Death and Taxes
The Republican tax bills are complex legislative documents which will fundamentally alter the structure of the American tax code. As Intuit and H&R Block essentially exist because taxes are complicated, it should come as no surprise that bills changing the tax code are even more complicated. Fortunately, the Tax Policy Center has a thoroughly wonkish thirty-seven page breakdown of the bill. A summary follows, but you can read the entire thing here if you feel so inclined.
Cut Corporate Taxes — Cost: $1.7 Trillion
The GOP believes that American companies are overtaxed and that lowering those taxes will generate jobs and opportunities for Americans. This has been a cornerstone of Republican economic policy since Ronald Reagan ran on it, defeating George H.W. Bush, who called it “voodoo economics” to win the 1980 Republican nomination.
Repeal Obamacare Taxes — Cost: $2.5 Trillion
The Republican party has been trying to end Obamacare since the day it was signed into law. While the tax bill doesn’t do that directly, it does chip away at the financial foundation of the Affordable Care Act.
Cut Taxes For The Rich — Cost: $1.3 Trillion
The Alternative Minimum Tax, or AMT, is a provision of the American tax code that acts as a back-stop to prevent people with a lot of income, investments, and creative accountants from using those resources to get out of paying their tax bill. Republicans want to repeal it.
Cut Even More Taxes For The Rich — Cost: $4.8 Trillion
The GOP tax plan moves around a number of tax brackets. While some of the cuts in this do go to the lower and middle classes, the vast majority of the nearly five-trillion dollars in cuts go to the wealthiest Americans.
End the Inheritance Tax — Cost: $500 Billion
The inheritance tax is a tax paid by people inheriting multiple millions of dollars. It is paid by a scant handful of the nation’s most wealthy heirs and heiresses and has been a thorn in the side of wealthy Republican donors for decades.
The bill is a give-away to the very wealthy. While there are a lot of numbers to support this, the most persuasive are the percentage change in tax rates experienced by different income levels.
- Bottom 80%: 0.4% tax-cut.
- Top 20%: 3.4% tax cut.
- Top 1%: 8.9% tax cut.
- Top 0.1%: 11.1% tax cut
Most Americans understand that those who pay the most in taxes tend to see the most benefits when taxes are cut but this is a different matter.
The rate at which the top 0.1% are taxed is being cut by more than twenty-seven times the rate at which the bottom 80% of Americans are being taxed is being cut.
The middle class pays, though not immediately. Those in the bottom 40% will see their incomes rise both in the short and long term. Those between the 40% and 95% marks see a short-term income bump which vanishes or turns into a tax increase by 2025. Only those in the top 5% see large and permanent cuts to their tax burden.
There is another hidden component to the cost of this bill. Only a percentage of the staggering costs are covered by shifting around the tax burden; the remainder will have to be borrowed.
An $8,000,000,000,000 dollar cash-advance against the national credit-card, if you will.
Senate rules are somewhat more short-sighted and require that the tax plan not increase the deficit by more than $1.5 trillion over the next decade. The House bill falls short of even this; should this bill pass the House, the Senate will have to find $200 billion in additional revenues or face a Democratic filibuster.
Tell Congress what you think!
The House will probably vote on the GOP tax bill on Thursday. Text RESIST to 50409 to tell your representatives or Senators what you think about this or any other issue before Congress or use Facebook messenger to do the same thing by clicking here.
You can also text TAXES instead to see the immediate, estimated impact on your tax bill based on the Trump framework.
More On Taxes
Want to learn more about the Trump’s tax cut and how it’ll affect you? We’ve got you covered.