The Senate tax bill, a 515-page mammoth, was introduced just last week, and the chamber could vote on it as soon as Thursday. This is not how lawmakers are supposed to pass enormous pieces of legislation. It took several years to put together the last serious tax bill, passed in 1986. Congress and the Reagan administration worked across party lines, produced numerous drafts, held many hearings and struck countless compromises. This time it’s not about true reform but about speed and bowling over the opposition in hopes of claiming a partisan victory. The country ought to be dismayed by the way senators like Bob Corker, Susan Collins and Ron Johnson appear to be backing away from their principled objections based on half-measures promised by President Trump and the majority leader, Mitch McConnell, that will not address its big flaws.
This rush to the Senate floor has been orchestrated by Mr. McConnell, following the same playbook he used in the failed effort to repeal the Affordable Care Act. The longer people have to study the details, the less likely the bill is to pass. People should know by now about the big stuff: the giant permanent corporate tax-rate cut, the small and temporary tax cuts for the middle class, the repeal of the A.C.A.’s individual mandate and the $1.4 trillion added to the federal deficit over 10 years. But other provisions are not as well understood and deserve to be called out. Here are three.
PICKPOCKETING THE MIDDLE CLASS: Like the House tax bill, the Senate measure would change how the government adjusts tax brackets and other tax provisions for inflation, replacing the Consumer Price Index with the Chained Consumer Price Index, which tends to increase at a slower rate. While most taxpayers would not notice an immediate impact, the effects would compound over time as more low- and middle-income families are pushed into higher tax brackets, and as working families receive less help through benefits like the earned-income tax credit.
Over the next decade, changing the inflation measure would mean that families would lose $134 billion by paying more in taxes and receiving fewer benefits than they would under current law, according to Congress’s Joint Committee on Taxation. The increase will be even bigger in future years: $31.5 billion in 2027 alone.Continue reading the main storyAdvertisementContinue reading the main story
HIDDEN GOODIES FOR BUSINESS: While families would be hit with tax increases, corporations stand to reap even bigger tax cuts under certain conditions. That is because the bill contains a tax-cut provision that would automatically kick in if the government took in more money than its accountants are projecting right now. Businesses could pocket an extra $79 billion in 2027 because of that measure, according to the Center on Budget and Policy Priorities. Proponents of the tax cut might argue that the government should give back money if it collects more than it expected. But there’s still going to be a gigantic deficit, and — surprise, surprise — there are no similar givebacks for individuals.
A BREAK FOR BOOZE: The Senate bill contains a special tax cut for makers of beer, wine and spirits, for no particular reason. (Perhaps it’s because these companies are doing their patriotic duty of keeping Americans in good cheer.) It would reduce levies on beer, wine and liquor produced in or imported into the country, and, while described as a boon for “craft beverage,” it would benefit the entire industry, saving it about $4.2 billion over 10 years. This is particularly galling because taxes on alcohol have not increased since 1991 and are calculated without an inflation adjustment, which means they have already shrunk substantially over time.
These policy changes, smuggled into the bill to please big Republican donors, would never survive a more transparent process. History will remember them for what they are: smaller scams aimed at winning support for a much bigger one.
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