Illustrated Economics: House GOP Tax Plan

For this edition of Howard's Illustrated Economics, trouble in the tax plan.

Republican members of Congress will own the tax plan in the next campaign, whether they were in the same cadre that wrote it or not. Hundreds of Republican lawmakers are as concerned as you are.

President Trump promised "a major, major tax cut" for working Americans. Didn't happen. This is a minor, minor tax cut, offset by certain changes to deductions. The average family of four will see a savings of less than 2 grand – and millions of middle-class tax filers could see their overall taxes go up.

A broader problem is the premise that lower corporate taxes will lead to companies investing more, hiring more, paying more, trickling down to you. The problem is, there's no reason whatever to assume they WILL shift the money to you, and nothing in the plan makes them.

In fact, the plan fails workers two ways, because when companies don't pass tax savings on to you, what they'll most likely do instead is pass the savings to shareholders through higher dividends, benefitting the same high net worth individuals who are already getting better tax breaks than you are. But it's early in the process, and there is still time for Republican back-benchers to insist on changes that will give them something that will get them cheered, not booed, at town meetings.

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