The This-Is-Why-We-Won’t-Be-Able-
TAX BILL -- THE POLITICS: At 1:30am on Saturday, the Senate voted on party lines (with exactly one Republican defector, Bob Corker) to pass a gigantic tax cut after exactly zero hearings, with last minute changes released literally hours before the vote, with changes literally written in by hand in the margins. This bill represents an astounding denigration of democracy, more damaging to our governing norms and structures than anything we have yet seen in the Trump era. “On Friday, at lunchtime, Mitch McConnell, the Senate Majority Leader, announced that he had the votes to pass a bill, but what bill? A final version, which ran to more than five hundred pages, didn’t emerge until about 6 p.m. , and some of the pages had inserts scrawled in ink.” Senator McCaskill tweeted out a photo of a list of amendments that, as of early Friday afternoon, she had found out about only through lobbyists and whose substance remained a mystery. When Democrats moved to adjourn until Monday to give senators time to read the bill, every Republican voted against it. Before the final draft was even released, John McCain announced his support of the bill, revealing once and for all that he has no principles. Recall that he voted against the 2001 and 2003 Bush tax cuts because their benefits skewed too heavily to the rich. This time around, with income inequality dramatically more serious than in 2001, the GOP plan not only directs the vast majority of its benefits at the wealthy, but it actually raises taxes on many poor and middle class families -- a perversion not even the Bush tax cuts attempted. Eric Levitz tallies up the many ways McCain has shown himself to be a fraud, among them, his early insistence that the GOP take a “bipartisan approach” to the tax bill. And let’s not forget his relief, expressed THURSDAY, that the bill had proceeded via “regular order” -- just hours before the GOP scrapped the bill and started redrafting a new version -- and then replaced that version with an entirely new draft, with handwritten amendments, just hours before the dead-of-night vote.
So why are they doing this? Why is the GOP dead set on passing an historically unpopular tax cut that goes against every idea Trump ran on (recall, for example, that he promised to do away with the hedge fund manager “carried interest” loophole)? Well, Orrin Hatch gave up the whole game in the middle of debate Friday night. When asked if the Senate could renew the Children’s Health Insurance Program -- a bipartisan program, originally co-drafted by Hatch himself, that insures 9 million children and whose funding expired on October 1 -- before rushing through this tax cut, Hatch responded: “[T]he reason CHIP’s having trouble is because we don’t have money anymore.” That’s the real plan: Drain the public coffers with these insane tax cuts for the wealthiest and most privileged members of our society (labeling them “job creators” all the way) and then throw up their hands that we can’t afford the social safety net because we ran out of money. And they’ve already started moving to Phase 2: “High-ranking Republicans are hinting that, after their tax overhaul, the party intends to look at cutting spending on welfare, entitlement programs such as Social Security and Medicare, and other parts of the social safety net. . . . As Republicans advocate spending cuts, they have frequently cited a need to reduce the national deficit while growing the economy.” (Side note: Recall that the Obama administration proposed free a community college and universal pre-K program, which would have cost $130 billion over ten years. The GOP shot it down because it was too expensive. That’s about 8% of the cost of this tax bill. (HT Drausin for the math.))
The House and Senate still needs to work out some significant differences in their bills, particularly to the deficit implications (the House version costs way more because it makes the individual tax cuts permanent, while the Senate sunsets them in 2026) and the way they’ve dealt with taxation of pass-through entities, businesses in which the income is attributed to the owners and taxed at the individual tax rates (like LLCs and partnerships). So there’s still time to lobby and push and press and cajole. Already, the American people appear to see through this scam for what it is: a massive transfer of wealth from the vast majority of the people to the tiny few at the very top. Our only hope to defeat this is to continue mobilizing people against this monstrosity. (Chait is almost giddy at the political boon this deeply unpopular plan presents: “Their ‘fix’ [to the tax code] is a cash grab. It is ‘permanent’ only until Democrats regain control of government. And thanks to the Trump tax cuts, that day will come sooner.”)
TAX BILL -- THE POLICY: Given the dark hole of its passage, it warrants taking some time to talk about what is actually in this bill. I recommend starting with this the New York Times piece, laying out in searing detail just how radical the GOP’s tax plan is. The upshot: “The result is a behemoth piece of legislation that could widen American economic inequality while diminishing the power of local communities to marshal relief for vulnerable people.” “In 2019, a person in the bottom 10 percent gets a $50 tax cut and a person in the top 1 percent gets a $34,000 tax cut.” The middle 20% of taxpayers can expect an $850 tax cut, while the top 0.1% will get $85,640. By 2025, the middle 20%’s tax cut remains about the same -- $880 -- while the share going to the top 0.1% balloons to $121,060, more than twice the total median household income. “And by repealing Obamacare’s individual mandate, an estimated 13 million fewer Americans are expected to have insurance and federal spending on Medicaid and other subsidies would drop.” All in all, as this Vox piece illustrates in detail, this tax plan will overwhelmingly exacerbate America’s already enormous and growing income inequality.
Roger Low comes through with the math, looking at the Joint Committee on Taxation’s report, available here. He sent me this analysis, which I am quoting:
All these numbers came from just 3 pages in the report: pages 1, 4 and 7 -- and some simple arithmetic. Note these numbers don't even get into 2027, when a number of the provisions expire and things get even shittier for the middle class:
- in 2019, $34 Billion goes to taxpayers earning $1 million or more. There are only 572,000 such taxpayers. With basic math: that represents an average tax cut of over $59,000 per millionaire in that year.
- In 2019, $118 Billion goes to taxpayers earning $200,000 or more. There are fewer than 10.9 million such taxpayers. That represents an average tax cut of over $10,800 per taxpayer earning over $200,000.
- In 2019, $14 billion goes to all taxpayers earning $50,000 or less. That represents just over half of all taxpayers, over 90 million taxpayers. The average tax cut these families get in one year is $156. Or, about $6 in a 2 week paycheck.
It gets worse. By 2025, as some provisions phase in and others phase out, here's where we stand:
- In 2025, $15.4 billion goes to taxpayers earning $1 million or more. That's an average tax cut of over $25,000 per millionaire.
- In 2025, $89 billion goes to taxpayers earning $200,000 or more. That's a tax cut of over $7,000 per wealthy taxpayer.
- By contrast, in 2025, believe it or not, taxes would actually be raised in total by $5 billion in total on 92 million taxpayers earning $50,000 or less -- again, about half of all taxpayers. That's an average tax increase of just over $50 per year.
Pretty incredible. Thanks Rog!
A few other nuggets: Orrin Hatch snuck in a last minute amendment that would make tuition for religious private schools deductible -- while making the money that funds public schools (state and local taxes) taxable. (What’s more, the amendment appears to single out religious school tuition for this preferential treatment, raising some serious First Amendment issues.) Pat Toomy inserted an amendment that seemed aimed to exempt a single religious college (in Michigan, not even Toomey’s Pennsylvania!) that has extensive ties to Besty DeVos’s family from the new provision taxing college endowments. That amendment was defeated. Both the House and Senate bills drop the tax rate for corporate income made overseas all the way down to 14%, under the rationale that it will encourage companies to bring jobs back to the United States. As NPR points out, we already tried this, in 2004, and it didn’t work: “According to a 2011 audit by the Senate, the companies that made the most use of the tax holiday ended up cutting, not growing, their American workforce.”
UNDER THE RADAR OUTRAGE OF THE WEEK: There were a lot of outrageous things that happened this week. Like when Trump tweeted out fake anti-Muslim videos propagated by a far-right British group, prompting an official denunciation from the leader of our most important ally. (But let’s clutch our collective pearls in remembrance of the time Barack Obama moved a bust of Churchill!) But here’s another outrageous tale of disgusting awfulness that you may have missed: The North Carolina state legislature passed an anonymously-drafted law that essentially bans judges from waiving court fines and fees imposed on poor people for offenses,even as minor as seat belt violations. The staggering number and amount of these fees -- “from $5 for being arrested to $200 for failing to appear[,] . . . $7.50 to underwrite the police and sheriff retirement funds and . . . up to $40 a day for taking up space in jail,” not to mention the $50 fee for failing to pay a fee -- can quickly add up for poor people, saddling them with massive debts that lead to the suspension of their driver’s licenses (and thus their ability to get to work) and even to jail time, despite the Supreme Court’s proscription of debtors’ prisons.
Endorsements:
- I highly, highly recommend this article by Ezra Klein about why we should rethink impeachment as a more “normal” process to correct for political mistakes. (And then read this critique by Charles Pierce.)
- Colorado readers: Your senator, Michael Bennet, made powerful, angry remarks about this tax scam on the Senate floor this week. Watch his speech. (HT: Roger Low!)
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