The first thing you have to keep in mind is, the GOP Tax Scam is still alive and is not law. It has not passed as yet. Not that you would understand that based on the pall that has come over the professional left. The level of defeatism is especially crazy because it comes from people who think of themselves as “activists.” The Senate passed one bill and the House passed another and they both have to be reconciled before it is voted on again. That means we have a lot of WORK to do. That doesn’t mean simply calling a select few Republicans you think might be swayed, but contacting every member of Congress and letting them know there will be consequences for voting on this piece of shit.
It is time to be actual activists and actually mass together in solidarity in support of Democrats and against Republicans and everything they stand for. You want a movement, people? Well, here’s your chance. We have to let every member of Congress, especially those Republicans representing blue states and districts, know that a price will be paid if they vote for this piece of shit. It is equally important to let Democrats know you have their back when they vote against this garbage.
Both Tax Scam bills are pieces of shit, too. Again, I am all in favor of tax reform; the system needs an overhaul. The problem is, the current Republican Party can’t do it because they are incapable of writing a bill that doesn’t pander to their “base,” which happens to meet the very definition of “lowest common denominator.” You see, the only “reform” elements in this garbage bill come with fewer tax brackets and lower rates for corporations. There are no “file your taxes on a postcard” type “reforms,” as they promised. They simplified deductions, of course, but only those deductions that (used to) benefit the middle class and working class. Oh, yeah; and they screwed with the mortgage interest deduction in a way that completely screws people living in blue states. They capped the deduction at homes worth up to $500,000, which means homeowners in many blue states, like California, New York and Washington, DC, among others, are completely screwed.
It was easy to tell this bill was a piece of shit because it was created in secret and the final bill didn’t reach the Senate floor until 7 p.m. Friday, about 7 hours before it was passed by two (GOP) votes in the middle of the night, which is when Republicans do their sneakiest work. There was no analysis, no debate and there is a likely bet that no one who voted for it had read any of its 479 pages. If you would like to read it, click here. That would be more than any of the 51 Republicans who voted for this monstrosity ever did. Also, you should know that every element of the bill was crafted by lobbyists for the corporate class. For those who don’t want to slog through its 479 pages, here are a few of the “highlights.”
- The tax rate for big businesses dropped from 34 percent to 20 percent. A great case can be made that the rate had to go down, but a 42 percent drop is a bit much. Since the effective tax rate for most large corporations has been slightly more than 20 percent anyway, the direct loss of revenue from this should be minimal. However, indirectly, the story is different. It used to be that large corporations had to engage in activities that dropped their rate to 20 percent, all of which helped the economy and brought in tax revenue. Now, they just get the 20 percent rate, even if they do nothing.
- In addition, companies can write off expenses for new investments, like factories and the like, for the next five years.
- Also, large businesses will only be taxed on US earnings, which will result in reduced revenue. Also, to bring overseas cash back to the United States, they will only have to pay 14.5 percent on that money. (You don’t get that privilege when you, personally, bring cash into the country.)
- The rich make out like bandits in this bill. Their top tax rate drops slightly, but unlike you, they will get to continue to be able to deduct the same things they always have. According to the CBO analysis of the previous bill, 80 percent of those making more than $1 million will pay less in taxes. Of course, there was no analysis of the last bill, since no one even had time to read it. (In fact, I wonder how this bill passed with reconciliation. Senate rules say it shouldn’t have.
- Under the last bill, just over half of Americans will get a tax cut but, not surprisingly, not very much. Those families of four getting by on $50,000 per year will see an average cut of $700, or the cost of a cell phone or broadband for a year.
- On the other hand, those scraping by on less than $10 per hour will see their taxes go UP, which is a fine way to finance tax cuts for the rich, isn’t it?
- About one-third of Americans itemize deductions, but that number will be cut by more than half because most deductions will go away, including deductions for natural disasters, fire and the like. You will also not be able deduct the cost of tax preparation or the cost of bicycling to work.
- You’ve heard that teachers don’t get to deduct expenses, but that will be one of the items that will have to be reconciled between the Senate bill, which doubles the credit, and the House bill, which eliminates it entirely. It doesn’t matter; most teachers lose either way.
- At first, the GOP Senate was going to scrap the state and local tax deduction entirely, but they compromised to keep 51 votes, so taxpayers will be able to deduct the first $10,000 in property taxes. If you’re a renter, you get nothing.
- Families will get a bigger standard deduction and child tax credit, but there is no more personal exemption. In other words, if you are single and have no kids, you’re screwed.
- Small businesses, who represent the largest segment of businesses in the country, actually get screwed, even as huge businesses get a massive cut. Most are organized as “pass-through” companies see a small tax cut, until they make $250,000, when they lose their eligibility for the deduction. That means, if a small business is really small, they won’t have to pay tax on 23% of their income, but if they grow, they have to pay the individual tax rate on the entire amount. In other words, the Republican Party is taxing people for their success, which is something they’ve always slammed Democrats for doing.
- If you sell your home, it will be more difficult to avoid capital gains taxes. As things stand, if you live in your home for two of the past five years, the first $250,000 is tax-free. Under the Senate bill, you have to live in your home for five of the past eight years. Another screw job for people who live in blue states.
- The bill also doubles the exemption for the estate tax, from $5.5 million for individuals and $11 million for married couples, to $11 million and $22 million. Not only will this be a major revenue loss to the Treasury, but it means fewer than 2,000 Americans will ever have to pay it.
There are quite a few things in this bill that have nothing to do with taxes, of course, since Republicans have to touch all the bases when pandering to their base. For example, they have eliminated the individual health insurance mandate, which might save a few people a few bucks, but it will also mean 13 million fewer insured, which means higher insurance premiums for the rest of us. I mean, who do you think pays when someone who goes without insurance gets hit by a bus or contracts meningitis? It’s the same problem that brought on the ACA in the first place.
The bill also contains a “drill baby drill” provision, that would expand oil drilling in the Arctic wilderness.
By the way, everyone, especially Trumpies, should know that, rather than create jobs, this bill contains provisions that encourage a loss of jobs. For example, they doubled the deduction corporations can take to fully automate. They used to be able to install robotics, for example, and deduct 50 percent of the cost. Now, they can deduct the full cost. Even better, there is no help for displaced workers in the bill.
You should also be aware that this bill will add upwards of $1.5 trillion to the deficit over the next decade, which means we could be back to $1 trillion per year deficits by 2020 or 2021. Not only that, but Republican leadership in the Senate has indicated that the deficits the bill will trigger will necessitate cuts in Medicare and Social Security. Keep in mind, even though we spend a ton on Social Security and Medicare, the deficit is in the general fund. Medicare and Social Security are self-sustaining and have never contributed a dime to the deficit. Ever.
One last thing to make clear. Only the corporate tax changes are permanent. Any changes to your taxes expire in ten years, if not sooner, since deficit increases could trigger increases in your taxes before then.
This entire exercise is ridiculous and you should fight this GOP Tax Scam as hard as you can. This is a unique opportunity to flex our progressive muscles and kill this thing. Contact everyone and mobilize Americans to fight this thing. In other words, BE an activist; don’t just call yourself that.
Also published on Medium.