Perhaps congressional Republicans would never have really decided to pay for upper-bracket tax cuts by lowering the amount Americans could put into their 401(k) retirement accounts. But the fact that Republican leaders chose not to comment on the possibility once it was reported that they were considering it last week, rather than immediately denying the story, gave reason for pause across the political spectrum.
And that's where things stood over the weekend, as Democrats began to open fire with charges that the GOP was planning to pay for tax cuts on businesses — something they rightly believe can help fuel economic growth — by making it harder for the harried middle and working classes to put money aside for retirement without paying taxes on their savings.
But any possibility that this might actually become part of the plan Republicans will eventually present to the country likely went out the window yesterday morning thanks to President Trump:
@realDonaldTrump: There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!
Republicans — as well as most of the rest of the country — have often complained about the president's use of Twitter and publicly wished that he would stop. As it happened, Monday morning provided another example of how Trump's inability to resist the temptation to reply to a critic leads to trouble, as he continued a feud with a Gold Star widow and a Florida congresswoman.
But Trump's tax tweet was as smart as it was very much to the point. If Republicans were even thinking of undermining the 401(k) provision in the law — and it's obvious that some of them were doing just that — the president just made that proposition a lot less attractive.
More from National Review:
Doing more on fiscal tax reform
The GOP's tax dilemma
The perilous path to tax reform
In any effort to simplify the tax code, some constituencies that already benefit from loopholes or breaks are bound to be hurt. The current laws are a compendium of politically inspired deals that were produced by a toxic mixture of horse-trading, payoffs to supporters, and raw pandering to public opinion. Wholesale change is an imperative, and to accomplish any real reform, lawmakers will have to make enemies of those who benefit from the status quo.
But while it might be argued that the growth spurred by upper-bracket tax cuts is worth reducing the amount Americans can save in their 401(k) accounts, the optics of such a measure would be atrocious.
We already knew that Democrats would greet any attempt to reform the system or lower taxes so as to grow the economy with their usual class-warfare tactics. Contrary to the myths they spread about taxes, the wealthiest Americans already pay most of the income tax collected by the government.
But it's also true that in an economy plagued by the anemic growth that followed the 2008 recession, the middle class has found it increasingly difficult to save money for retirement. The 401(k) accounts allowed by law are a sensible way to encourage savings and increase investment in the economy. Though the government "loses" the revenue it might have collected had these savings been taxable, it gains from the surge of investment that 401(k) savings provide.