[This commentary was first published in The Portland Business Journal.]
Rarely has Congress faced such an important decision on tax policy as it does right now: whether and how to extend the massive tax cuts enacted in 2017 during the first Trump administration — tax cuts that have largely benefited the rich at the expense of working families.
Contrary to what some would have you believe, we do not have to choose between renewing them in their entirety — thus continuing a policy that mainly benefits the rich — or letting them expire altogether, which would likely cause taxes to go up for everyone. Instead, Congress can take a better approach: protect tax cuts for middle- and working-class families, and let the others expire.
There is no question that the biggest winners of the 2017 Trump tax cuts were the wealthy, and they would continue to reap the biggest rewards if the expiring tax cuts were renewed in full. According to the Institute on Taxation and Economic Policy, the richest 1% of Oregonians would get an average tax cut of about $22,000 in 2026 if Trump’s tax cuts were renewed in their entirety. Meanwhile, Oregonians in the middle would get a tax cut averaging about $860, while low-income Oregonians would receive just $100.
Congressional Republicans claim that we must accept the full tax package or risk increasing taxes for everyone.
But that’s a false choice. Nothing limits congressional action to those two options. Republican leadership can easily take a middle-of-the-road approach that cuts taxes for working families, without further enriching the rich.
The need to reject the false choice is all the more urgent, given that the Trump administration and congressional Republicans want to pay for their billionaire tax cuts by gutting critical services that families depend on. While the budget blueprint passed by the Republican-controlled House of Representatives in late February doesn’t say so explicitly, it’s easy to connect the dots and see that a big chunk of the money to pay for extending Trump’s tax cuts would have to come from Medicaid (also known as the Oregon Health Plan) and the Supplemental Nutrition Assistance Program (SNAP), our nation’s first line of defense against hunger.
As experts have pointed out, the potential cuts to Medicaid and SNAP add up to about the same amount as what the richest 1% would get from tax cuts. That’s why it’s no exaggeration to say that the House Republican budget blueprint would cut essential services to pay for tax cuts for the rich.
It gets worse. When you compare the economic blow to families from the loss of Medicaid and SNAP to the modest benefits they would receive from extending the tax cuts, it turns out that many families would be far worse off. They would lose more — a lot more, in some cases — from the budget cuts than what they would gain from the tax cuts, a recent study by the Yale Budget Lab shows.
This analysis speaks only to the pain that families will feel from the Republican budget blueprint that is currently under consideration in Congress. Another matter entirely is the economic nightmare families will face from the steep tariffs recently announced by the Trump administration. These tariffs — in effect a massive tax increase — will ultimately be paid by working families in the form of higher grocery prices, fewer jobs, and a worse economy going forward.
The reality right now is that nearly half of all Oregonians are struggling to make ends meet, while income and wealth are concentrated in the hands of the few. With this in mind, the policies that Congress enacts should help level the playing field for working Americans, not further rig it for the benefit of billionaires.
That does not mean that Congress should let all of the 2017 tax cuts expire. Instead, the common-sense choice is to do away with the tax cuts for the rich while preserving the tax cuts for the middle class and working families, in addition to protecting funding for Medicaid, nutrition assistance, and other essential services. That’s the right choice for Oregonians and the nation.
