Democrats continue to suggest that voters oppose the just-passed Tax Cuts and Jobs Act. House Minority Leader Rep. Nancy Pelosi says it will be the end of the world, "Armageddon." The establishment press has claimed that many or most Americans will see their taxes go up.
And yet 227 of 239 Republicans in the House of Representatives and all 51 Republicans on the Senate floor voted to pass this tax reform. (Republican Sen. John McCain supports the bill but was at home in Arizona.)
Why did the Republicans so confidently vote for a bill the press and Democrats say is a tax hike and an economy destroyer—and thus presumably a bad political move?
For one, they read it. Heck, they wrote it over the past five years. They had more than 40 public hearings. The House drafted, scored and made public specific legislation three years ago. The framework and policy goals of the bill were front and center in the 2016 election and have been public knowledge for years.
Second, they understand what voters want in 2018.
While polling tells us that many Americans believe the Democrats when they say this bill will raise taxes on middle-income Americans, that is simply not true. The Joint Tax Committee, the official government body that scores tax changes, shows that the largest cuts in Americans' tax burdens flow to those earning between $20,000 and $50,000. In fact, every income group will see their taxes fall.
The problem for Democrats is that between today and Election Day 2018, Americans will cash a paycheck every two weeks. They will see less money withheld, and thus bigger paychecks.
A tax cut is a pay raise. Democrats threatening to repeal the Republican tax cut will be promising a pay cut for middle-income Americans.
The biggest winners of tax reform will be the Americans who were unemployed in the past eight years and finally enter or re-enter the workforce. But there are some other groups, newly identified and engaged voting blocs, whose vote will be changed by tax reform.
Democrats like to talk about demographic trends; they think all Americans self-identify by age, race, gender or ethnicity. But there are powerful demographic forces that this tax reform package energizes against Democrats.
Democrats attacked Republicans for reducing the corporate income tax rate from 35 percent to 21 percent. This, they argue, will only benefit big corporations (which they smugly note do not vote). Democrats forget a few tens of millions of things here: stockholders, for example—the people whose life savings, pensions and health savings, flexible spending and 401(k) accounts increase with the stock market. When big corporations make more money, they make millions of Americans wealthier.
Of the 250 million Americans over age 18:
- 54 million have an active 401(k). That is a number equal to all the voters of Florida, New York, New Jersey, Pennsylvania, Michigan, Ohio, Wisconsin, Iowa and all of New England. And they have spouses, children and parents.
- 43 million have an individual retirement account, and receive a letter showing them in black and white how much their life savings have increased.
There are already 13 million 529 educational savings accounts, used by families for college expenses. And the expansion of these accounts under the Tax Cuts and Jobs Act to cover K-12 expenses will greatly increase the number of account holders. Millions of Catholic, Jewish and evangelical parents who send their children to parochial and religious schools just watched the Democrats oppose them.
Pelosi is 77, and Vermont Sen. Bernie Sanders is 76; they remember the days when few Americans owned stock, and operate that way, too. Now tens of millions of Americans—more than a majority of voters—learn every month how their life savings have gone up (or down). They don't hate corporations; they like companies that increase their life savings. And since the GOP bill's passage, Republicans will remind those stockholders every week that Democrats threatened to take away their savings by scuttling lower business taxes.
What's more, Democrats have spit at "pass-through" corporations—calling them tax cheats and loopholes—to their ultimate disadvantage. A pass-through is a smaller business, a partnership, a sole proprietorship or S-corporation where the owner pays his business taxes through his personal income tax return. While Democrats belittle pass-throughs, Republicans understand their impact: There are 28 million pass-throughs, and each has an owner. Many owners have spouses and families, and the majority of Americans at work today work for a pass-through.
The tax cut for pass-throughs is less than we had hoped, but the ball is now rolling downhill. Every year the Republicans are in power, there will be another tax cut, and pass-throughs will see their rates fall in each effort.
Democrats say they would support a tax cut for everyone but the 1 percent. But all of them—every single one—just voted against a collection of tax cuts that energize, reward and empower the vast majority of American citizens, aka voters.
Grover Norquist is the president of Americans for Tax Reform and author of Leave Us Alone: Getting the Government's Hands Off Our Money, Our Guns, Our Lives.
