Nel's New Day

December 19, 2017

Tax Bill a Lump of Coal for the Holidays

Filed under: Legislation — trp2011 @ 10:05 PM
Tags: , , ,

During his campaign, Dictator Donald Trump (DDT) promised to bring coal back, and he’s lived up to his promise: most people in the United States will get a lump of coal in their holiday stockings, thanks to DDT and the GOP. This morning, 227 Republicans passed a disastrous social reform bill, masked as tax cuts, in opposition to all Democrats and 12 other Republicans. Their desire was to “do something,” just as serial killers want credit for their negative actions. GOP leadership is preening over a bill that has only 33 percent support among the public with 66 percent of the nation knowing that it benefits the wealthy rather than the middle and lower classes.

After its success in the House, the tax bill ran into a small glitch because the rush in the Senate kept it from living up to requirements that would avoid any filibustering. Tonight the Senate is working on a revised bill that will go back to the House after it passes the Senate. There is little hope that the bill will fail.

Senate Majority Leader Mitch McConnell (R-KY) claims that the GOP made major accomplishments in 2017. Other than potentially passing a bill with less than one-third approval and packing the courts with judges who believe in discrimination, the GOP Congress has no other successes. The greatest accomplishments have been in energizing the Democrats. Thus far they have far more viable candidates than the Republicans and flipped the Virginia House of Delegates with a 50-50 tie between the two parties. The last recount resulted in a Democrat winning by one vote to change 16 seats from red to blue. [Update: After a court decided that one of the the discounted votes is for a Republican, the result is a tie. In that case, the winner may be chosen by drawing a name for a glass bowl. The loser may then seek a second recount. A Republican win would leave the Virginia House of Delegates with a 51-49 majority for the GOP.]

McConnell blamed the negative polling for his tax bill on the press and Democratic resistance. Yet the media, except for the far-right such as Fox and Breitbart, publishes the facts—such as the revisions of the bill to capture both chambers of Congress gives 83 percent of the tax cuts to the top 1 percent by 2027, an increase of 62.1 percent with the original Senate bill. Over one half the people in the United States will pay more in taxes. Even in the bill’s first year, the top 20 percent gets almost two-thirds of the bill’s benefit.

The tax cut fails four Republican rules:

  • It increases the debt by at least $1.5 trillion—or possibly more.
  • It doesn’t benefit the middle class.
  • The wealthiest, including DDT), are the primary beneficiaries.
  • It likely won’t supercharge the economy, according to independent experts in the field.

DDT had promised to get rid of the carried interest loophole that gives massive tax breaks to managers of private equity funds, venture capital funds, and hedge funds. Instead of paying taxes at the higher rate of ordinary income, they can use the low rates of capital gains. The new tax bill allows them to continue saving money with that practice if they hold the investment for at least three years.

House Speaker Paul Ryan claimed that the bill would deliver revenue neutrality, simplicity, and fairness. None of those happened—not even simplicity. The tax bill still has seven tax brackets, and the revision of “pass-though” income in businesses confuses even most tax experts. The business revision will create many jobs for people who magically become independent contractors or part of LLCs.

Fairness? The bill gives breaks to businesses owned by trusts. The marriage penalty returns because the maximum deduction of ten thousand dollars for state and local taxes is the same for individual filers and for couples. And far more.

Robert Reich lists other flaws in GOP arguments about their tax plan:

It won’t make U.S. corporations competitive with foreign corporations, which are taxed at a lower rate. (1) With all the loopholes for U.S. corporations, they pay the same as foreign-based corporations. (2) Most other countries require a “Value Added Tax” on top of the tax. (3) Other countries will cut their tax rates to be competitive. (4) Most corporations benefiting aren’t “American” because over 35 percent of their shareholders are foreign, 20 percent of the employees are foreign, and U.S. citizens work for foreign-based corporations. (5) The “competitiveness” of U.S. corporations depends on U.S. workers, diminished in education, health, and infrastructure through shrinking public investments. (6) Profits of U.S. corporations, already at record levels, are used to buy back stocks and raise executive pay—the same thing that corporations will do with the $1 trillion that the GOP is giving them.

Big corporations and the rich won’t use the investment to invest and create more jobs. (1) Job creation doesn’t trickle down as proved by Reagan and George W. Bush’s tax cuts. (2) Demand for goods and services causes corporate expansion and new jobs. The middle class and poor could provide this demand if they had additional money, but the rich, far more benefited by the bill, won’t create this demand. (3) Financing the wealthy by losing health coverage for 13 million low-income people and subsequent cuts in Social Security and Medicare won’t create more jobs.

Small businesses will have no incentive to invest and create more jobs. (1) At least 85 percent of small businesses earn so little they already pay the lowest corporate tax rate. (2) The larger rewards for big business will give them more ability to squeeze out small firms and force them out of business.

Treasury Secretary Steven Mnuchin repeated the myth that “wages will go up” because of “lowering business taxes.” Businessman and former mayor Michael Bloomberg said that “sitting on a record amount of cash reserves: nearly $2.3 trillion. It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth.”

A prize last-minute tweak that originally appeared in neither the House nor the Senate costs less-advantaged people $418 billion. Known as the “Corker Kickback,” because Sen. Bob Corker (R-TN) was against the bill until that provision was put in, allows real-estate developers through LLCs to deduct twenty percent of the income that these properties generate. Corker denies that he knew about that provision in the bill because he hadn’t read it before he changed his vote. Corker said: “Deficits matter. They’re a greater threat to us than North Korea or [the Islamic State].” Now he’s willing to take almost $2 million away from poorer people with his vote for the tax bill. Only the Republicans could turn tax cuts into such an unpopular bill.

Corker isn’t alone in supporting the bill that pays him back. Twenty-three other leading GOP lawmakers responsible for crafting the bill will also see this windfall, but they were supporting the tax bill before the change.

DDT will make even more money off this part of the tax bill. Once the tax bill goes into effect, people who voted for DDT may have concrete proof of how he and the GOP will cheat them just as DDT swindled contractors without promised pay or students at Trump University with dishonest marketing. Without DDT’s releasing his tax returns, people are highly unlikely to believe that his own taxes are going up, a claim that received four Pinocchios for falsehood.

Vice President Mike Pence also lied about the tax bill to avoid going to the Middle East at this time. It’s natural that he would want to avoid the hostility that he would face after DDT claimed Jerusalem as the capital of Israel and the Western Wall as belonging to Israel. Thus Pence said he was postponing the trip to break a tie on the bill. Sen. John McCain (R-AZ) has gone back to Arizona for the holidays and won’t be present for the vote. That leaves 99 people left in the Senate for the vote, making a tie impossible.

Senate Majority Whip John Cornyn (R-TX) tried to blame Democrats for any of the bill’s problems. The GOP refused to allow any participation from Dems, and it is doubtful that Dems could keep Republicans from paying back all the wealthy donors who have been buying the GOP for years.

DDT supporters are clinging to their choice, many of them even with the possibility of paying higher taxes and health care premiums. Will they stay loyal when DDT breaks another campaign promise and tries to take away some of their Social Security and Medicare?

[Update: After a court decided that one of the the discounted votes is for a Republican, the result is a tie. In that case, the winner may be chosen by drawing a name for a glass bowl. The loser may then seek a second recount. A Republican win would leave the Virginia House of Delegates with a 51-49 majority for the GOP.]

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