GOP tax bill advances
Republicans this week moved a big step closer to a major rewriting of the tax code, after several holdout senators said party leaders had largely assuaged their concerns. The Senate Budget Committee voted along party lines on Tuesday to send the $1.5 trillion tax package to the floor. The plan, which is opposed by every Democratic senator and will need at least 50 of the 52 Republicans to vote “yes,” slashes the corporate rate from 35 percent to 20 percent and lowers the top individual rate from 39.6 percent to 38.5 percent. It provides temporary cuts ranging from $244 to $1,200 a year to some, but not all, individual taxpayers in 2019; in subsequent years those cuts will dwindle and even turn into tax hikes for 50 percent of middle-class earners. The Senate’s proposal helps pay for the corporate cuts by completely eliminating state and local tax deductions for individuals, but unlike the House bill, it preserves a deduction for medical expenses and the $1 million mortgage interest deduction. It also repeals Obamacare’s individual mandate, which requires all citizens to have health insurance.
Republican leaders made several compromises in a bid to win over the more than a half-dozen GOP holdouts. To placate Sen. Bob Corker (R-Tenn.) and other deficit hawks over the bill’s cost, Senate Majority Leader Mitch McConnell said he’d add a “trigger” that would eliminate some cuts if revenues don’t meet expectations. Trump assured Maine Sen. Susan Collins he’d back measures to stabilize Obamacare if the tax bill passed, to assuage her fears over eliminating the individual mandate. Every compromise and concession, however, faced resistance from other GOP senators. McConnell said lining up the 50 votes he needed was like “sitting there with a Rubik’s Cube.”
What the editorials said
“Of all the lies” the GOP tells, said The New York Times, “the biggest whopper” is that their tax reforms would “generate so much growth they would pay for themselves.” Of 38 leading economists surveyed by the University of Chicago, only one said this was true. Another falsehood is that this is a middle-class tax cut. While the corporate tax cuts are massive and permanent, half of all Americans will in fact be paying more taxes by 2027, according to an analysis by the nonpartisan Congressional Budget Office.
The CBO always underestimates how much tax cuts spur growth and revenue, said The Wall Street Journal. The organization based its score on GDP growth of only 1.9 percent a year—way below the “U.S. historical norm” of 3.4 percent. Sure, the GOP’s proposal has its “imperfections.” But in the end, we must bring the corporate rate into line with those of other developed nations if we are to escape “the slow growth and stagnant wages of the last 11 years.”
What the columnists said
This bill exposes President Trump’s “phony populism,” said Dylan Scott in Vox.com. After running on a promise to lower taxes for the poor and middle classes, and raise them for wealthy elites like himself, he is backing a plan that does the exact opposite. The only reason Republican lawmakers are passing a bill supported by just 25 percent of voters is to keep their wealthy donors happy. Rep. Chris Collins of New York even admitted his donors had told him, “Get it done or don’t ever call me again.”
Trump’s low approval ratings mean that anything with his “name attached to it” will be unpopular, said Ed Rogers in Washington Post.com. But passing this bill is “a wise decision” for Republicans. As corporations use their tax savings to grow, the economy will pick up, wages will rise, and the GOP will reap the “political benefits before next year’s election.” (See Talking Points.)
Republicans are clearly desperate to score a major legislative victory before the year ends, said Catherine Rampell in The Washington Post. But the legislation they’re frantically amending and rushing through is “full of glitches.” The bill’s territorial tax system for corporations will reward companies “for shifting more, not less, of their operations abroad,” and wealthy individuals will find it “extremely easy to game” the new 25 percent rate on pass-through businesses, thereby dodging higher individual rates. Republicans could easily take the time to “properly vet and craft this legislation.” Instead, they’re racing “to outrun the truth.”
AP, José Andrés/Think Food Group ■