The Koch brothers and their network of billionaire political spenders have made their marching orders to Republicans in Congress clear this year—kill the Affordable Care Act and pass sweeping new tax breaks for corporations and the top 1% or don’t come looking to us to bankroll your 2018 campaigns.
But in order to execute those orders, lawmakers may have to pay a steep political price by eliminating health benefits and tax breaks that benefit millions of middle income voters as well as state and local governments.
Pouring SALT into the Wound
The Trump tax plan is already taking a pounding as a gift to the super rich and to Trump himself. The elimination of a popular tax deduction throws salt into the wound.
That explains why the troika of institutions that make up the Koch’s state-based political network—Americans for Prosperity, the State Policy Network, and the American Legislative Exchange Council — are muted or silent on the proposed elimination of the state and local tax (SALT) deduction in the midst of the biggest push to overhaul federal taxes in almost 40 years.
The 100-year-old provision gives taxpayers the ability to deduct state and local taxes (SALT) and avoid being taxed twice on the same income and it supports the provision of state and local services.
Whether or not to sacrifice SALT is turning out to be the heart of the debate, as it is the only way Republicans can figure out how to pay for their proposed tax breaks for corporations and the rich. Without it, the GOP can’t offer a revenue-neutral bill that cuts the marginal corporate tax rates from 35% to 20%, lower the top income tax rate, and eliminate the estate tax.
Those tax cuts would add $1.5 trillion to the federal deficit over the next ten years. Eliminating SALT would make up $1.3 trillion of that amount. But, according to the Urban-Brookings Tax Policy Center, 80% of the resulting tax savings would flow to the wealthiest 1% of taxpayers.
The Koch troika of institutions has the same problem as Republican lawmakers: It is hard to be for eliminating a tax break if you represent a state where most taxpayers benefit from it.
Americans for Prosperity
The Koch’s astroturf field operation, Americans for Prosperity (AFP), claims to have 3.2 million members and, if the national average applies to its membership, 30% of them deduct state and local taxes on their federal return. Is AFP all out for the elimination of the deduction, the way it has been all out for the destruction of Obamacare? Not even close.
“We have a tremendous opportunity to advance tax reform as the top priority in the months ahead – but it’s never going to happen unless we take bold action,” says AFP on its national webpage. It also says it is for closing tax loopholes, but it is silent on SALT.
American Legislative Exchange Council
Then there is the American Legislative Exchange Council (ALEC), the Koch’s pay-to-play group of lobbyists and legislators. Unlike AFP, ALEC does say it is for the elimination of SALT deductions, but its sign-on letter picked up only 100 state legislators out of the group’s 2,000 claimed members.
Eighteen states have no signers even though ALEC has state legislative chairs and members in those states, and some states only have one signer. The reason is obvious: most legislators find it hard to justify double-taxing their constituents. Notably, only eight of this year’s 37 ALEC “Legislators of the Week” signed on.
State Policy Network
If AFP is sitting on the sidelines, and ALEC can only organize tepid support, what about the Koch-funded State Policy Network (SPN) of groups that provide the cookie-cutter “research” to support ALEC bills and AFP lobbying? Surely they must have good arguments for eliminating the SALT deductions?
Nope. There are 66 state based “think tanks” in the SPN network, but only a few of them have anything to say about the major tax issue facing Congress. The Empire Center says that New Yorkers will not be hurt as much as Californians, but there is no way to tell if the group is for or against the deduction elimination.
In Illinois the Illinois Policy Institute warns that elimination of the SALT deduction would have “a disastrous impact on the Illinois’ economy” unless it is offset by “tax cuts that improve Illinois’ competitiveness relative to other states,” but it doesn’t specify what those are.
As a result, the Kochs are going through linguistic and organizational gyrations to explain their non-positions. “The network won’t draw any ‘red lines’ on changes to the tax laws; it’s simply pushing to get rid of carve-outs for special interests and lower tax rates across the board,” said James Davis, a spokesman for Freedom Partners, the Koch’s ATM for political campaigns.
Without leadership from AFP, ALEC, or SPN in the states, it is clear that the fight is being carried by the large corporations like Koch Industries that benefit from the GOP’s tax overhaul, and the Koch machine can only half-heartedly and vaguely create the illusion of an acceptable way to pay for it.
On the flip side, every other organization that represents state and local elected officials, such as the nonpartisan National Council of State Legislators, the National Association of Counties, the National League of Cities, is resolutely against elimination of SALT deductions.
Image courtesy of Brave New Films Koch Exposed.
The Mercers, Rebecca and Robert, certainly deserve a dishonorable mention.
Bruce,
Sourcewatch.org, the companion site to prwatch.org, describes many of the corporate right groups that undermine our representative democracy and widen the income gap. Start always with ALEC and its and its board members, and read about the bad acts of the companies that are active in it. Next stop are the State policy Network groups, Koch funded conservative policy shops in almost every state. Then there is Americans for Prosperity, It’s a three legged stool — ALEC corporation write the bills, groups part of the State Policy Network then do “studies to support the bills, and Americans For Prosperity fakes grassroot support for the legislation. Understanding this three pronged approach allows an understanding of much of what is going on, and behind them are the funders, not just the Kochs, but read our expose of the Bradley foundation. Steve Bannon is a unique player in American political history, but the real work of changing laws for the wealthy — an effort he helps without knowing it by pitting people against each other — is done by institutions and right wing foundations. There’s the glitz, Bannon, then there is the hard work of these right wing groups to pass legislation at the local and state level. Alecexposd.org gives examples of these bills.
Don
Don Wiener as you must realize, this business of “tax reform” is a pretty sounding label that can be used by Satan and his servants as cover for a great multitude of evil schemes. The Koch brothers are notorious for sure, but isn’t Sheldon Adelson, aren’t some of the other “rabid right” conservatives on board with this mother of all evil schemes? Would appreciate your comments on who else is quietly supporting the mess Mr. Trump is pushing. Like his billionaire friends? Bannon and company? Help us get acquainted with the lay of the land. In advance many thanks.