Last Thursday, Senate Republicans received some terrible news: their trickle-down tax bill—the one that would transfer trillions in wealth to corporate America—officially had too much red ink to pass with a simple majority. So on Tuesday night, lawmakers took a step back and decided upon some radical changes to come up with the revenue necessary to ensure the bill complies with the Byrd rule.
First, as expected, they threw in a repeal of Obamacare's individual mandate, which frees up some $300 billion over 10 years thanks to an estimated 15 million people going uninsured.
But the real coup de gracewas deciding to completely sacrifice the nominal tax cuts being tossed to the middle class: under changes proposed by Utah Senator Orrin Hatch, tax cuts for the middle class—as well as other individual tax cuts, plus the doubling of the standard deduction—would expire after 2025.
The reduction of the corporate tax rate from 35 to 20 percent, on the other hand, would be permanent.
Republicans, of course, claim that taking an ax to the corporate rate will ultimately benefit the common man by incentivizing companies to invest. But unfortunately for the people trying to sell this thing, chief executives have largely refused to play ball, even to humor Gary Cohn.
Conventional wisdom, outside the Grand Old Party, is that those tax savings will mostly go toward things like dividends and share buybacks. Amazingly, House Speaker Paul Ryanis now claiming that the temporary provision wont actuallybe temporary, predicting that a Congress of the future will preserve the cuts, but without going into any detail about how that would actually, y'know, work.
Ryan might be right: if the United States still exists in 2026, it will probably be difficult for lawmakers to allow those tax cuts to sunset the following year. It's a hell of a gamble, both that Republicans can persist through the electoral pain of backing a bill where the middle class so obviously takes a backseat to corporations, but also that the Congress of the future won't allow this plutocratic scam to become permanent.
Republicans might have avoided this whole mess if they'd targeted a more realistic corporate tax rate.
As Vox's Matthew Yglesias pointed out earlier this month, though the corporate income tax rate in the U.S. is 35 percent, most companies take advantage of so many loopholes that they usually pay a rate in the mid to high 20s. In 2012, Mitt Romney floated a plan to reduce the ostensible rate to 25 percent. "But House Republicans looked at Romney's plan and decided to cut 5 percentage points lower—all the way down to 20 percent—even though there's no way to make that work."
There's still no way to make that math work, it seems, without some kind of gimmick. Now, courtesy of Senator Hatch, that's what Republicans are proposing: a plan where all the popular parts disappear; the unpopular parts are permanent; and some other schmuck is left to fix the damage long after Donald Trump is out of office.
Bess Levin, Vanity Fair, November 15, 2017
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November 15, 2017
Post Script. The subtitle of this article is: Sorry Suckers. The GOP’s new. plan eventually raises taxes on everyone but corporate America. Call your elected officials.
