Are Democrats Pro-Tax Reform? Depends on the Year

There is a phenomenon in physics whereby the mere act of observing an event changes the outcome. This is perhaps most pronounced in the debate over whether light was composed of particles, which travel in a straight line, or waves, which travel in undulating ripples. Experiments have proven that when electrons are not observed, they behave as waves, but once an observer begins to watch the electrons they behave like particles.

There is a similar effect when it comes to Democrats and tax reform. When Democrats know that their voters aren’t watching, they discuss the necessity of tax reform and laud it’s economy-growing prowess. But when the lights come on and reform is on the table, Democrats inevitably reverse course, and portray everything as a sop to the wealthy.

Take some recent comments by Democratic senators:

  • Elizabeth Warren (D-MA): “We need serious tax reform to make the tax code fairer and simpler.”
  • Debbie Stabenow (D-MI): “I certainly think we need to do tax reform and I certainly want the jobs that will come with an infrastructure bill.”
  • Chuck Schumer (D-NY): “I’m game to to it because I think it’s real important for American competitiveness.”
  • Joe Donnelly (D-IN): “Joe thinks Hoosiers deserve a tax code that is fair, efficient and encourages businesses to invest here at home. He believes that tax reform should reflect our most basic priorities-building a strong middle class; encouraging businesses to invest, innovate, and create jobs; and fostering an environment that allows American companies to compete in the global economy.”
  • Claire McCaskill (D-MO): “The current U.S. tax system is broken and needs reform.”
  • Tammy Baldwin (D-WI): “Tammy believes that in order for America to compete and win the future, we need a tax code that respects and rewards hard work and not just wealth; grows the middle class and strengthens economic security; increases American competitiveness; and reduces the nation’s deficit and debt.”
  • Sherrod Brown (D-OH): “Corporate tax reform is necessary to ensure the American economy is the most desirable place in the world for U.S. based companies to invest.”

If those represented true positions then Republicans would have an excellent starting point for negotiations, heck the principles that President Trump has already laid off would tick most of the boxes. But of course, they don’t.

Instead, they’re nice-sounding white lies that are designed to make them seem reasonable, and pro-reforms that help things that everyone likes (jobs, innovation, competitiveness, the middle class). But they’re still lies.

So when the election was over and Republicans’ were teeing up their aggressive pro-growth agenda, Democrats explained their strategy to take down tax reform. Bloomberg reported on Democrats’ approach months before President Trump’s tax plan was even released:

“Congressional Democrats say they’ll try to thwart Republican plans to overhaul the U.S. tax code by portraying them as a boon for the rich that betrays President-elect Donald Trump’s campaign promise to fight for working Americans.”

Rep. Pelosi’s staff even admitted that Democrats “will draw lessons from earlier fights when it was able to black changes despite lacking control of the White House and Congress.”

So it was absolutely no surprise at all that as soon as President Trump’s tax plan was released, Democrats amped up their rhetoric. Gone were the days of focusing on the growth-unleashing benefits of tax reform. Never mind that they’ve long supported closing special interest loopholes in order to lower rates. And please forget any mentions of American competitiveness  or encouraging domestic investment. Just as they promised, Democrats singular message was that reform was nothing more than a sop to millionaires and billionaires.

What they don’t tell you is that almost any attempt at reform is going to disproportionately “benefit” the wealthy, but only because high-income taxpayers (those who earned over $250,000) earned 28 percent of total adjusted gross income while paying 55 percent of the entire income tax burden. In other words, our tax code is so progressive, that any attempt at reform will inevitably reduce taxes more for the wealthy than the poor. But that doesn’t make it bad. If anything, it presents a tremendous opportunity to grow the taxable pie by unlocking higher growth.

Democrats know that. Or at least they know it in the intervening years when tax reform is nothing but a distant political dream. When it comes time to actually take a vote, Democrats morph back into anti-reformists, no matter the details of the plans Republicans are discussing. Through the mere act of talking about tax reform, Democrats views about reform changes dramatically.