Tax Reform or Tax Perversion?

The Senate Republican tax bill is now so bastardized one cannot properly call it "reform." I propose starting all over.

Moments ago, the Senate Finance Committee Voted 11-10 to Approve Senate Tax Plan.

Senator Ron Johnson of Wisconsin and Bob Corker of Tennessee resolved their differences.

The positions of Johnson and Bob Corker were at odds. Johnson wants to lower pass-through taxes for small businesses, which will add to the deficit.

“My primary issue is pass-throughs,” Mr. Johnson said. “The good news is everybody agrees it’s a problem, it has to be fixed. I just keep getting assurances it’s going to be fixed, I just want to see how.”

Johnson has assurances the problem will be fixed. How? Not even he knows.

Mr. Corker, a deficit hawk, wants some kind of mechanism to be added to the legislation that would kick in if projected economic growth from the tax rewrite does not end up materializing.

“I think we’ve come to a pretty acceptable place, from my standpoint,” said Corker.

Corker has assurances his problem will be fixed. How? By a mechanism that will never see the light of day.

Senate Hurdle

The next hurdle comes in the full Senate.

Senators Lisa Murkowski (Alaska) , Susan Collins (Maine), John McCain (Arizona), and Jeff Flake (Arizona) all have reservations.

Collins opposes Two Tax Cuts for the Wealthy. Collins will also get the state income tax deductions she wants, and that will add to the deficit.

"Unless it reduces deficits — let me say that one more time — unless it reduces deficits and does not add to deficits with reasonable and responsible growth models, and unless we can make it permanent, I don't have any interest in it," said Corker.

McCain wants more military spending. That's at odds with Corker. It won't matter. McCain will get more military spending to buy his vote.

Apparently, Corker will be happy with a mechanism that won't do a damn thing.

Seven Senators Express Reservations

With a 52-48 senate lead, Republicans can afford to lose at most two votes.

Johnson and Corker are now happy, at least enough for the bill to pass the finance committee.

Republican senator, Lisa Murkowski of Alaska also has reservations. She was bought out with legislation that would open the Arctic National Wildlife Refuge in Alaska to oil and gas drilling.

Bill Will Add to the Deficit

Without a doubt, the bill will add to the deficit, and likely substantially after McCain gets his defense spending buy-in.

Tax cuts? Where? When?

The bill is supposed to be a middle-class tax cut. Where? Let's consider what the non-partisan Joint Committee on Taxation says.

2019 Tax Impact

Hooray! Everyone wins.

2021 Tax Impact

If you make between 10,000 and 30,000, your taxes go up. Everyone else wins.

2023 Impact

If you make $40,000 or more you win. If not you lose.

2027 Impact

By 2027, only those making more than $100,000 a year gain from reform.

Reform or Perversion?

The Washington Post summarized things similarly.

The tax bill does not simplify things, it does not cut taxes for a huge swath of the middle class, and by 2027 it raises taxes on the poor while increasing the deficit.

By no perverted stretch of the imagination can one call this monstrosity "tax reform."

I propose starting over.

Mike "Mish" Shedlock

Comments
No. 1-8
El_Tedo
El_Tedo

Actually, 'conservatives' Rubio & Lee are pushing for even more 'refundable credits'. i.e. WELFARE.

JoeMichels
JoeMichels

It is just so strange that the tax cuts goes to those who are actually paying income taxes and not going to those who don't. Man who would have ever thought that. And for the Republican senators who care about the deficit and can't see to figure out how to cut spending, I say instead let's raise taxes instead. I know that is why I voted for them.

KidHorn
KidHorn

All cutting corporate taxes will do is increase stock buybacks. It will help the dow, but won't help the economy at all and it will make the budget far worse. I would actually be more in favor of the FED QEing equities into their portfolio. At least the fat cats wouldn't make out like bandits. Not as much.

mpowerOR
mpowerOR

the GOPe will not be rewarded for this joke of a bill... voters see straight through the charade. neither party has the gonads to truly govern or lead... both would rather manage the country's decline for the sake of their own personal golden parachutes...

thimk
thimk

gosh i thought i had a shot of not paying 60 bucks for turbo tax and doing my return on a postcard . Maybe we will get 'lucky" and the bill won't pass. The Republicans are eager for a win regardless of the outcome. Same old same old . the beat goes on .https://www.youtube.com/watch?v=umrp1tIBY8Q

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