Friday, January 20, 2023

Only the Current Level of Insanity Could Let Republicans' Tax Policy "Ideas" Fly Under the Radar

by Neil H. Buchanan

Yesterday, in what I admitted was a rather grumpy column, I waded back into the muck of the debt-ceiling debate.  I made it clear up front that there is nothing important about technically reaching the statutory debt limit this week, because the impending catastrophe will happen only if the Treasury Department exhausts its so-called "extraordinary measures," most likely in late Spring or early Summer.  Even so, it matters how the debate is framed over the coming months, and readers can be assured that both Professor Dorf and I will not be able to avoid writing again and again about the debt ceiling.

Today, however, I want to turn to one of the most basic, old-fashioned seitan-and-potatoes political issues out there: taxes.  If the Republicans who are threatening to blow up the global economy by refusing to adjust the debt ceiling were truly interested in "fiscal sanity" of any kind, they would be talking sensibly about taxes and spending.  Instead, they are making vague threats about spending cuts while refusing even to consider tax increases to address what they claim are horrible deficits.  And of course, their first order of business this month (after ritually humiliating Kevin McCarthy for a solid week) was to defund the police -- specifically the tax police, because the IRS is the federal law enforcement agency that Republicans most love to hate.

If their threats to take the economy hostage were not in play, we would all be talking about what Republicans do and do not want to do regarding taxes.  And although we can put their tax policy preferences in the category of "at least not tantamount to terrorism, unlike their debt ceiling plans," their tax plans are truly terrible.  I referred to their "tax policy 'ideas'" in the title of this piece, and the scare quotes are quite apt.

Here, I will discuss a recent interview of a purportedly reasonable Republican member of the House, as a window into just how far off into la-la land one of America's two parties has gone.  This is not governing.  This is at best wishful thinking.  At best.

One of the proximate reasons that control of the House of Representatives switched parties in the 2022 midterms -- where the ultimate reason continues to be extreme, shameless gerrymandering -- is that Republicans picked up several seats in New York State.  With 222 seats in a house that requires 218 seats to command a majority, New York made the difference.  Of course, one particular rookie congressman from New York has been sucking up an impressive amount of political oxygen, and that is a pathological liar named George Santos.  (Or is that really his name?!?!)

It has been a pleasant surprise that many New York Republicans, including all of Santos's fellow members of Congress, have called on him to resign his seat.  As that seat might well flip back to the Democrats, and with the ever-present possibility of deaths and other unexpected events making a 4-seat majority especially precarious, that is truly a public-spirited position to take.  Naturally, it is not a position that McCarthy has taken, but he might ultimately not get his way.

One of those first-time Republican representatives is a political novice named Brandon Williams, who barely (one-percent difference) flipped the upstate district that includes Syracuse and Utica.  (Side note: "Brandon" must be a particularly awkward name for Republicans these days, dark or otherwise.)  Last week, after Williams joined his fellow Republicans in denouncing Santos, Chris Hayes interviewed Williams on his "All In" show on MSNBC.  The interview began on the common ground of the Santos controversy, and both Hayes and Williams were clearly comfortable talking to each other, even joking about NYC-versus-upstate politics at a couple of points.

Williams came across as reasonable, pleasant, and not at all a bomb-thrower.  Washington Post columnist Jennifer Rubin is completely correct, however, in pointing out that "There are no moderate House Republicans," including this devastating indictment of her former party:

Yet every single one of them voted 15 times to make Kevin McCarthy, an election denier, the speaker of the House.

Every single one of them also voted for the rules package that the House passed this week, which sets up a standoff over the debt limit, creates a committee to “investigate” ongoing criminal cases and hobbles the Office of Congressional Ethics. And they didn’t bat an eye over reports that McCarthy (Calif.) promised to give more seats on the Rules Committee to MAGA radicals. Pretty immoderate behavior.

So Williams (whom we might call Bland Brandon) is no moderate.  He might be getting his moment in the sun for having at least one thing that he will not abide, but he is a member in good standing of his band of anti-democracy radicals.  And this is where the interview with Hayes becomes interesting.  Hayes began the discussion with this:

I'm curious, as someone who is in a district that's a close district ... if it helps to have things like votes on abolishing the IRS and slapping everyone with a 25 percent sales tax, which would likely amount to an enormous tax cut for billionaires and probably increase taxes for most middle-class folks.  Like, is that the kind of thing you went to Congress to do, and does voting "yes" on that help you at home?

After noting that his district went for Biden in 2020 by 7 points, Williams decided to answer Hayes's question in a way that a tax policy nerd like me can only describe as so scary that it is funny:

I ran as a classical conservative, and so I believe the challenges that we face need classical-conservative-Ronald-Reagan Republican solutions.  And so, and that's the message that I ran on.  If you look at the numbers for the IRS, you know, the real needs of the IRS, they do most of their audits electronically, and so it's just natural that the number of people in the IRS have gone down over time.  To hire 87,000, when we're not even, frankly, defending our southern border ... uh, that's just not what we need to do.  I don't think it's the right message, and I think a lot of the analysis says that the bulk of the revenue is going to be drawn from the people under $200,000 a year.  In New York State, that really targets a big part of the middle class and I don't think that's what Americans need right now.

As the kids say: Wow, just wow.  I will get to the more obvious problems with that statement in a moment, but I have to say that I was surprised to learn that classical-conservative-Ronald-Reagan solutions include letting people cheat on their taxes if they make less than $200,000 per year.  Because honestly, that is the most generous reading of what Williams is arguing.  Toss in the silly anti-immigration pandering, and you get something like this: "The IRS doesn't need money, and if we give it to them rather than spending it kicking out people who are seeking a better life in this country, they'll just collect tax revenues from people who aren't super-rich."

To be clear, we should be spending more tax-collection resources on catching the wealthiest tax cheats, but it is a bit odd to say that we dare not give the IRS more money because it will succeed in finding and stopping tax evasion among people with six-figure incomes.  More to the point, however, I discussed this "IRS audits are targeted at people with lower incomes" talking point in a column last summer, where I pointed out that the IRS does currently aim its limited resources at the working poor who are eligible for the Earned-Income Tax Credit (EITC).  Back then, the Republicans were talking about people earning less than $75,000 per year (making it notable that Bland Brandon decided to move the number up to $200,000), but the point was that there are cynical reasons that that IRS targets EITC recipients: the agency has so few resources that it makes sense to target un-lawyered EITC workers who might have made innocent errors on needlessly complicated tax forms; and besides, Republican-led Congresses have made it abundantly clear over the last two or three decades that they want the IRS to target the working poor.

To his credit, Hayes clarified that point: "Oh, they've definitely been auditing the poorest folks the most, and stopped auditing the richest folks, which is one of the great ironies."  Indeed, the Republicans are saying what amounts to this: "Because we've set up the system so that the IRS essentially has no choice but to audit poor people rather than rich people, we're going to scare voters into not letting the IRS audit rich people -- because the IRS audits poor people."  I believe the only appropriate response here is: "Huh?"

Note also the ritual invocation of the magic number 87,000, which has become a big part of the Republicans' reaction to the funding provision that they are trying to repeal.  At least Williams passed up the opportunity (or maybe he simply forgot the talking point) to claim that all 87,000 IRS hires will be armed and shaking down small businesses.  Republicans' claims about that totemic number -- 87,000 (over the course of ten years,  by the way) -- and its composition have been repeatedly debunked, with many of the new hires set to replace retiring employees, and almost none of them being gun-toting cops in the field.

Also, Williams tried to say that the IRS does not need more resources because the IRS does most of its audits electronically, but of course a big part of the budget enhancement was needed specifically because the IRS's technology is so radically out of date.  He tries to paint a picture of an agency that should just naturally get smaller, when in fact Congresses led by both parties have repeatedly given the IRS new things to do, with no new budgeting to do it -- until the Democrats finally did something about it last year, partially reversing a 25 percent cut in the IRS's real budget since 2011.  And the Republicans have been lying about it ever since.

But wait, it gets worse.  Note that Williams did not even answer Hayes's question, which was not about the Republicans' vote to fire those 87,000 bogeymen at all.  Hayes noticed this and, after letting Williams blather on, followed up:  "I just wanted to clarify, I meant the legislation that one of your Republican colleagues has introduced to abolish the IRS entirely, which may get a floor vote soon."  When Williams looked bemusedly unenthusiastic about that bill, Hayes asked: "You don't think that's a good idea?"

Williams replied: "I don't think that's a good idea.  I mean, you know, that seems like showmanship to me.  That doesn't seem like good policy."  Fair enough, but to be clear, what Hayes was referring to is the co-called FairTax proposal, which would replace the entire tax code with a national sales tax.  That has been a passion project of many of the most conservative Republicans (including presidential hopefuls) since the 1990's, and the current true believers extracted a promise from McCarthy to have a vote on their proposal.

This bad idea is so old that I wrote a column about it in the very earliest days of Dorf on Law, in August 2007 (when the proposal itself had already been languishing for over a decade), pointing out among other things that FairTax proponents are even dishonest about the 30 percent tax rate that they are proposing.  It is a sales tax, and sales taxes are expressed as the percent that we add to the sales price: an 8 percent sales tax turns a $1.00 purchase into a $1.08 total cost, for example.  But Republicans insist on saying that they are only proposing a 23 percent rate.  Why?  Because if your $1.00 purchase has 30 cents added in tax, then those 30 cents are only 23 percent of the new $1.30 total.

Talk about spin!  Interestingly, Hayes referred erroneously to the rate as 25 percent, but it seems clear that he is (inadvertently, to be sure) buying into the Republicans' spin, which is yet another example of how insidiously effective repeated lying can be.

As I suggested at the beginning of this column, Republicans' ideas about tax policy have reached the point of parody, completely detached from reality and driven by nothing more than animus and wilful ignorance.  If we were not worried about the debt ceiling and other existential threats, this craziness would be making people shake their heads in disgust.

In the end, Hayes wrapped up the Williams interview pleasantly: "Congressman, I gotta say, you and your colleagues in this New York delegation have I think one of the most interesting two years ahead of you in this House Republican caucus, representing Biden districts."  The conversation ended amicably.  And that is better than shouting past each other, but the entire vibe made it seem as though Williams's quiet demeanor was consistent with his policy views.

Again, however, Rubin is right:

Then came the vote on Monday to repeal the $80 billion boost in funding for the Internal Revenue Service that Congress passed last year. Getting rid of this money would empower tax cheats and add some $115 billion to the deficit over the next decade. Yet every Republican voted for it. Again, there was no difference between how faux moderates and the worst of the election-denying extremists voted.

It should be clear now that these “normal” Republicans have deceived voters.

There is nothing normal here.  Dick Cheney was sometimes described as moderate and reasonable because he did not sound like Jesse Helms or Pat Buchanan, but there was nothing moderate about the man.  House Republicans, very much including people like Williams who seem truly genial, are not normal.  They keep proving that they are not normal, but too many people keep refusing to admit what is in front of them.  This will not end well.

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