Unwrapping the Senate tax plan: Working people lose, the rich win. That’s it.

A lump of coal for working families’

By ED FINKELSTEIN

Publisher

The GOP tax bill that passed the Senate by one vote recently isn’t the Christmas gift to America President Trump promised, AFL-CIO President Richard Trumka said.

“President Trump said that he wanted to lower taxes for everyone as a Christmas gift to America,” Trumka said, “but this bill is simply a lump of coal to working families across the country. The only real gift is the major tax giveaways to Wall Street, big corporations and the super-rich, when what our country needs is investment in our schools and infrastructures that creates jobs.

“It’s a job killer” and “nothing but an attack on America’s workers,” Trumka said. “It gives billions of tax giveaways to big corporations that outsource jobs and profits…. We will pay more, corporations and billionaires will pay less.”

The bill was rushed through the Senate in the early morning hours of Dec. 2 without any time for debate, or even reading of the proposed bill. A Democratic motion to at least read the 479-page bill on the floor, so everyone understood what was really in the voluminous document was voted down by Republicans.

The Economic Policy Institute (EPI) called it a “scam, through-and-through,” adding, “Despite incessant claims earlier this year that they would provide a ‘middle-class tax cut,’ the actual details of their plans show quite the opposite.”

Under both the House and Senate versions of the tax plan, the gift that Trump promised will go to corporations and rich individuals who don’t need them. For the rest of us, it’s going to be a blue Christmas.

WORKING PEOPLE LOSE

Here’s what is what the GOP tax plan will do for (to) all of us working stiffs:

• A tax increase: The illusory middle class tax cuts will evaporate. Households making under $75,000 would see their taxes increase by 2027.

• To finance cuts for the wealthy: The tax increases on the middle class will be needed to finance massive tax cuts for the wealthiest Americans and corporations. According to analysis by the Joint Committee on Taxation, the Senate tax plan would deliver 62 percent of its benefits to the top 1%, households that currently have income of $730,000 or more.

• Will NOT raise wages: “Besides lying about who would benefit most directly from the tax cut,” EPI reports, “defenders of (the Senate) bill have also lied about the trickle-down benefits that will accrue to workers in the form of higher wages. Simply put, this bill will not raise wages for typical workers.”

Adding strength to the analysis, EPI notes in a separate report, “Since 1953, lower corporate rates have not noticeably boosted productivity growth and wage growth. Both productivity and wage growth were substantially stronger in the first decades following World War II, when corporate tax rates were significantly higher than they were in the 1980s, 1990s, and 2000s.”

• WILL kill health insurance: To help pay for the tax cuts for rich households and corporations, the Senate plan calls for eliminating the individual mandate that is the cornerstone of the Affordable Care Act (Obamacare), cutting $300 billion over 10 years in subsidies that otherwise would have been spent on consumers. As a result, some 13 million people will lose their insurance.

• Will ELIMINATE or reduce popular tax breaks: Under both the House and Senate bills, households that take deductions for state and local income and property taxes will only be able to take an itemized deduction for property taxes, and only up to $10,000. Itemized deductions for casualty losses, medical expenses, student loans, employer educational assistance grants and dependent care assistance programs, adoption credits and unreimbursed employee expenses will be eliminated. As a result, households that rely on these deductions will pay more in 2018, “in some cases a lot more,” says The New York Times.

THE WEALTHY BENEFIT

While working people tally their losses under the tax plan, the country’s richest families and corporation will get that big, fat Christmas gift President Trump promised. Here’s what that looks like under the Senate plan:

• Corporate rate reduced from 35 percent to 20 percent.

• Estate tax exemption doubled to $11 million for a single taxpayer and $22 million for married taxpayers. This will allow the richest families to pay no taxes on inherited money, establishing a hereditary wealthy class where riches are passed on from one generation of a family to the next. So much for pulling yourself up by your bootstraps.

• Top rate reduced on income earned by owners of pass-through businesses – S corporations and partnerships – from 39.6 percent to a shade below 30 percent, allowing many businesses to revamp their corporate structure and pay far less taxes. (President Trump, whose assets include more than 500 pass-through partnerships and limited liability companies, will make out like a bandit on this one.)

• The Alternative Minimum Tax, intended to ensure the richest tax filers pay at least some tax by disallowing many tax breaks (most typically for filers making between $200,000 and $1 million today) would remain in place under the final version of the Senate bill, but the bill would raise the amount of income exempt from it.

BOTTOM LINE

Lisa Desjardins, a correspondent at PBS NewsHour summed up the proposed Republican tax plan like this:

“These numbers show what conservatives rarely say directly these days — that they believe the U.S. tax system is too progressive, and moves too many resources from the rich to the poor. The GOP tax plan is a decided shift in the other direction.

“Our numbers show a very clear reversal: lower income groups have larger amounts of taxpayers but would benefit far less from this tax overhaul. Higher income groups have far fewer taxpayers, and would gain many times more from the GOP bill.”