“One question neither President Trump nor Ryan has answered is how their tax cuts will be paid for, especially if increased spending on the military and President Trump’s border wall become a reality…”
Efforts to repeal and replace ObamaCare have failed, and now the Republican Party is looking to move on to other issues. The biggest item on the list appears to be taxation, and the next big showdown may not be between Democrats and Republicans, but instead President Donald Trump and Republican Speaker of the House Paul Ryan.
President Trump is aiming to deliver across the board tax cuts that will appeal to his working class base. Ryan, on the other hand, is fixing primarily to cut taxes on the wealthy, while even raising taxes on lower income brackets. This could set up a contentious showdown between already uneasy allies, and could fracture the already divided Republican Party.
Donald Trump swept into office primarily by appealing to working and middle class Americans across the Rust Belt and the South. President Trump eschewed Republican orthodoxy and instead embraced a strain of conservative populism that acknowledged the plight of working class Americans. Of course, whether or not President Trump will actually be able to address the needs of the middle class now that he is in office is an entirely different issue.
President Trump is looking to deliver significant tax breaks. Yes, the wealthy would enjoy lower taxes, but so too would working and middle class Americans. Republican House Speaker Paul Ryan, however, is aiming to cut taxes almost exclusively for the already-wealthy. Ryan’s plan would streamline the tax code and eliminate various tax breaks, while Trump would continue to expand deductions.
Statistical analyses have found that over the course of a decade a shocking 99.6% of Ryan’s tax cuts would be enjoyed by the top 1%. With President Trump’s tax plan, a more “modest” 50.6% would be accrued by the top 1%. President Trump’s plan also offers and extends a variety of deductions that benefit working class families. For example, families would be able to deduct money spent on child care under the presidents plan. Under Ryan’s plan, essentially all deductions would be eliminated.
Further, under Ryan’s plan the affluent but not-quite-wealthy would end up seeing the biggest tax increase. Households that earn $150,000 to $220,000 would see their tax bills jacked up by an average of $1,900. Under President Trump’s plan, these households would see taxes slashed by $3,400.
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Who’s Really Going to Pay for Tax Cuts?
One question neither President Trump nor Speaker Ryan has answered is how their tax cuts will be paid for, especially if increased spending on the military and Trump’s proposed border wall become a reality. Taxes are an unfortunate necessity when it comes to paying for government spending. When debt is used instead, the bill is just pushed off onto future generations.
In theory, the tax cuts could be paid for with spending cuts, but with the failure of ObamaCare repeal efforts, at least one potential source of savings has been eliminated. The Federal government did try to tighten its belt under President Barack Obama but savings proved elusive. Meanwhile, President Trump is looking to launch several big projects, such as his border wall, a revamped military, and massive infrastructure investments.
So, who then will be paying for either President Trump’s or Ryan’s tax cuts?
So far, no one seems to know.
Brian Brinker is an OpsLens Contributor and political consultant. Brinker has an M.A in Global Affairs from American University.
