Why Will This Tax Reform Focused on the Middle Class Fail?
Democrats in Congress are focusing on what has been traditionally a Democratic interest: the middle class. However, according to Rep. Chris Van Hollen (D-Md.), they haven’t done enough in the past. Van Hollen, a ranking member of the Budget Committee of the House of Representatives, has been extremely active on the topic. In early January, Van Hollen introduced a new legislative effort he says would work toward improving financial growth and living conditions for middle-class Americans.
Are Democrats really the only ones interested in the middle class?
“It’s absolutely astounding that within minutes, minutes of us being sworn in, our Republican colleagues want to pass a rule that will stack the deck in favor of trying to give another big tax cut — not to the middle class, but to the millionaires, the folks at the very top,” said Van Hollen on the House floor earlier this month.
However, Democrats aren’t the only hat in the game when it comes to middle-class appeal these days. Some Republicans have come to realize that trickle down rhetoric and the wealthy-white-man reputation the GOP has had for so long aren’t helping the party. Jeb Bush is making his own impact with a similar message. His new “Right to Rise” PAC will cover what he says would be his main talking points for 2016: a new economic approach for the Republican party based on economic mobility and increasing chances to grow and improve. “We believe the income gap is real, but that only conservative principle can solve it by removing the barriers to upward mobility,” reads the PAC’s mission statement. Clearly there is a trend here, and it’s not a bad one for Bush if he’s hoping to hit more middle of the road Republican voters and appeal to a wider audience.
Van Hollen’s efforts, while less relevant to 2016 — though who knows, there’s a chance he may throw his lot in for the sake of altering odds and to build his name — are more interesting in that we have a tangible plan put in front of us with his announced legislation. His policy’s chances of success are another matter.
Why will Van Hollen’s act fail?
Yes, Van Hollen’s plan is more clear cut and present than Bush’s more general philosophy announcement, but it’s unlikely to pass a majority Republican House and Senate. At least Bush might have a chance of appealing to members of his own party enough to enact some form of change.
It’s not that Van Hollen’s ideas aren’t in line with messages many across the country support — for example dealing with “wage stagnation” and helping to increase pay for the middle class. While not bringing up the failed national wage increase, the sentiment is similar. But the CEO/Employee Paycheck Fairness Act, as he outlined it for Congress, is far too invasive for most Republicans in favor of the free market and small government.
Yes, it’s very Robin Hood-esque. And it’s not that the idea doesn’t have some tit-for-tat logic to it. Van Hollen makes a compelling argument that if the companies are benefiting from taxpayers the government has a right to demand they give back or give up the benefits. But the fact remains, it would mean higher taxes for businesses who don’t increase wages, which is a control Republicans have been heartily against imposing in the past. The policy would mean no tax deductions on compensation above the $1 million mark unless wages go up or employees are lost. “Corporations should not be able to deduct the bonuses and compensation for their CEOs and other executives over $1 million unless they’re giving their employees a fair shake,” explained Van Hollen. “Why should the taxpayers be subsidizing that?”
What do Republicans say?
Right on cue is Brendan Buck, spokesperson for the House Ways and Means Committee. “Just as the sun rises in the east, Washington Democrats propose another massive tax increase,” he said, according to RealClearPolitics. “Here in the House our focus is going to be on cleaning up the tax code so that we can lower rates for all taxpayers and help create good-paying jobs, not scaring them off with punitive tax hikes.”
While the GOP has long been in favor of tax code reform, its members aren’t looking for such a targeted approach. Van Hollen argues that if we give “tax breaks for things like corporate jets and racehorses,” then “surely we can change the tax code to incentivize corporations to give employees bigger paychecks.” Rep. Tom Price (R-Ga.), the House Budget Committee Chairman, gave a gentle but clear explanation of his aversion to the policy. “We welcome our Democrat colleagues to the conversation about how we can fix our broken tax code and improve the financial security of American families,” he said, according to the Washington Times. “But Washington shouldn’t be in the business of picking winners and losers in the economy.”
Follow Anthea Mitchell on Twitter @AntheaWSCS
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