Congress now appears on track to approve an enormous tax cut that primarily benefits businesses and the wealthy, adds nearly $1.5 trillion to the federal deficit and could lead to cuts in Social Security and Medicare down the road. It may become the only major legislative victory this year for President Donald Trump, but for millions of Americans there will be nothing to celebrate. The rich get richer, and the poor and the middle class lose again.
The Senate’s predawn approval Saturday of its proposed tax cuts by a 51-49 vote sends the final negotiations to a conference committee, which will work out the differences between the House and Senate plans. A handful of reluctant Republican senators were bought off one by one, and a vote on the final tax cut plan could come before the holidays. It would take a Christmas miracle for enough Republicans to regain their senses and reject the conference committee’s final legislation.
Except for Sen. Bob Corker of Tennessee, the only Republican to vote against the Senate bill, Republicans are so desperate for a win of any sort they have abandoned their long-held opposition to deficit spending. Sen. Marco Rubio said last year during a debate that each of his fellow candidates for the Republican nomination for president should not leave the stage without "hearing a serious answer from every single one of us about how we are going to bring the national debt under control once and for all." Yet Rubio voted Saturday for this massive tax cut.
Predictably, Republicans contend the tax cuts will pay for themselves because they will spark economic growth and businesses will use their windfalls to create more jobs and raise salaries. Don’t buy this retro trickle-down argument. The nonpartisan congressional Joint Committee on Taxation projects that even accounting for economic growth, the tax cuts still would increase the deficit by $1 trillion over 10 years. This would be fiscally irresponsible under virtually any scenario, but the details of the tax cuts rub salt into the wound.
Among the examples: The House bill would eliminate the $250 tax deduction for teachers who buy supplies for their classrooms. It counts as taxable income tuition waivers for graduate students and eliminates interest deductions on student loans, making it harder for many students to pursue a college degree. The Senate bill repeals the requirement under the Affordable Care Act for most individuals to have health insurance, which is expected to result in 13 million fewer Americans being covered.
How regressive is the Senate bill? In the first year, the nonpartisan Tax Policy Center shows half of the overall value of the tax cut would go to taxpayers earning more than $200,000. Less than 1 percent of taxpayers earn more than $1 million a year, but the Washington Post reports they would receive more than 60 percent of the entire tax cut by 2027. The liberal Center for American Progress calculates more than 3.3 million Floridians who are in the bottom 80 percent of taxpayers will see tax increases in 2027.
As the House and Senate negotiators hammer out the final tax cut legislation, they should at least sand off some of the rougher edges even if it means reducing the benefits for the wealthy and for businesses. Adopt Rubio’s proposal to double the child tax credit to $2,000 per child and make it fully refundable. Keep the tax deduction for school supplies for teachers, the tax break for graduate students and the tax deduction for student loan interest. Don’t repeal the individual mandate for health insurance. Don’t repeal the estate tax, which already applies only to a small fraction of farms and businesses. Distribute the tax cuts more fairly to the poor and middle class.
Call it a Christmas wish list.