What Just Happened?
The JCT said the “Emperor has no Clothes”
The Senate GOP Leadership has been pushing their tax reform proposal as fast as they possibly can to get ahead of the analyses that would show lawmakers and the general public what they are voting for. Their goal is to get the necessary votes in the Senate before the analyses show their rhetoric is false or overblown.
Today’s analysis from the Joint Committee on Taxation (JCT) says that the proposed tax cut does not stimulate the economy enough to offset the tax cut. It will grow the economy by 0.8% and this will add $400 billion in revenues over the next decade. The other $1 trillion will be added to the national debt. https://www.jct.gov/In other words, they are saying the exact same thing as almost every economist “the GOP tax reform” will not pay for itself.
If you read this document carefully, you will find that they are particularly dismissive of the efforts to double the estate and gifts tax exemption. They are also quite critical of the proposal to sunset the individual tax cuts after ten years while making the corporate tax cuts permanent.
So in the last few days, the independent analysts have said 1) the plan is heavily weighted towards tax cuts for the wealthy, 2) it will grow the economy a little but not enough to pay for itself and 3) a lot of middle class taxpayers are in for a very rude surprise when their taxes go up after 2025 to pay for tax cuts for the wealthy and the big multi-national corporations.
In the next 24 hours, we will see whether the Senators begin to rethink and recast their proposal to give the middle class a fairer shake. Senator Collins is pushing for restoring some of the deduction for state and local taxes; Senator Rubio appears to be pushing for making the child tax credits refundable. Senator Collins is pushing for reinsurance and other provisions to shore up the individual insurance market in light of the GOP efforts to wreck it by repealing individual responsibility. Senators Corker and Flake are pushing to reduce the adverse impacts on the budget deficit by another $500 billion.
So hold on to your wallets and call your Senators to get a tax reform measure that is fairer to middle class Americans and less tilted to the uber-wealthy. Number 1, retain the Alternative Minimum Tax for individuals and corporations. Number 2, don’t give higher estate tax exemptions to the super wealthy, and number 3, keep the top tax bracket as is at 39.6%. Number 4, close the carried interest loophole for hedge fund managers. Number 5 if you want to reduce corporate tax rates to 20%, then pay for that by closing corporate loopholes, not by eliminating middle class deductions for the state and local taxes they pay to support public education and health care.
Prepared by: Lucien Wulsin