Counts against the Senate tax plan

Research on the cost and impact of the Senate tax bill shows that it would blow up the deficit, burden future generations, benefit corporations and wealthier taxpayers disproportionately, and not benefit the middle class in the long term. And, it does not have the support of the American people. Here’s why it shouldn’t become law:

1. The Senate tax bill would blow up the national deficit and drain the economic future for the next two generations. Congress’s own nonpartisan Joint Committee on Taxation estimates that it would add at least $1.41 trillion to the current national debt of $20 trillion. This would burden at least the next two generations of American taxpayers.

The bill alone would increase the deficit by more than $1.41 trillion, but Congress just passed a budget that projects economic growth at 2.6 percent per year. Most economists would question this because the growth rate over the last 11 years has averaged only 1.5 percent annually.

The nonpartisan Committee for a Responsible Federal Budget estimates the bill’s true added debt at $2.2 trillion if Congress decided to make the temporary changes permanent. If the cuts did expire, individuals would face a huge tax increase in 2025. This would lead to repeated Congressional standoffs and to national economic uncertainty.

2. The Senate bill would disproportionately benefit corporations and wealthier individuals while not helping the middle class in the long term. The bill makes the proposed corporate tax cuts permanent, but the individual cuts would expire in 2025.

While the middle class would benefit from increases in the standard deduction and the child tax credit, these benefits expire in 2025. They also are offset by other key provisions that hurt the middle class.

First, the nonpartisan Congressional Joint Committee on Taxation says the Senate bill would raise taxes on Americans earning $30,000 or less, starting in 2021. Those earning $75,000 or less would see large tax increases in 2027 when their cuts expire. It would increase taxes in 2019 for 13.8 million households earning less than $200,000, about 10 percent of all taxpayers. The Joint Committee says that by 2025, 21.4 million households would have steeper tax bills.

Second, the bill would eliminate deductions that are especially important for the middle class. These include the deductions for state income and sales taxes and for local property taxes.

Third, the bill gives extra benefits to wealthy taxpayers. It lowers the estate tax for the wealthiest Americans by allowing them to avoid estate taxes on the first $11 million of their property, instead of $5.5 million as in current law. The bill also eliminates the Alternative Minimum Tax (AMT), which mostly affects those earning $200,000 to $1 million. The AMT was created in 1969 to prevent perceived abuses by some wealthy people trying to avoid taxes.

Finally, tax cuts for individuals would be temporary, but corporate cuts would be permanent. It would cut the top rate for corporate taxes from 35 to 20 percent – the biggest business tax cut in history.

3. The proposed tax plans do not have the support of the American people. Polls show that a majority of Americans oppose the tax plan. A Washington Post/ABC News poll found that half of Americans oppose the plan and say they do not believe it would help the middle class more than it would help the wealthy. A Quinnipiac poll found that 52 percent disapprove of the “Republican tax plan” while 25 percent approve. A CNN poll found that 52 percent oppose the tax reform proposals vs. 34 percent in support. Another CNN poll found that 40 percent think the tax proposals would make the federal deficit larger, 29 percent say “about the same”, and 18 percent think it would be smaller.

A CBS News poll found that 58 percent think the Republican Party favors the rich, and 70 percent think other issues facing the nation should be addressed first. The Quinnipiac poll found that 61 percent think the wealthy “will benefit the most from this plan,” and 59 percent say the “Republican tax plan favors the rich at the expense of the middle class.”

That CBS poll also found that 50 percent of Americans say corporations pay less than their fair share of taxes, 56 percent would like to see taxes on corporations increased, and 58 percent would like to see taxes increased on wealthy Americans. If taxes are reduced on corporations, 57 percent of Americans think corporations will not use that money to create more jobs.

For these reasons, I urge Sens. Burr and Tillis to vote against the Senate tax bill. It increases the federal debt and the burden on future generations. The Republican Party has long been a voice for reducing the national debt, but this bill directly undermines that stated goal. It is fiscally irresponsible. This is vital for our country, and I hope our Senators will do the right thing and vote against this bill.

Ran Coble is an attorney and was director of the N.C. Center for Public Policy Research for 33 years. He wrote this op-ed as an individual citizen.

This story was originally published November 30, 2017 at 12:00 PM with the headline "Counts against the Senate tax plan."