Upcoming Tax Reform Vote Faces Some Unlikely Opponents

Wisconsin Republican Ron Johnson speaking at CPAC 2011. (Unmodified Creative Commons photo by Gage Skidmore.

On November 16, the House of Representatives passed tax reform legislation, which includes provisions to cut taxes on the richest people in the country. This is based on the idea that wealth will “trickle down” from the rich to ordinary Americans in the form of wage increases and rising economic prosperity.

However, many Democrats believe that when CEOs, bankers and executives are given tax breaks, average Americans are the ones who suffer when government spending is cut on the basis of deficit concerns, as Republicans have done in the past.

Though receiving lower tax rates might seem like a priority for those in the highest tax brackets, this does not hold true for all. Over 400 millionaires and billionaires have signed a letter to Congress asking that they not cut taxes for the wealthy. Moreover, the letter ends with the signatories asking Congress to raise their taxes.

Some of the most notable signatories to the letter include Ben & Jerry’s Ice Cream co-founders Ben Cohen and Jerry Greenfield, hedge fund manager George Soros, and former Secretary of Labor Robert Reich.

The letter argues that what is necessary for creating jobs and strengthening the economy is not a tax cut for the top 1%, but investments in people, education, infrastructure, transfer programs, and our civic institutions.

Using their authority as business owners, entrepreneurs and CEOs, the signatories emphasized that cutting their taxes would do nothing to address what they believe to be historic and dangerous income inequality in America.

Former American Airlines chief executive Bob Crandall, who is now retired, said that he has “a big income. If my income gets bigger, I’m not going to invest more. I’ll just save more.”

In an interview, Senator Elizabeth Warren, D-Mass., brought up audio recordings where CEOs were asked what they would do with the money they receive from a tax break.

“They don’t say ‘We’re going to hire more people. We’re going to invest more here in America.’ They say ‘We’re going to maximize our returns to our wealthiest shareholders.’”

Despite this criticism, Republicans are desperate to pass the bill for several reasons. Their original push for health care reform failed, so the GOP is looking to tax reform to prove that they can get something done in Congress with their majorities in both chambers.

Additionally, several Republican donors are angry that there has not been a big legislative victory this past year. Representative Chris Collins, R-N.Y, told reporters that his “donors are basically saying, ‘Get it done or don’t ever call me again.’”

This is not a singular phenomenon, as several Republicans have publicly said that the bill was written to appease donors.

At this time, Congressional Republicans are still working on tax reform. The biggest hurdle to its passage is the Senate, which killed several Affordable Care Act repeals.

The bill’s biggest challengers in the Senate come from so-called SALT states, or states which have state and local tax deductions such as California, New Jersey and New York.

Also, conservative senators such as Steve Daines, R- Mo., and Ron Johnson, R- Wis., have expressed concerns over the current draft.

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