The House has passed the final version of the GOP tax plan – a bill that will deliver 83 percent of its benefits to the top 1 percent in 2027. "Today," said House Speaker Paul Ryan, "we are giving the people of this country their money back."
Ryan's words ring true if you believe in the old Mitt Romney maxim that "corporations are people, my friends." The Republican bill slashes the corporate tax rate by 40 percent. It offers corporations that have funnelled trillions offshore as much as a 77 percent break on their tax bill for those profits – while creating new incentives to offshore future profits. Business owners who pocket "pass-through" income receive a 20 percent break on their taxes. As a gift to oil companies, the bill also opens up the Arctic National Wildlife Refuge to drilling.
The bill makes a liar of the president. In November, Donald Trump insisted tax reform "is going to cost me a fortune ... believe me." In fact, the GOP's give-away to the wealthiest directly benefits Trump and his heirs – including by creating a deduction for real estate investors and by doubling to $22 million the amount that can be passed down at death without paying any estate tax.
The GOP bill also includes special tax breaks for the owners of private jets. House minority leader Nancy Pelosi condemned the bill as "one of the most scandalous, obscene acts of plutocracy ever."
The legislation will hurt millions of middle-class families, both upfront and over time. It effectively eliminates the individual mandate to buy health insurance – which the Congressional Budget Office projects will cause 13 million Americans to leave the insurance rolls – driving premium spikes for Americans who remain in the marketplace.
While the GOP's cuts to corporate taxes are permanent, new tax benefits for the middle class largely expire after a few years. The tax bill creates an across-the-board tax increase for Americans earning less than $75,000 by 2027, according to a distributional analysis by the Joint Committee on Taxation. These tax hikes will reportedly hit 86 million middle-class households.
With declarations of support from moderate Maine Sen. Susan Collins and real estate investor (and erstwhile deficit hawk) Sen. Bob Corker of Tennessee, the Senate is now poised to pass the same bill and advance it to Trump's desk. It would mark the first major legislative victory for a president who ran as a populist champion of the "forgotten men and women" but has instead enriched the nation's millionaires and billionaires – including many of the same politicians who voted for the bill.
Advanced by the same Republican Party that threatened to push the nation into default rather than increase the debt limit in the Obama years – this legislation will not be paid for. Over the first decade, the tax plan will require America to borrow another $1.5 trillion from China and other lenders. The final cost could swell to $2.2 trillion if a future Congress blocks the scheduled tax hikes on the middle class. As a result, according to the Committee for a Responsible Budget, "the national debt could exceed the size of the economy" by 2027.
The final tax bill does eliminate a few of the most egregious provisions of the original House bill. Grad students will not be taxed for receiving free tuition. The deductions for student loan debt and large medical bills is preserved, as is the tax break for teachers who buy supplies for their classrooms.
But the legislation remains an unprecedented act of political revenge, exacted through the tax code, hurting blue states. It limits to $10,000 the amount that can be deducted for state and local property and income taxes. This will force millions in high-tax, high-property-value states like New York and California to pay taxes on their taxes, further subsidizing red-state America.
For many non-rich Americans, the GOP tax bill is a puzzling scramble – creating confusion rather than promised simplicity. For example: the bill doubles the "standard deduction" to $24,000 for couples, but it simultaneously eliminates the "personal exemptions" that had effectively boosted the standard deduction to $28,900 for a family of four. Most Americans won't discover whether they're winners or losers until their tax bill comes due in April 2019.
Despite the complexity, the broad strokes of the tax bill couldn't be clearer: American wage earners expecting a windfall from this legislation will be gravely disappointed. But billionaires will be laughing on their private jet rides all the way to their Cayman Island banks.