Diane Mitsch Bush: Not so fast on Tax Cut Act
Many economists, tax analysts, nonpartisan organizations like the Joint Committee on Taxation, and former officials from both Republican and Democratic administrations agree that the Tax Cuts and Jobs Act will not simplify the tax code, provide long-term tax cuts for middle- and lower-income workers or jumpstart the economy.
Contrary to claims by GOP leadership, this bill adds over 400 pages to the tax code and a whole series of confusing, sometimes conflicting, provisions. It is not a simplification. It rigs the system even more than the current code.
The centerpiece is a $1.5 trillion dollar permanent tax cut to America’s largest corporations, which are now making record profits and paying astronomical CEO salaries, paid for by adding at least $1.4 trillion to the deficit, by ending the limited middle class cuts in 2025 and by major cuts to benefits that working Americans have already paid into: Social Security and Medicare.
Additionally, the bill “saves” $300 billion by ending financial help for those buying health insurance on exchanges and ending the individual mandate to purchase insurance. This provision alone will leave at least 13 million Americans without healthcare coverage and an unknown number unable to pay rapidly rising premiums, likely creating individual bankruptcies. That doesn’t even count the billions in mandatory cuts to Medicaid.
The House version cut deductions that currently help middle-income people, like deductions for medical expenses, student loan interest and expenses incurred by teachers for needed classroom materials that schools can’t afford.
The National Federation of Independent Business (NFIB), which generally supports Republican policies, is strongly opposed to the House version because their analysis of the bill shows that the help for small business owners claimed by proponents is just not there. In the Senate version, the “small business” benefits accrue to people making more than $400,000 in profit income annually, with the lion’s share going to businesspeople who make $1 million or more in net income from their businesses.
Claims by our Congressman that the bill “will cap the rate that small businesses can be taxed to 25 percent” ignore the fact that under current tax code, the top rate for income from business profits up to $400,000 is already 25 percent.
The Tax Cuts and Jobs Act was crafted hastily under pressure to deliver a political win to satisfy the President and big GOP donors. “My donors are basically saying get it done or don’t ever call me again,” said Congressman Chris Collins (R-New York) on Nov. 13 just before the House vote.
This rush to a “political win” spells a huge loss for the American people. Many analysts have pointed out contradictions, loopholes and tax dodges in this bill that benefit the top 1/10th of 1 percent of earners.
Steven Shay, a former Treasury official under Presidents Reagan and Obama, has cautioned about all the unforeseen consequences in this bill because it was so rushed with few hearings and little public input. Among those are loopholes that may accelerate moving jobs to foreign countries. Shay said, “all of this is happening in an incredible rush, and frankly it is absurd and incredibly poor governing to push a bill of this significance through in the time-frame they are doing.”
GOP leaders say the $1.4 trillion increase in the deficit will be paid for by “growth,” but most economists who have run the numbers say that the growth rates in the models are unrealistic. Evidence from past attempts to use the trickle-down theory show that it simply does not create new investment and new jobs and may lead to high inflation. Anecdotally when the President’s Economic Advisor Gary Cohn asked a group of Wall Street movers and shakers whether they would invest in new capacity or new jobs with this tax windfall, he seemed surprised when only a few hands went up.
Many statements from GOP leaders and members, including our own Congressman, suggest that they do not understand what is actually in the bill or how it affects people and whole communities. They forget to mention that the Senate bill ends any tax cuts for middle-income earners in 2025, but corporate cuts are permanent. In fact, the Tax Cut and Jobs Act is a giveaway to America’s largest corporations and wealthiest individuals, paid for by increasing deficits and cutting benefits for lower- and middle-income earners.
I strongly urge our Senators to vote “no.” Then we can develop evidence-based, workable solutions for jobs and economic opportunity for all. We need to level the playing field, not rig it more.
Diane Mitsch Bush is the former Colorado State House District 26 representative and a current candidate for the U.S. Congress in Colorado’s 3rd District.
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