If the Senate Republican tax bill could talk, it would probably sound a lot like Chuck Grassley. During a week already rife with Republican skullduggery, the Iowa Senator did his best Scrooge impression while defending the recently passed legislation’s weakening of the estate tax:
“I think not having the estate tax recognizes the people that are investing,” Grassley told reporters last week. “As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
The senator’s words were callous, elitist, and, worse still, completely inaccurate. In 2015, consumers with pre-tax incomes between $15,000 and $30,000 spent nearly eight-and-a-half times less on alcohol than consumers who made $200,000 or more, according to a Bureau of Labor Statistics survey. Consumers that made between $50,000 and $70,000 still spent more than four times less on alcohol than those who made $200,000 or more.
That same year, those wealthier consumers also outspent lower-income groups by quite a bit on entertainment (yes, that includes movies): about five times as much as those who made between $15,000 and $30,000 and more than three times as much as those making between $50,000 and $70,000.
What do lower- and middle-income American taxpayers spend most of their money on? Pretty much the same things as wealthy folks do: Housing, food, transportation, and health care, according to the BLS survey. Higher-income consumers obviously spend more on “booze” and “movies” because they make more, but Grassley chose to double down on the supposed prodigal spending among ordinary Americans.
Senator Grassley, for his part, accepted more than $170,000 in campaign contributions in the 2016 election cycle from the purveyors of “Beer, Wine, and Liquor” and “TV/Movies/Music,” according to Open Secrets, a nonprofit that tracks political donations. The Senate bill, which Grassley played a large role in shaping, includes a $4.2 billion tax cut for alcohol producers.
On Monday as the negative reactions to his remarks piled up, Grassley said his comment had been taken out of context. He defended his defense of weakening the estate tax by reiterating that the government “shouldn’t seize the fruits of someone’s lifetime of labor after they die” or penalize “frugality, saving and investment.” “That’s as true for family farmers who have to break up their operations to pay the IRS following the death of a loved one as it is for parents saving for their children’s college education or working families investing and saving for their retirement,” he said in a statement.
But the “family farmers” reference is a canard, meant to evoke images of mom-and-pop businesses struggling to pass on their savings to the next generation. The tax only affects the wealthiest 0.2 percent of Americans, according to the Urban-Brookings Tax Policy Center in Washington. Small businesses and farms, roughly 80 in total, account for about 1 percent of all estates that owe any estate tax in 2017. Under current law, individuals can pass on up to about $5.5 million completely tax-free to their heirs, while married couples can bequeath almost $11 million. The Senate bill would double the value of estates that are exempt from the tax, giving estates of married couples worth over $22 million a tax cut of $4.4 million.
One of the biggest differences between the rich and the lower- and middle-income Americans is how much they save. According to the BLS survey, in 2015 consumers with pre-tax incomes between $15,000 and $30,000 spent 26 times less on average on pensions and Social Security than consumers who made $200,000 or more. People that that made between $50,000 and $70,000 spent almost six times less than the wealthier group.
Inheritances account for roughly 40 percent of all household wealth and primarily among the rich, according to a 2015 report by the Center on Budget and Policy Priorities. Weakening the estate tax would only exacerbate such inequality and, despite Grassley’s contention, could actually reduce incentives for wealthy heirs to work.
Grassley’s heavy-handed rhetoric was a lapse from the usual Republican tax doublespeak, but by no means an aberration. Other Senate Republicans like Orrin Hatch of Utah have offered similar caricatures of lower-income Americans. “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything,” Hatch said on the Senate floor last week.
This virulent strain of modern conservatism will surely rear its head again when it comes time for spending cuts to pay for the $1.5 trillion tax bill that is currently in conference committee. House Speaker Paul Ryan has promised to curtail spending on federal health care and anti-poverty programs, and President Trump has personally set his sights on welfare reform. “I know people that work three jobs and they live next to somebody who doesn’t work at all and the person who’s not working at all and has no intention of working at all is making more money and doing better than the person working his or her ass off,” Trump told a crowd at a Missouri rally last month. “It’s not going to happen. It’s not going to happen.”
Many working-class voters might still not realize that they’ve been conned by this tax plan, but they’ll surely recognize an insult when they see one. And the Republicans might have a hard time explaining away divisive comments by lawmakers like Grassley and Hatch—and their $1.5 trillion tax bill.
Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.