Sun Sentinel Palm Beach Edition
GOP tax plan gets even worse
Congressional Republicans proclaim they are serious about tax reform. Their actions, however, show they aren’t.
At first, the tax proposal from Senate Republicans looked a little better than the version from GOP House leaders. On Tuesday, though, Senate Majority Leader Mitch McConnell announced the legislation would include repeal of the Affordable Care Act’s individual mandate.
Having failed repeatedly to kill their political white whale on a straight-up vote, Republicans want to make the law collateral damage from the tax bill they are desperate to pass this year. It’s part of the GOP’s frantic search for money to offset tax cuts for businesses and the rich.
Analysts say eliminating the mandate would save the government $300 billion over 10 years. That savings, however, would come from roughly 13 million people dropping out of the program, and thus not needing government subsidies to buy it. They likely would be healthier people.
Their refusal to buy insurance would upset the individual market under the Affordable Care Exchange. Premiums thus would rise for sicker people who need coverage. Abolishing the mandate also would burden local hospitals facing a new wave of uninsured patients.
For Republicans, the magic number in their search is $1.5 trillion. If the tax legislation adds more than that to the budget deficit over a decade, they can’t pass it on a simple majority vote. They would need 60 votes, and — horrors — would have to work with Democrats.
Attempting to sabotage the health care law would cost Republican Senate leaders any Democratic support and maybe some GOP votes. With that change, there is even less reason to like the Senate plan, despite its differences from the lousy House plan.
Most notably, the Senate proposal spreads income tax cuts more evenly throughout all seven brackets. The House version cut the brackets to four.
In addition, the Senate would retain two deductions that matter a lot in Florida — uninsured losses from natural disasters and out-of-pocket medical expenses. After much criticism, the House also restored the medical deduction after first eliminating it.
The Senate also would retain the limit of $1 million for mortgage interest deductions. In the House version, the limit would drop to $500,000. Only about 6 percent of all mortgages exceed $500,000, but Realtors in Florida and elsewhere oppose any change.
Where the House would end the estate tax in six years — saving the wealthiest 0.1 percent of Americans $5.5 billion — the Senate would retain it, but double the exemption. Heirs would only pay taxes on estates of more than $11 million.
Wealthy families would get to use the child tax credit if their incomes were up to $1 million. The current cap is $110,000. The alternative minimum tax, which falls more heavily on high-income filers, would go away.
The student loan deduction would stay, but Floridians no longer could deduct state sales taxes.
As with the House plan, the core problem is the goal. Republican priorities are not tax cuts designed to help the middle class and stimulate investments, such as for expanded broadband access. The priorities are cuts for corporations and the wealthy.
Like the House, the Senate would end individual tax breaks in about a decade, while the corporate cuts would be permanent. The Senate would delay the business breaks until 2019, a year later than the House, but the rate would drop to the same 20 percent. In addition, the Senate would tax only corporate income in this country, not abroad. That’s a big break in a globalized economy.
Then there’s the process, or lack of it. With legislation that will affect every American, Republicans are making it up as they go along. There are only 12 days left in 2017 when the House and Senate both will be in session. The GOP wants its patrons to get tax cuts for Christmas.
Sen. Bill Nelson, D-Fla., summed it up during recent remarks on the floor:
“We are completely rewriting our tax code. Yet, we haven’t had any hearings on the bill. Or any time to seriously debate the slew of policy changes that will affect people’s everyday lives … This isn’t the way we ought to be operating. Everyone here knows it. We should be working together to negotiate a truly bipartisan tax plan, instead of throwing this all together on the fly.”
Nelson’s Florida colleague, Republican Marco Rubio, should reject his party’s tax proposal on grounds of substance and style. So should President Trump, since the approach would hurt his most loyal supporters.
After all, this is the Washington Trump campaigned against.