its guesses on the assumptions of the House GOP’s “Better Way” blueprint from 2016, yet that campaign document will certainly differ from any bill that emerges this year. Last week’s GOP framework explicitly included discretion for committees in Congress to iron out details. Case in point: The paper doesn’t assume a fourth tax-rate bracket for high earners that the framework left as an option.

The larger issue concerns economic assumptions. The Tax Policy Center assumes almost no growth impact from tax cuts, whether on capital or income. When growth increases or revenues rise after a tax cut, as they did after the 2003 tax cut, the center’s progressives attribute it to something else.

The tax center is essentially consigning the U.S. economy to a fate of slow growth as far as the Obama “secular stagnation” crowd can see. Yet if the rate of GDP growth speeds up from the Obama pace of 2% a year to 3%, incomes would rise and revenues would increase to the Treasury by some $2.5 trillion.

Partisans can honestly debate economic assumptions, but the Tax Policy Center betrays its bias by making premature guesses based on partisan assumptions. The center did a similar sandbag job on Mitt Romney’s tax reform proposal during the 2012 campaign, claiming it would have to raise taxes on the middle-class and poor because it wouldn’t reduce certain loopholes. But those loopholes were very much on the table in the Romney plan.

The lesson for Republicans is that they had better be prepared to fight back—early and often. House Ways and Means Chairman Kevin Brady called the report “misleading, unfounded, and biased,” and they shouldn’t hesitate to describe the Tax Policy Center as the anti-reform propaganda shop that it is.

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