Here we go again: Republicans in the U.S. House are planning to vote this week on a major overhaul of the country’s tax code, without a single hearing and without a score from the Congressional Budget Office that will detail the plan’s impact on the U.S. economy. A vote on a similar Senate bill is expected to soon follow.
This is the same playbook Republican congressional leaders followed with votes to repeal the Affordable Care Act. That political gambit failed when a small group of Senate Republicans, led by Susan Collins, rejected bills that would have raised rates, eliminated essential health benefits and left tens of millions of Americans without health insurance.
The GOP tax cut plan, which reduces corporate and individual income tax rates, eliminates the estate tax and numerous middle-class deductions, should meet the same fate.
Much like the ACA repeal and replace plans, the tax cut bill includes big giveaways to the rich while ultimately hurting average Americans. Nearly a third of the tax cuts for Americans would go to the richest 1 percent in 2018. By 2027 that fraction would rise to nearly half, according to the Institute on Taxation and Economic Policy. A third of the tax cuts would go to the bottom 80 percent of U.S. taxpayers in 2018 and that number would drop to 28 percent in 2027.
Adjusted for income, the wealthiest 1 percent would see a tax cut of 2.5 percent of their income. Middle income Americans would see their taxes drop by 1.4 percent of their income next year, dropping to just 0.6 percent in 2027.
Foreign investors will receive more in tax breaks than 60 percent of Americans, the institute calculated.
There are new credits and expanded deductions for families, but they would no longer be able to deduct state and local taxes or medical expenses from their federal taxes. Many higher education credits and credits for teachers who buy supplies for their classrooms would also go away.
On the business side, the House Republican plan would lower the corporate tax rate from 35 percent to 20 percent and create a new 25 percent rate for pass-through businesses, such as medical practices, law offices and hedge funds.
However, the National Federation of Independent Business, an advocate for small businesses, said that it is “ unable to support” the bill because it “leaves too many small businesses behind.”
The proposed tax changes would increase the budget deficit by $1.5 trillion over 10 years, according to the Congressional Budget Office. Republicans who have cited concerns over the deficit to oppose numerous spending proposals suddenly have no concern about raising the deficit. The budget office is already warning that the deficit caused if the tax cuts go into effect could lead to sequestration of government spending, including an automatic $25 billion cut to Medicare.
Republicans wrongly claim that the tax cuts will largely pay for themselves through economic growth. This “trickle down” theory has been proven false decade after decade. Even Bruce Bartlett, an architect of President Ronald Reagan’s 1981 tax cut, says tax cuts don’t spur growth. “That’s wishful thinking,” he wrote recently in The Washington Post. “In reality, there’s no evidence that a tax cut now would spur growth.”
Despite its many negatives and unknowns, Rep. Bruce Poliquin, a Republican representing Maine’s 2nd Congressional District, said Tuesday that he will vote for the House GOP tax plan. This is irresponsible, as was his vote to repeal and replace the Affordable Care Act.
Rep. Chellie Pingree, a Democrat who represents Maine’s 1st Congressional District, hosted a forum this week where local residents voiced concerns about the plan, which she will vote against.
Things could get even worse when the Senate takes up its tax cut plan, which now includes a repeal of the individual mandate to buy insurance under the Affordable Care Act. Without the mandate, the ACA will fall apart, leaving millions of Americans without health insurance. The Senate plan, which is still being drafted, would also phase out most individual tax cuts by 2025, but corporate tax reductions would be permanent.
Collins — and Republican Sens. John McCain and Lisa Murkowski — who voted against gutting the ACA this summer because it would harm Americans, health care providers and the U.S. economy, can’t now set those principled concerns aside in favor of tax cuts for the rich.
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