In the Senate tax bill, only the rich come out ahead – something that could not be more obvious than if the bill were written by Scrooge McDuck and the scheming Simpsons tycoon Mr. Burns.
The bill, which just passed the Senate Budget Committee and will be rushed to a vote as early as the end of this week, purports to deliver tax relief to the middle class and blue-collar workers. However, it’s just a ruse to squeeze them by abolishing their favorite (and much-needed) tax breaks and steadily raising their taxes over the next 10 years. According to New Yorker writer Adam Davidson, who analyzed a congressional report on the legislation, “This bill is much like a teaser rate on a new credit card: there are some goodies in the first couple of years, but those disappear fairly quickly, at least for those below the median income.”
In fact, by 2027 all families earning less than $75,000 a year will actually be paying a higher percentage of their income to taxes than they are , according to the congressional Joint Committee on Taxation – all so that the ultra-rich and corporations can get a still fatter tax cut. After all, the money for those tax breaks has to come from somewhere. (Cue Mr. Burn’s Machiavellian laugh: “EH-heh-heh-heh-heh!”)
But enough with the cartoons: Let’s take a closer look at the bill promoted by its creators as making good on a promise to help the middle-class.
“Devastating” is what the Washington, D.C.-based non-profit Center for American Progress calls the tax bill. Its estimated $1.4 trillion tax cuts “favor wealthy people and large corporations at the expense of the middle-class and families living paycheck to paycheck.”
Not only that, the Senate bill would also cut a key part of the Affordable Care Act, which would stick the middle-class with an average $2,000 hike in insurance payments and result in 13 million fewer Americans with health insurance by 2025, according to the non-profit’s analysis.
Chopping for dollars
And that’s not all. As a result of an obscure law called the Statutory Pay-As You-Go (PAYGO) Act, the Senate will make up for the estimated $1.4 trillion deficit its tax bill will usher in through automatic cuts to programs designed to help the most vulnerable. Medicare would be slashed by 25 billion in 2018 if the Senate tax bill passes, and other programs that could be automatically eliminated include federal affordable housing programs, farm programs that fund crucial conservation efforts and commodity assistance that donates surplus foods to help the elderly and low income.
PAYGO would also trigger the automatic elimination of such programs as the Crime Victims Fund, social service block grants (which give states the flexibility to fund Meals on Wheels and other urgently needed programs) and payments to states for oil and mineral leasing within their borders.
And if Congress merges certain proposals in the house and Senate tax bill, the middle-class might get hit with higher taxes and lose many favorite tax deductions. As Forbes contributor Tony Nitti points out in “The House Tax Bill: Six Popular Breaks You Didn’t Realize You’ll Be Losing,” these include tax-free employer educational and tax-free employer childcare assistance, the student loan tax deduction, deductions for all medical expenses, deductions for alimony, deductions for state and local taxes, a cap on property tax deductions – even the deduction for your tax preparer’s fee!
The latter provision – also in the Senate bill—would cap property tax deductions at $10,000, a provision that would hit California, New York, New Jersey and other blue states with high-cost housing especially hard. “The bills appear to selectively punish taxpayers in states that voted against Trump, favoritism befitting a third-world dictator rather than a U.S. President,” observes Joe Ridout of the non-profit organization Consumer Action.
Consumer Action: Tax bills “a travesty”
Even Senate Majority Leader Mitch McConnell, who promised the tax bill would provide ordinary Americans tax relief and told MSNBC this November that “nobody in the middle class is going to get a tax increase,” was forced to backtrack on that promise. “You can’t guarantee that absolutely no one see a tax increase,” he told the New York Times a few days later. House Speaker Paul Ryan also now says he misspoke when he said every American family would get a tax cut.
The Senate tax bill would hit the poor the hardest since they’d receive less government aid for healthcare, according to the Congressional Budget Office, which released a new report on the bill on November 26.
Ridout of Consumer Action calls the tax bills “a travesty.”
“The crux of the tax plan is to take money away from Americans who work and give it to financial elites who live off investments and inherited fortunes,” he says. “These so-called reforms propose to end things like the deductibility of student loan interest and scrap a small $250 deduction for teachers who have to buy supplies for their classrooms, yet preserve the carried-interest loophole, which only benefits hedge fund partners, costs the Treasury at least $2 billion per year, and which Trump actually campaigned to get rid of.”
As an example of how the tax plan favor the rich, Ridout points to the House tax bill’s proposal to abolish the tax on inherited fortunes, known as the “estate tax,” by 2025. This provision would benefit individuals with at least $5.49 million dollars and couples with more than 11 million dollars.
The Republican tax bills are “outrageous, mean-spirited and self-serving,” Ridout says. “More than anything, this is just a huge giveaway to their rich friends and corporations,” he said. “There is nothing in it for the middle-class and ordinary Americans, who will be picking up the tab for the resulting deficits deep into the future.”
