Leading Republican presidential candidates including Donald Trump, Gov. Jeb Bush and Sen. Marco Rubio have all received misguided accolades at some point for so-called populist tax plans that would eliminate or reduce federal income taxes for the lowest-income families.
Of course, after the initial media hullabaloo died down, it quickly became clear that these candidates are toeing the party line and masking massive, deficit-financed tax breaks for corporations and the wealthy with token tax breaks for working people.
Well, presidential candidate Bobby Jindal’s tax plan suggests he believes the others have it all wrong. Currently in poll purgatory, Jindal announced a tax plan Wednesday that would repeal most of the features in the federal tax code that shelter many low-income workers from the federal income tax. He proposes to dissolve personal exemptions and standard deductions all in the name of ensuring that those below the poverty line “have some skin in the game.”
“If we have generations of Americans who never pay any taxes,” Jindal wrote. “It will be very easy for them to turn a blind eye to absurd government spending and to continue to allow our government to bankrupt our nation.”
To some, this will sound rational; to others it’s a loaded, erroneous and misguided statement that indicates Jindal’s understanding of human nature is just as wrongheaded as his knowledge of how the nation’s economy and tax system work. His assumptions are outrageous but pretty much in line with rightwing social and political thought that labels low-income people as “takers,” blames the poor for being poor, and presumes people are poor because they simply haven’t tried hard enough not to be poor.
Alas, Jindal’s federal tax proposal isn’t surprising given his track record. As governor of Louisiana, he championed policies that suggest he believes low-income people aren’t paying nearly enough in taxes and the rich need tax breaks. He proposed repealing the state’s personal and corporate income taxes and replacing the lost revenue with an expanded regressive sales tax, which would capture more of Louisiana’s poorest residents’ income. Fortunately, state lawmakers panned his plan.
Now, the governor wants to bring his backward tax philosophy to Washington.
His tax proposal perpetuates myths about low-income, working people instead of asking tough questions such as why we have an economy in which 45 percent (by the latest estimates) of U.S. taxpayers earn incomes so low that they have no federal income tax obligation? The answer cannot be that nearly half the nation’s population just needs to stop being poor and, by the way, pay more taxes.
Here are a few facts that Jindal likely didn’t consider, misconstrued or conveniently overlooked. Even the poorest Americans pay a substantial share of their income in federal, state and local taxes. All working people pay Medicare and Social Security taxes, and all consumers pay sales taxes as well as a bevy of other state and local taxes.
Jindal also promises his plan would “dramatically simplify the tax code.” But that, too, is empty rhetoric. Sure, his proposal to repeal all standard and itemized deductions except for charitable and mortgage deductions sounds simpler on its face. But a deeper dive reveals that repealing the standard deduction means that every American would be able to write off their charitable contributions, no matter how small, to lower their tax bill.
Of course no plan that panders to the radical right wing would be complete without a call to “neuter” the IRS, an agency that is already substantially underfunded.
Much of the rest of Jindal’s proposal is consistent with what we’ve seen from other Republican presidential candidates. His plan would repeal the corporate income tax, the estate tax, and the “net investment income” tax enacted to help pay for the Affordable Care Act, and he would sharply cut other taxes, including the personal income tax. The main beneficiaries of this approach would be the very best-off Americans.
While there are too few details available to confidently project the likely cost of Jindal’s plan, his own campaign, after factoring in the dubious magic of dynamic scoring, estimates his plan would cost $9 trillion over a decade—largely in line with a plan put forth recently by Donald Trump and by Jeb Bush’s multi-trillion-dollar giveaway to the wealthiest Americans.
In Jindal’s defense, not every claim he makes about his tax plan is obviously false or misguided. It is very likely that his proposals would blow at least as big a hole in the federal budget as the $9 trillion he cheerfully projects.
But let’s also be clear. Some economists have said growing income inequality and stagnating wages are among the defining issues of our time. Jindal’s tax proposal would make this problem worse by lavishing tax breaks on the very wealthy while taxing the poor more.