Turkey time is not over, folks. Oh, you may be stuffed with Thanksgiving turkey, but you’ve still got a big Christmas turkey to swallow. That’s the wonderful turkey Congressional Republicans hope to cook up for you in time for Christmas called the “Tax Cut and Jobs Act.”
It’s an act alright.
Why do you suppose Republicans in the House will start taxing grad students who get tuition waivers? Put a new 1.4% excise tax on large private college endowments? Or eliminate the tax exempt status of private activity municipal bonds used to finance hospitals, airports, and museums?
Why would House Republicans eliminate the deduction for medical expenses altogether? And deductions for state taxes and personal property taxes? And all personal and dependent exemptions?
You get a hint as to why when you look at the turkey getting basted by Senate Republicans. It’s a slightly different bird from the House bill. It blatantly makes its individual tax cuts temporary while making corporate cuts permanent.
Even this turkey can see what’s happening. A gigantic, painstakingly wrapped, Christmas tax gift is coming for corporations and most businesses. Corporate tax rates will fall from 35% to 20% and the max rate on pass-through businesses (sole proprietorships, S corps, MLPs, LLPs, LLCs) will generally fall from 39.6% to a range between 25% and 35% depending on the type of income.
Prank tax cuts, offset with newly taxable income and reduced deductions, will stuff stockings for individual taxpayers.
The House bill even eliminates the $250 deduction for teachers to buy supplies for their students!
Such antics result from Republican leaders scrambling to lessen the wallop their gifts to businesses and corporations will have on the national debt. They gave themselves permission up the debt by $1.5 trillion. But that’s not enough. They’ve got to zap struggling teachers, grad students, and ordinary taxpayers to make the numbers work.
Oh yeah, the $1.5 trillion debt cap they’re working with is just for the first ten years. Projected additions to the national debt after that range from astronomical to stupendous, like in the $4 trillion range.
Guess what? If they cut the corporate tax rate to 25%, still internationally competitive, and put the top rate for pass-through businesses at 35%, the top proposed rate for most individuals, the hit to the national debt would go away, individual cuts could be permanent, and the zaps on teachers, grad students, and ordinary taxpayers could be eliminated.
Why are no Republicans fighting for this?
Well, there’s Trump’s insistence. But many are scared or committed to pay the piper.
You see, corporate titans like the Koch brothers have invested millions to develop grassroots organizations (Freedom Partners, Americans for Prosperity, Americans for Tax Reform, etc.) geared up to go after any Republican who doesn’t support their interests. Lots of Republicans are scared they will be primaried if they don’t toe the line. Others owe their political success either directly or indirectly to corporate titans.
This is real, hardball politics at work.
Ole Abe had it wrong. What shall not perish from the earth is debt-ridden government on the people, by the politicians, and for the corporations.
PS – They recommend swallowing this turkey whole, not chewing it up.