Leave it to Republican leaders in Congress to combine some of the worst parts of the horrible House and Senate tax bills and produce a true monstrosity.
How bad is the deal announced Wednesday? Let us list some of the many ways.
It hits California taxpayers hard. The tentative compromise reportedly caps the deductions for state and local income or property taxes at $10,000. In 2015, those deductions were worth about $100 billion to nearly 6 million California taxpayers – an average of $16,000 in income taxes and $6,000 for property taxes. The bill also lowers the deduction for mortgage interest to loans of as much as $750,000 from $1 million, which affects states with high housing prices such as California, where more than 4 million taxpayers claim an average of $12,000.
It’s unfair to the middle class. While some families would get lower tax bills, many workers would pay federal taxes at a higher rate than corporations and partnerships. Benefits for the middle class are uneven and temporary and some families could pay more. The California Budget & Policy Center projects that more than 2 million Californians would end up paying higher taxes.
Be the first to know.
No one covers what is happening in our community better than we do. And with a digital subscription, you'll never miss a local story.
It threatens people who rely on the Affordable Care Act. Republicans failed to repeal Obamacare, but to help pay for this tax bill, a provision would end the requirement that people have health insurance. That would lead to at least 13 million Americans not having coverage by 2027, including 1.8 million Californians.
It explodes the federal debt. The plan would add about $1.5 trillion in deficits over 10 years. That could lead to deep cuts in social programs as Congress attempts to balance the budget. Most experts dismiss the notion that these tax cuts would pay for themselves through economic growth.
Michael Cohen, Gov. Jerry Brown’s finance director, laid out these “significant concerns” in a letter Wednesday to California’s congressional delegation, and also warned of damage the tax bill would do to the state’s efforts on clean energy and housing for veterans.
Individuals who would be the biggest winners under this bill are the very rich, including President Donald Trump and his family. The top tax rate for individuals would drop from 39.6 percent to 37 percent, and the estate and alternative minimum taxes would be narrowed so they affect fewer high-income taxpayers. Republicans love to criticize any proposal that supposedly redistributes wealth, but this plan actually does – to the super-rich.
Mostly, the bill would be a huge jackpot for big business, which is sitting on billions and billions in cash. The corporate tax rate would be slashed from 35 percent to 21 percent, and there would be no alternative minimum tax for corporations.
House and Senate negotiators, who met in public for the first and only time Wednesday, plan to unveil details of the deal by the end of this week so there can be final votes next week.
They are in a rush to get it done before the swearing-in of Democrat Doug Jones, whose victory in Alabama on Tuesday will narrow the GOP majority in the Senate to 51-49.
Now, the last hope is that enough Republicans come to their senses and vote against what would be the most sweeping rewrite of the federal tax code since the bipartisan 1986 reform.
Rep. Tom McClintock, R-Elk Grove, was one of three California Republicans who voted against the House version last month. He needs to stand up again for the state’s taxpayers, as do the other 13 House Republicans from California.
In typically grandiose, misleading comments at a meeting with GOP leaders on Wednesday, Trump urged them to send him the bill before the holiday recess starts Dec. 22.
At a later White House event, the president trotted out five families who would benefit in different ways and declared he wanted to give Americans a “giant tax cut for Christmas.”
Most Americans, however, know it’s really a big lump of coal. In two polls released this week, support for the GOP tax plan was at only 31 percent and 32 percent – the lowest level of public backing for any major legislation passed in the last three decades, including Obamacare in 2009.
Here’s the bottom line: Trump and Republicans are desperate for any major legislation so they don’t go before voters in 2018 empty-handed. They are willing to go to extreme lengths to lower taxes for wealthy donors and corporate CEOs, even if it means increasing the divide between haves and have-nots and mortgaging our children’s future.
They ought to be ashamed, but in the Trump presidency, shame is in increasingly short supply.