If you know what the Republican tax bill will do, please call your local U.S. representative and tell them.
Were you even aware that an overhaul of our income tax system has passed the U.S. House of Representatives and will soon be voted on by the Senate?
If you were aware of that, do you have any idea how it will affect your personal tax bill?
This bill is a rush job, pushed by a president and Republican majority in Congress desperate to pass something — anything — that they can brag about, however unworthy of praise the bill may actually be.
Look at the way a repeal of the Affordable Care Act’s individual mandate — the requirement to buy health insurance or pay a penalty — was jammed into the tax bill at the last minute. This is a cob job, a slapped-together structure that has every sign of eventual collapse.
Look at the way the personal tax cuts included in the bill expire in 2026, because Republicans could not figure out a way to make their math work. Having the tax cuts expire for individuals (the corporate tax cuts, in contrast, are permanent) is the only way Republicans could figure out to write this bill without exploding the deficit to an unacceptable size.
Mick Mulvaney, the federal budget director, has said the administration is willing to take out repeal of the individual mandate if that will persuade moderate Republican senators like Maine’s Susan Collins, to support the bill.
So is there anything about this last-minute bill the Trump administration likes enough to stand behind?
Yes, the huge corporate tax cut, from a 35 percent rate to a 20 percent rate, and the changes in business tax rules, which will allow “pass-through” companies to pay at a much lower rate. “Pass-through” companies are set up so owners can claim the business income on their personal returns.
The changes in the pass-through rules would benefit larger companies more than smaller ones, making it harder for the smaller companies to compete. That is why Wisconsin Republican Sen. Ron Johnson, a former small business owner himself, has come out against the bill.
The business tax cuts are the heart of the bill. Coincidentally (perhaps), many of Donald Trump’s companies are set up as “pass-through” businesses, and these cuts would save him millions of dollars.
Regardless of the effect on Trump’s personal wealth, some experts have supported the business tax cuts, arguing they will improve the U.S. economy.
But who knows?
These are issues that should be debated, publicly. But no hearings have been held in Congress on this bill, and very little time is being allowed for public discussion.
We’re certain that most people can tell you more about what was on their Thanksgiving table than what is in the tax bill. We bet more people have started their Christmas shopping than have even a basic understanding of the bill.
But this bill will have a direct and significant effect on most Americans. You might pay less in taxes. You might pay more. Either way, you are going to have to change the way you fill out your tax forms.
Speaking of paying more, we noticed that our Republican congresswoman, Elise Stefanik, voted against the bill, because it drops the deduction for state and local income taxes. That deduction benefits residents of high-tax states like New York, Massachusetts and California. Coincidentally (a lot of coincidences pop up with this bill), those are Democratic states.
You have to give Stefanik a smidgen of credit for trying to protect her constituents’ interests, although we suspect she was given the OK to vote no by Republican leaders, because the bill was going to pass anyway.
Instead of putting the blame for the soak-the-blue-states strategy on Paul Ryan and crew, where it belongs, Stefanik blamed New York state leaders (Democrats, coincidentally) for failing to reduce state taxes.
But if you want to talk about New York and the federal budget, you should point out that our state contributes far more revenue to the federal treasury than it gets back in federal spending. In 2016, New York sent about $41 billion more in tax payments to the federal government than it received back in federal spending, according to the state Comptroller’s Office.
The apparent partisanship in the proposed changes to the tax code is another reason far more debate is needed on this bill.
A University of Chicago survey of economists found that 69 percent of them were either uncertain of what the Republican tax bill will do or believe it will not substantially boost the nation’s gross domestic product. That leaves 31 percent who agree with the Republican assertion that the bill will create economic growth.
The point is, even economists don’t know, and that is because this bill has not been thoroughly vetted. Congressional hearings should be held, as they should be on any major piece of legislation and were, for example, on the Affordable Care Act. This bill is much too important for a rush job.
To learn more about the proposed tax bills, check out the nonpartisan reports linked to in the attached box.