Why exactly did Republicans decide to reduce the death tax on the mega-rich?

The Republicans had a problem as they edged towards passage last weekend of a tax re-write bill in the US Senate. The body they had themselves created to make sure Congress doesn’t pass laws the country can’t afford, the Joint Committee on Taxation, had announced that rather than paying for itself, the legislation would add about $1trillion to the federal budget deficit.

This was inconvenient. It shone a bright light on what was already obvious to most of us: the contention that the considerable loss of government revenue from slashing taxes on the wealthy and big corporations would be offset by increased economic growth was dubious, if not a lie. The party of budget disciplinarians was in fact the party of deficit addicts.

In the next couple of weeks, Senate negotiators must reconcile their bill with one passed by the House of Representatives in November, in hopes of getting a common version approved and ready for Donald Trump’s signature by Christmas. They will probably succeed, even though the public at large is watching the exercise with deepening scepticism.

The centre-piece of the reform is a steep cut in taxes on corporations from 35 per cent currently to about 20 per cent, not something that the average American considers a priority. While the sheer complexity of the legislation makes grasping its implications for individuals at every income-level less than easy, it’s abundantly clear it’s the wealthy who will benefit the most, not the middle class or the poor. Message to Trump voters in particular: you’re about to be screwed.

Chuck Grassley, the chairman of the Senate Finance Committee, helped us understand what is really going on when he defended one of the most hard-to-swallow provisions of the Senate bill, a doubling of the threshold for the paying of estate taxes. Currently, a death tax is due if the deceased is transferring assets of more than $5.5m to their heirs. The Senate wants to raise that to $11.2m. The House version would eventually repeal estate taxes altogether.

What? Why? Tapping inheritances of the rich at least provides one means of keeping the deficit in check. Well, here’s Grassley. “I think not having the estate tax recognises the people that are investing as opposed to those that are just spending every darn penny they have, whether it's on booze or women or movies,” he told the Des Moines Register a few days ago. Such vices! We’ll be fine with this plan so long as we lay off the eggnog this yuletide season. And mistletoe.

Even today, estate taxes are levied on just two out of every 1,000 Americans. But Republicans are so resistant to upsetting the very well-off (their donors) they must find other ways to restore sanity to what they are proposing. And they have, each time robbing the rest of us. Let’s review.

The Senate bill would repeal the Obamacare requirement that all Americans buy health insurance, because that would mean huge savings in subsidies the government pays poorer folk to do so. That could eventually lead to Republicans finally achieving their dearest goal: extinguishing Obamacare entirely.

Meanwhile, fewer people buying insurance coverage would entail a sharp spike in premiums for those of us still doing so. By one estimate they would jump 10 per cent just in 2018. Not great for the middle class. Also for the chop: the deductions home owners can now take for the local and state taxes they pay on their properties. Already forecast: a 10 per cent drop in property prices in the New York City area alone as a consequence. Not great for the middle class.

The Senate bill would end tax exemptions for municipal bonds issued by big cities like New York to build urgently needed affordable housing stock. Not good for the poor or middle class. Take everything together and the Tax Policy Center, a non-partisan think tank, calculates that 87 million families making less than $200,000 nationally would experience a tax increase under the Senate tax plan by 2027. Not good for the middle class.

But the pain will likely extend much further. The next steps in mitigating the damage the tax overhaul will do to the federal budget are likely to come in the form of Republicans taking a scythe to America’s welfare safety net. Several among them, Trump included, have already begun to say as much on the record. Welfare reform – that implies cuts to programmes like Medicare, Medicaid, children’s health insurance and food stamps – will “take place right after taxes, very soon, very shortly after taxes,” Trump said at a recent rally.

Senator Orin Hatch of Utah has been putting it even more bluntly. “I have a rough time wanting to spend billions and billions and trillions of trillions of dollars to help people who won’t help themselves, won’t lift a finger, and expect the federal government to do everything,” he said on the Senate floor shortly before the chambers tax bill passed. He said he was talking about people, “who believe everything they are or ever hope to be depends on the federal government rather than the opportunities that this great country grants them”.

So the agenda of the GOP with Trump is now clear. Look after the rich and hammer the middle class and the poor. To which I say over to you, Democrats. If you can’t make a case for a popular rebellion next year when the mid-term elections will give you the chance to retake control of not one but both chambers of Congress then you will deserve our support even less than they do.