Stop acting like tax cuts for the rich are a bad thing

  • It's impossible to make sweeping tax cuts and reforms without benefiting the rich the most.
  • So let's get over our jealousy and anger and do whatever we can for the non-rich even if it helps the wealthy, too.
  • The Trump plan has some ways to do that — and it has room for more.
President Donald Trump
Kevin Lamarque | Reuters
President Donald Trump

Critics of the Trump tax reform plan are up in arms over new studies that say the policy will favor the rich more than any other economic group.

Even some Republicans are joining this chorus including Senator Rand Paul:

Yep, it looks like the rich will make out better than any other group in this tax cut plan.

Wow, what a shocker... not.

Let's get something out of the way right now: Any tax cut or even tax simplification plan will always favor the rich. The rich pay the most taxes and spend the most money to have their taxes prepared. There is no way to make those changes without benefiting them the most.

It's important to remember that the rich pay the most taxes and they've been taking on a growing overall portion of the American tax bill for years. No, that statistic is not meant to make anyone pity the upper class. They're paying more in part because they're making a lot more. So don't shed a tear.

But not shedding a tear for the rich shouldn't be replaced by the even more destructive act of angrily resenting them so much that anyone else's benefits would be sacrificed. As the late British Prime Minister Margaret Thatcher once famously shouted to her left wing opponents: "They'd rather have the poor poorer than the rich richer!"

"It may seem more fair to only cut tax rates for the middle class filers, but there's simply not that much more left to cut. The middle class is already not paying much of the total federal tax burden as it is."

If tax rates are cut across the board, richer people will mathematically keep more of their money than middle class and lower middle class people. It may seem more fair to only cut tax rates for the middle class filers, but there's simply not that much more left to cut. The middle class is already not paying much of the total federal tax burden as it is. For example, in 2013, (the most recent year where we have a full Congressional Budget Office report), the middle quintile— those people making 10 percent above and 10 percent below the mean household income of $69,700 —paid only 4 percent of all federal income taxes. Meanwhile, the top 10 percent of income earners pay 71 percent of the federal income taxes. If you want to cut taxes just for the middle class, there's not so much "there" there.

Plus, this administration and every other administration that's pushed tax cuts since the JFK years has wanted to spur economic growth from the tax cut, not just tax savings. Unless large amounts of capital are unleashed into the economy, then the tax cuts will only make a small impact. And you know who holds most of the capital.

Thankfully, it's not entirely impossible to boost the middle class benefits than the ways tried in the past. The good news is that the Trump plan did smartly focus on one way to provide very targeted middle class tax relief by doubling the standard deduction in the plan. Of course, critics have jumped all over that, too, by pointing out that might only result in a 15 percent increase in money middle class and lower middle class earners keep because some other deductions would be eliminated. Of course "only" is a relative term. A thousand bucks or so may not be a big break for many people, but for a lot of Americans it surely is.

But that's the point, isn't it? Again, we're seeing a significant segment of the partisan political experts throwing cold water on anything they don't deem to be enough of a cash boon to the non-rich because the rich benefit more. Some of us remember being told that no one should be completely happy if there's even one starving person out there. But these folks are unhappy if there's even one person eating too much out there — even if that helps lead to less starvation overall. That's just mixed up.

If the goal is to help the poor or the working lower middle class, then focusing on the end results on their behalf is everything. If national hatred for the rich among everyone from Democrats to Trump-supporting populists is more powerful than compassion for those who make a lot less, then no tax cut will ever pass.

All that negative energy against the rich would be better invested in finding new ways like the standard deduction boost to help the non-rich. We could start by restoring all those other deductions nixed in the Trump plan to make that standard deduction increase really pack a bigger punch. Changes to payroll withholdings for Medicare and Social Security could also help, especially if the politicians would be willing to let people have more control over their medical and retirement savings. Federal refunds for sales taxes on certain essential items for lower income earners is another idea worth considering.

But the easiest thing to do is simply lower tax rates for everyone and call it a day. And it's a sad commentary on the level of anger and jealousy in America today that there isn't more support for that simple solution.

Commentary by Jake Novak, senior columnist. Follow him on Twitter @jakejakeny.

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