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posted on 29 July 2017

The Koch Brothers Are Steering Trump's Tax Reform Policy

by Staff Reports Money Morning, Money Morning

Special Report from Money Morning

The billionaire Koch brothers are attempting to drive Washington's policy decisions again.

This time, the siblings are prepared to sway GOP leaders' decisions on tax reform.

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And they'll kick off their campaign this Monday, July 31, in a meeting with officials from President Donald Trump's administration - specifically Treasury Secretary Steven Mnuchin and White House aide (and former Koch advisor) Marc Short.

Set to make the case for Charles and David Koch's special brand of tax reform will be Freedom Partners Chamber of Commerce Executive Vice President James Davis and Americans for Prosperity (AFP) President Tim Phillips.

Both Freedom Partners and AFP are Koch-backed organizations.

The event has been billed as an opportunity for "the White House and the Koch network to argue the benefits of a tax code rewrite," reported The Hill this morning.

But "arguing benefits" isn't all the Koch brothers will be doing; they'll actually be shaping the U.S. tax code…

The Koch Brothers' Wish Is the GOP's Command

Evidence that the brothers are already affecting Washington's "tax code rewrite" came yesterday (July 27) when GOP leaders nixed Speaker Paul Ryan's (R-WI) border tax proposal. The border adjustment proposal was a key revenue-raising plank of the plan House Republicans unveiled last year. It would tax imports but let exports go untaxed.

The Koch brothers say that they didn't like the tax because it would burden taxpayers by increasing consumer prices.

Of course, the Kochs also have major stakes in Canadian tar sands imports. Any import tax on goods - including oil - coming in from Canada would cost them a pretty penny.

AFP's President Phillips didn't hide his excitement after the tax was shut down: "We're greatly encouraged to see leaders put this harmful provision behind them and start to unify around a positive vision for tax reform," he said, according to Roll Call this morning.

Phillips added that the Koch brothers' organization will continue working with lawmakers and the White House to advance its vision for a tax code built on "positive principles."

"Not burdening taxpayers" is just one of those five principles.

Here are each of the Koch principles they hope to bring to the tax reform table in the days ahead…

The Koch Brothers' "Five Principles of Tax Reform" Are Just a Front

As outlined on AFP's website, the organization adheres to the following principles when it comes to crafting ideas for Washington's tax reform:

  1. SIMPLICITY: Lower rates, fewer brackets, and the elimination of special loopholes, deductions, and exemptions will make tax compliance easier and more affordable.
  2. EFFICIENCY: A broad-based, low-rate tax system is the most efficient way for the government to collect revenue - causing as little disruption to the economy as possible.
  3. EQUITABILITY: Corporate welfare and special-interest handouts in the current tax code create an unfair, two-tiered tax system and should be eliminated.
  4. PREDICTABILITY: Tax certainty is essential to a pro-growth tax system.
  5. NO BURDEN ON TAXPAYERS: Comprehensive tax reform must be done without placing new burdens on the American people, whether in the form of a BAT (border adjustment tax), VAT (value-added tax), carbon tax, or otherwise.

As part of their effort to affect tax reform changes, AFP and Freedom Partners have run digital ads urging lawmakers to adhere to these principles.

Additionally, the group's volunteers will be making calls this summer to urge lawmakers to back a tax code overhaul.

While the Kochs' principles sound solely beneficial to average Americans, they aren't always so ideal once they're applied to a bill.

Case in point: Earlier this year, Koch organizations said they favored a bill in Florida that would have hurt Medicaid recipients in the Sunshine State. They pushed for a bill that would have required all Medicaid recipients to work in order to receive medical care.

This "push" fell in line with their fifth principle because Medicaid recipients who are able to work - but don't - place undue burden on the taxpayers who do.

"By taking measures to ensure that temporary cash assistance remains temporary, research shows that more Floridians would enjoy the dignity and extra income that comes with work," AFP wrote on its website this week.

This arguably Orwellian justification shows that both the government and the Kochs can justify any piece of legislature they come up with using their five principles.

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