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The Grand Tax ‘Bargain’ Is Just a Bigger Bonus for the Rich

How about an end to plutocracy?

"The rich who dominate politics are altering humankind’s age-old bargaining dynamics – and right on America’s grandest political stage!"

"The rich who dominate politics are altering humankind’s age-old bargaining dynamics – and right on America’s grandest political stage!" (Photo: Backbone Campaign/cc/flickr)

Did you ever bargain with an auto dealer over the price of a car? Most of us have, at one time or another, so we know how this drill works. The car has a sticker price. We want a lower price, so we make an offer. Sometimes the dealer doesn’t budge. More typically, dealer and buyer agree on a price somewhere between what the dealer demands and the buyer desires.

Humans have been haggling like this since the dawn of time. This give and take, making compromises, almost seems hard-wired into our human DNA.

But plutocracies like the contemporary United States are rewiring that historic human code. The rich who dominate politics are altering humankind’s age-old bargaining dynamics – and right on America’s grandest political stage! In the Capitol building, where America’s lawmakers meet, House and Senate Republicans have just concluded a round of “bargaining” on the GOP tax legislation that defies all human logic.

Why Bargain?

Why did these lawmakers need to bargain? Earlier this fall, the Republican majority in the U.S. House of Representatives passed a version of that tax legislation that gave America’s rich and the corporations they run over $1 trillion in tax breaks. Earlier this month, the Republican majority in the Senate passed a different version of the same legislation, with its own mammoth set of tax breaks for America’s wealthy and their corporations.

There’s nothing particularly unusual here. The House and Senate regularly pass different versions of the same basic legislation. Then they then come together in a “conference committee” to hammer through the differences. These “conference committee” bargaining sessions do what hagglers have always done. They arrive at a point somewhere between the House position and the Senate position.

Capitol Hill observers, naturally, expected the same process to play out on the tax bill. The House and Senate conferees, everyone expected, would come up with a compromise somewhere between the House and Senate positions. The conferees did no such thing. They simply bargained themselves to an even better position — for America’s rich.

Giving It All Away

On provision after provision, the House-Senate conference committee has given away to the rich more than either the House or the Senate originally voted.

The most glaring example of this new giveaway is the so-called “compromise” the conference committee “bargained” on the U.S. tax code’s top marginal tax rate.

Under current law, a couple filing jointly pays taxes on ordinary income over $480,050 at a 39.6 percent rate. The legislation the Senate passed cut that top rate to 38.5 percent on income over $1 million. The House version of the tax legislation kept the top rate at 39.6 percent, and added a “bubble” surcharge that bumps that rate a bit over 40 percent on incomes over $1 million.

Honest Brokers?

True haggling, in the time-honored tradition, would end up with a top marginal rate provision somewhere between these two positions — say, for instance, a 39 percent top rate.

But traditional bargaining processes simply do not apply in American politics today. Lawmakers in a plutocracy like ours don’t bargain with each other. They bargain with the rich. And plutocracy leaves those rich insatiable. They can never have enough. They always want more for themselves.

During the conference committee deliberations on the GOP tax plan, the Washington Post reports, America’s wealthy — the political campaign “donor class” — “demanded” an even greater top marginal tax rate giveaway than either the House or the Senate had individually legislated.

And so the Republican House and Senate conferees obliged. They came up with a “compromise” that lowers the top marginal tax rate to 37 percent.

Bringing Home The Bacon

What will this lower tax rate mean for America’s richest? A Business Insider analyst has run the numbers. The House-passed tax plan saves a taxpayer reporting $10 million in income an estimated $116,972. The Senate-passed legislation saves this same taxpayer $222,004.

Classic bargaining 101 theory would put the tax savings for our mega-millionaire taxpayer in the House-Senate conference committee compromise at some point between $116,972 and $222,004.

The actual tax savings the conference committee has “bargained” for our well-heeled taxpayer: $361,435!

Don’t you wish you could benefit from “compromises” like that? In the House-Senate conference committee tax plan, you — if you happen to reside in the 99 percent — most certainly do not. You get less out of this new package, not more.

We need to start over on a new tax package, one that could honestly be called reform. Even better, how about an end to plutocracy?

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