GOP's 'class warfare' tactics will doom tax reform

  • The GOP tax bill raises taxes on the rich and many others, which will likely cause it to fail.
  • With Republicans like this, who needs Democrats?
  • The GOP needs to get some guts and President Trump needs to improve his salesmanship so they can actually pass a bill that enacts the kind of reforms they've been elected to get done.
Speaker of House Paul Ryan and Senate Majority Leader Mitch McConnell announce the Republican tax reform initiative accompanied by members of the Senate Finance Committee and House Ways and Means Committee on Capitol Hill in Washington DC Wednesday September 27, 2017.
Melina Mara | The Washington Post | Getty Images
Speaker of House Paul Ryan and Senate Majority Leader Mitch McConnell announce the Republican tax reform initiative accompanied by members of the Senate Finance Committee and House Ways and Means Committee on Capitol Hill in Washington DC Wednesday September 27, 2017.

Once again, it looks like the Senate Republicans are delaying the roll out of their big tax reform bill.

But this is just the freshest example of how the entire tax reform process in Washington this year has been confusing and convoluted. There are two things, however, that are becoming abundantly clear: Congressional Republicans are proving how irrelevant they truly are. And this bill has almost no chance of passing.

Being irrelevant in politics can either mean not having any power or not using that power to make a difference. And if anyone in America is looking to the GOP to offer a contrast to "Big Government" Democrats obsessed with class warfare, they aren't getting that in the tax reform bill so far.

Yes, the Republicans like to talk about big corporate tax cuts and even President Donald Trump has boasted about how the plan contains the biggest tax cuts in history. But in reality, there's too much in the bill that the Democrats would be proud to include themselves. Chief among them is a new set of quirky surcharges that creates an effective new tax rate of 45.6 percent for those who earn more than $1 million in taxable income per year.

That's right, the Republicans are raising taxes on the rich. Yes, there are plenty of economists and political activists, (it's getting harder to tell the difference), who espouse that kind of a policy. But raising taxes on the richest Americans will only stifle investment and job creation while actually increasing tax evasion.

With Republicans like that, who needs Democrats?

"You don't need a crystal ball to predict that whether the GOP tax reform bill passes or not, these policies will doom many Republican candidates in the 2018 elections and perhaps beyond. Ignoring a conservative base that has for decades demanded lower taxes and spending cuts is disastrous."

But wait, there's more. The tortuous back-and-forth debate over eliminating several major deductions for state and local taxes, mortgage interest, and even medical expenses prove there are plenty of Republicans willing to raise taxes on not-so-rich people too, especially those living in pricier urban and suburban areas.

Again, with Republicans like that, who needs Democrats?

Of course the answer to that humorous rhetorical question is that the voters will not see any reason to vote for Republicans if they're just espousing the same philosophies and policies as Democrats. There's plenty of history to prove that; just ask President George H.W. Bush what happened after he reneged on his "Read my lips, no new taxes!" pledge.

The Republicans would have us believe that this is all about a responsible push for deficit reduction to go along with the economic shot in the arm coming from tax cuts. The tax cut part of the plan is projected to result in $1.5 trillion in reduced tax revenues over the next 10 years. The GOP needs to keep it at that number in order to pass the bill with just 51 votes in the Senate and to win the votes of some the deficit hawks in their own party.

But as everyone who balances their own business or household budget knows, the best way to cut deficits is to cut spending. And the Republicans simply won't do it.

You don't need a crystal ball to predict that whether the GOP tax reform bill passes or not, these policies will doom many Republican candidates in the 2018 elections and perhaps beyond. Ignoring a conservative base that has for decades demanded lower taxes and spending cuts is disastrous.

There are a number of reasons why Republicans continue to ignore their base, but suffice it to say that negligence played a big role in Donald Trump's winning of the GOP presidential nomination in the 2016 primaries.

Contrast that to the most successful national Republican candidate of the modern era: Ronald Reagan. Reagan won two landslide presidential election victories by unapologetically cutting taxes and brushing off all the loudest critics with infectious optimism.

But what we have now is a congressional GOP without the courage to cut the taxes and the spending. President Trump has the guts, but so far hasn't shown the salesmanship skills to pull it off.

The result is a bill that sure looks like it will fail. There may be enough opposition to kill it just from Republican members of Congress from states that will be creamed by the deduction eliminations. And that new 45.6 percent tax rate is sure to spur objections from a lot of wealthier GOP donors and free market advocates at all income levels.

Yes, Republicans will face a backlash of sorts from the usual liberal suspects if they act like Republicans and embrace simple conservative policies. But the consequences will be much worse if they abandon those policies and try to pull off some form of "liberalism lite."

And they won't have to wait until the 2018 elections to find that out. The ugly and delayed roll out of this tax reform bill on Capitol Hill is already more than enough proof that the measure won't be passed. The failed Obamacare repeal and replacement effort is starting to look more orderly and reasoned in comparison, and that's saying something.

Until the GOP gets some guts and clarity, the best the Republicans can hope for is maybe just passing the corporate tax cut and repatriation parts of the bill. And if that happens, they'll have people like Apple CEO Tim Cook and Oracle Co-CEO Mark Hurd to thank for doing a better job of selling that part of the plan than they or even President Trump ever did.

The Republican Party still doesn't seem to get that it lost the 2016 elections just as much as the Democrats did. And the White House hasn't flexed its muscles enough to force Congress to craft a tax plan that would work like Reagan's 1981 bill did.

The result is everyone loses. We actually do need tax cuts, tax reform, and spending cuts most of all. The Democrats have made it clear they're against all those things and the Republicans are falling over themselves to follow them down the same path.

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

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