Amid mounting efforts to block the Republican Party's latest attempts to cut taxes for the nation's corporations and wealthiest families, a new report out Tuesday details 13 "terrible things" about the most recent GOP tax bill put forth in the U.S. Senate.
The analysis by Americans for Tax Fairness (ATF)—a campaign of more than 425 national, state, and local groups that advocate for progressive tax reform—is just latest in a series of warnings about the consequences of passing what's being called the #GOPTaxScam.
The report warns that the proposed legislation:
- Gives most of the tax cuts to the richest 1%. The share of tax cuts going to the richest 1% is 62% in 2027, up from 18% in 2019. Their tax cut will be $33,000 in 2027, on average. [Tax Policy Center (TPC)]
- Gives 53% of the tax cuts to corporations and businesses. These tax cuts mostly benefit the wealthy. [Joint Committee on Taxation (JCT)]
- Makes 82 million middle-class families pay more in taxes. Half of all households—94 million—would pay more in taxes in 10 years. Of those, 82 million are of low- or middle-income. Two-thirds of families earning $55,000 to $93,000 will see a tax increase. [TPC]
- Pays for corporate tax cuts by taking healthcare away from working families and seniors.
• To raise revenue to pay for permanent corporate tax cuts, the plan repeals the requirement under the Affordable Care Act for individuals to have health coverage. This will lead to 13 million more people being uninsured and cause a 10% increase in health insurance premiums. [Congressional Budget Office (CBO)]
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• The corporate tax rate is slashed from 35% to 20%, losing $1.3 trillion over 10 years That’s almost the $1.5 trillion cut the Republican budget proposes for Medicare ($473 billion) and Medicaid ($1 trillion). [JCT, Center on Budget and Policy Priorities (CBPP)]
• The tax bill would trigger immediate Medicare cuts of at least $25 billion a year, and more than $100 billion in other cuts to agriculture subsidies, student loans, military retirement and more, because it adds $1.4 trillion to the debt. [(CBO)]
- Makes corporate tax cuts permanent, but makes tax cuts for individuals and families temporary. All the tax cuts that benefit the middle-class will expire after 2025, while the corporate tax cuts are permanent. The plan makes permanent changes to the way tax brackets are adjusted for inflation, resulting in a growing tax increase over time. [CBPP]
- Adds $1.4 trillion to the national debt jeopardizing critical services. The plan includes at least $1.4 trillion in tax cuts—and possibly as much as $1.9 trillion—that are not paid for by closing loopholes used by the wealthy and corporations. This will balloon the deficit and further endanger funding for Social Security, Medicare, Medicaid, public education and more. [CBPP]
- Puts wealthy business owners over seniors. Wealthy business owners and investors—including real estate developers like Donald Trump—get a $225 billion tax cut from the effective drop in the top tax rate for “pass-through” business income from 39.6% to 32%, along with other tax changes on pass-through income. (Pass-throughs include partnerships, S corporations and sole proprietorships, and their owners pay taxes at the individual rate.) By comparison, the Republican budget cuts Medicare by $473 billion. [JCT, TPC and CBPP]
- Kills American jobs by encouraging outsourcing and profit shifting. The plan creates a territorial tax system, which exempts foreign profits from U.S. taxes. While the plan will tax some of those offshore profits, the effective tax rate will be far below the U.S. rate. U.S. multinationals will have even more tax incentives to outsource more jobs and shift more profits offshore.
- Hands a $565 billion tax cut to offshore tax dodgers. American corporations have $2.6 trillion in profits stashed offshore on which they owe $750 billion in U.S. taxes. Rather than make them pay what they owe, like all the rest of us do, the tax plan will charge them only $185 billion—over a half-trillion-dollar discount. [Institute on Taxation and Economic Policy (ITEP) and JCT]
- Repeals the federal deduction for state and local taxes (SALT) hurting the middle class. One-third of taxpayers making $50-75,000 take this deduction for state and local income and property taxes, as do half of those making $75-100,000. Eliminating SALT will put pressure on state and local budgets, likely forcing cuts to education, health care, and infrastructure. [Government Finance Officers Assoc. and CBPP]
- Helps Donald Trump pay much less in taxes. The plan repeals the alternative minimum tax (AMT), losing $770 billion. Without the AMT, Trump would have paid just a 4% tax rate on $153 million in income one year. But thanks to the AMT, he paid $38 million for a tax rate of 25%. [JCT and New York Times]
- Lets many wealthy heirs avoid paying the estate tax. The estate tax is substantially weakened, losing $83 billion and allowing more rich families to inherit wealth tax-free. The tax now only applies to estates worth over $5.5 million per person—about 5,500 estates. Under the bill, only estates worth at least $11 million per person (about 1,800 estates) would pay the tax. [JCT, TPC, CBPP]
- Breaks Trump’s promise to close the “carried interest” loophole benefitting Wall Street. Remember when candidate Trump promised to get rid of this loophole that primarily benefits private equity fund managers? The Senate plan keeps it in place. [New York Times]
Both the House and Senate versions of the tax bill have been heavily criticized for proposing massive tax cuts for corporations and rich Americans—which even lawmakers admit is aimed at satisfying the GOP's wealthy donors—while hiking taxes for graduate students and millions of middle-class families.
Now that the House has passed its tax plan, despite protests from progressives nationwide, all eyes have turned to the Senate, where Republican lawmakers have proposed scrapping the Affordable Care Act's individual mandate—which aspires to keep health insurance rates low by requiring all Americans to carry coverage—and allowing oil and gas drilling on a federally protected wildlife refuge in Alaska, to make up for the federal revenue that will be lost if big businesses and billionaires get massive tax breaks.