An open letter to our Congressman

EDIT: Some of the sources I used commented on provisions of early versions of the legislation that have been changed. I will soon update this to reflect the final version of the bill.

Dear Congressman LaMalfa,

Please vote against the harmful tax bill that Congress will vote on this week. If you vote against this bill, you might save your job.

Your next Democratic opponent undoubtedly will be happy to point out the following facts about the tax bill. If you doubt any of these facts, please consult the references I have provided.

• The tax bill will increase the taxes of 31% of your constituents, and reduce the taxes of only 3% of them. Your constituents will lose $770 million of tax deductions every year. [1]

• The tax bill will not benefit the economy. [2] Even conservative economist Greg Mankiw, who was Mitt Romney’s economic adviser when Romney ran for President, calls the tax bill "an unworkable mess." [3]

• The tax bill will drastically increase the national debt. In a survey of eminent economists, the one economist who denied that the debt-to-GDP ratio will substantially increase said later that he misread the question. [2]

• The tax bill is a giveaway to the idle rich who live off their investments. Wealthy business owners who tell other people what to do will also benefit, but not as much, and people such as surgeons who have earned their wealth by providing useful services or goods will benefit less than the business owners. [4] One of the most fundamental principles of economics is that people respond to incentives, and society benefits when the incentives it provides encourage people to do useful things. By this standard, a tax bill that encourages people to retire and live off their stock portfolios can’t be a good idea.

• The tax bill is a bait-and-switch. As you know, this bill includes some tax cuts that benefit people who aren’t wealthy, but those tax cuts expire after a few years, while the tax breaks for the rich remain.

• The tax bill gives $700 billion to foreigners. [5] I have nothing against foreigners, but supporting them is not a goal of our tax code.

• The tax bill is a giveaway to heirs. Weakening the estate tax will put even more money into the hands of heirs who have done nothing to earn their wealth. Even with the estate tax in place, the heirs of one wealthy American inherited more money than the total wealth of the poorest 40% of Americans put together. [6] I see no reason anybody needs to inherit even more than this. I don’t mean to criticize wealthy heirs; I mean to criticize a system that gives them unlimited unearned wealth.

• The tax bill will prevent the government from providing necessary services. For example, funding for CHIP, the Children’s Health Insurance Program, has not been renewed. Republican Senator Orrin Hatch, who helped create CHIP, says "The reason CHIP’s having trouble is that we don’t have money anymore." [7] Yet economists have found that in the long run, CHIP turns a profit, because children who get medical care grow up to be healthier adults who earn more money and pay more taxes. [8] If we are already unwilling to fund a vital program that pays for itself, God help us if the tax bill becomes law. The U.S. economy is currently at or near full employment, so our economy has a ceiling but no floor. If, as is likely, a recession occurs within the next few years, we will be unable to recover by lowering interest rates, because interest rates will already be near zero, and we will be unable to recover by increasing government spending. The government won’t have the money because the tax bill will reduce government revenues by $150 billion per year. [9][10]

• The tax bill will increase the U.S. trade deficit by about $800 billion over 10 years. [11] Donald Trump is correct to be worried about our trade deficit. When we pay foreign workers for net goods we import, we don’t have enough money left to pay our own workers. But Trump seems to think that our trade deficit results from "bad trade deals." He does not understand that our trade deficit increases when our budget deficit increases, since foreigners buy about 40% of federal debt.

• Because the tax bill repeals the individual health insurance mandate, premiums will rise, and millions of people will lose health insurance. Thousands of them will die unnecessarily every year. An American who loses health insurance is 40% more likely to die in the next year. [12][13]

• The arguments in favor of the tax bill are a web of lies. Donald Trump says the tax bill will cost him money. Senator John Cornyn says "This is not a bill that is designed primarily to benefit the wealthy and large businesses." [14] Give us a break. If this tax bill were a good idea, its proponents would be able to defend it honestly.

[1] DeLong, Bradford (December 3, 2017). "Doug LaMalfa: Republican House Member Voting to Make His District and Constituents Poorer". Grasping Reality With Both Hands. http://www.bradford-delong.com/2017/12/doug-lamalfa-republican-house-member-voting-to-make-his-district-and-constituents-poorer.html

[2] "Tax Reform". Chicago Booth IGM Forum. November 21, 2017. http://www.igmchicago.org/surveys/tax-reform-2

[3] Mankiw, N. Gregory (November 3, 2017). "How To Improve the Trump Tax Plan". The New York Times. https://www.nytimes.com/2017/11/03/business/how-to-improve-the-trump-tax-plan.html

[4] Krugman, Paul (December 14, 2017). "Republicans Despise the Working Class". The New York Times. https://www.nytimes.com/2017/12/14/opinion/republicans-working-class-taxes.html

[5] Krugman, Paul (December 14, 2017). "Trump’s $700 Billion Gift to Wealthy Foreigners". The New York Times. https://www.nytimes.com/2017/10/26/opinion/trump-taxes-wealthy-foreigners.html

[6] Moorhead, Molly (July 31, 2012). "Is the Walmart family wealthier than 40% of the United States?". Politifact. http://www.politifact.com/truth-o-meter/article/2012/jul/31/walmart-family-wealthier-40-percent-united-states/

[7] Krugman, Paul (December 7, 2017). "The Republican War on Children". The New York Times. https://www.nytimes.com/2017/12/07/opinion/republicans-children-health-chip.html

[8] Goodman-Bacon, Andrew (December 2016). "The Long-Run Effects of Childhood Insurance Coverage: Medicaid Implementation, Adult Health, and Labor Market Outcomes". The National Bureau of Economic Research. http://www.nber.org/papers/w22899

[9] "The Latest: Estimate Says Tax Bill Adds 1.46T to Deficit". WTOP. December 15, 2017. https://wtop.com/national/2017/12/the-latest-trump-predicts-monumental-tax-bill-will-pass/

[10] Chait, Jonathan (December 12, 2017). "Why the Trump Tax Cuts Might Jack Up the Deficit More Than Anybody Expects". New York Magazine. http://nymag.com/daily/intelligencer/2017/12/trumps-tax-cuts-might-jack-up-deficit-more-than-you-expect.html

[11] Applebaum, Binyamin (November 17, 2017). "Trump's Tax Cuts are Likely to Increase Trade Deficit". The New York Times. https://www.nytimes.com/2017/11/17/us/politics/tax-cuts-trade-deficit-trump.html

[12] Pear, Robert (December 18, 2017). "Without the Insurance Mandate, Health Care's Future May Be in Doubt". The New York Times. https://www.nytimes.com/2017/12/18/us/politics/tax-cut-obamacare-individual-mandate-repeal.html

[13] Chalabi, Mona (June 24, 2017). "Will Losing Health Insurance Mean More US Deaths? Experts Say Yes"". The Guardian. https://www.nytimes.com/2017/12/18/us/politics/tax-cut-obamacare-individual-mandate-repeal.html

[14] Krugman, Paul (November 30, 2017). "Republicans' Tax Lies Show the Rot Spreads Wide and Runs Deep". The New York Times. https://www.theguardian.com/us-news/2017/jun/24/us-healthcare-republican-bill-no-coverage-death