Before House and Senate Vote, Here's 13 Worst Things in Trump-GOP Tax Scam

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Before House and Senate Vote, Here's 13 Worst Things in Trump-GOP Tax Scam

ENEWSFUSE September 25, 2020 No Comments

As opponents continue to raise alarms about the GOP tax plan being pushed by President Donald Trump and Republican lawmakers—with the House expected to vote Tuesday afternoon and the Senate later in the day—a new analysis details 13 ways the proposed tax cuts for corporations and wealthy individuals will negatively impact American families and the U.S. economy while lavishing rewards on corporations and the rich.

The analysis by American for Tax Fairness (ATF)—a coalition of more than 425 groups that advocate for progressive tax reform—found that the Republicans’ plan would give more than 80 percent of tax cuts to the nation’s richest one percent while also—among other things—raising taxes on 92 million middle-class families; increasing healthcare premiums; encouraging outsourcing of U.S.-based jobs; and limiting deductions for state and local taxes.

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ATF’s analysis warns that the GOP’s proposed legislation:

The richest 1% of taxpayers will get one-fifth (21%) of the tax cuts in 2018, but that grows to 83% by 2027. Their tax cut will average $51,000 in 2018; the bottom 60% of taxpayers will get about a dollar day. [Tax Policy Center (TPC)]
That is more than one-half (57%) of all households making less than $200,000 a year. 69 million households making less than $100,000 a year would also pay more in taxes after the temporary tax cuts for individuals expire. [TPC]
In effect, seniors will pay for tax breaks for corporations and the wealthy as automatic spending cuts are triggered because the tax cuts add $1.5 trillion to the national debt. Automatic cuts altogether will total $136 billion in 2018 and include reductions in agriculture subsidies, student loans, military retirement and more. [Congressional Budget Office (CBO)]

The plan repeals a key part of the Affordable Care Act: the requirement for individuals to have health coverage if they can afford it. That makes $314 billionavailable for tax cuts. [Joint Committee on Taxation (JCT)]
This will lead to 13 million more people being uninsured and cause a 10% increase in health insurance premiums for people getting insured on the individual market. [CBO]

[JCT]

The corporate tax rate is slashed from 35% to 21%, and the corporate Alternative Minimum Tax (AMT) is eliminated.
The $1.4 trillion corporate-tax-rate cut is nearly equal to the $1.5 trillion by which the whole tax plan increases the national debt, and to the $1.5 trillion cut the Republican budget makes to Medicare ($473 billion) and Medicaid ($1 trillion). [Center on Budget and Policy Priorities (CBPP)]
Tax cuts that benefit working families will expire after 2025. However, one individual tax cut made permanent changes the way tax brackets are adjusted for inflation, resulting in growing tax increases over time. [CBPP]

The plan includes at least $1.5 trillion in tax cuts that are not paid for, such as by closing loopholes used by the wealthy and corporations. [JCT] Because the bill contains several budget gimmicks that obscure the true cost of the tax cuts, the cost could be as much as $2.2 trillion. [CBPP] This will balloon the national debt and further endanger funding for Social Security, Medicare, Medicaid, public education and more.
The plan lowers the top individual tax rate from 39.6% to 37%, giving more tax cuts to the richest 518,000 households. The GOP chose not to fully adjust changes in the Child Tax Credit so that some 24 million children in working families could fully benefit. Both of these changes would cost roughly the same amount, about $80 billion over 10 years. [Institute on Taxation and Economic Policy (ITEP), CBPP]
They get a net $265 billion tax cut from a new 20% deduction for “pass-through” business income combined with a tightening of rules on losses. Applied to the new 37% top individual tax rate, this 20% deduction on business income will drop the top pass-through business tax rate from 39.6% to 29.6%. More than 80% of this tax cut will go to the top 5% in 2019. Trump owns more than 500 pass-throughs. Pass-through owners—which include sole proprietorships, partnerships, LLC’s and S corporations—pay taxes due on their business income on their personal returns at individual rates. [JCT, ITEP]
The plan creates a territorial tax system, which exempts foreign profits from U.S. taxes. While the plan will tax some of those offshore profits, the effective tax rate will be far below the U.S. rate. U.S. multinationals will have even more tax incentives to outsource more jobs and shift more profits offshore.
American corporations have $2.6 trillion in profits stashed offshore on which they owe $750 billion in U.S. taxes. Rather than make them pay what they owe, like all the rest of us do, the tax plan will charge them only $339 billion—over a $400 billion discount. Apple will save $44 billion and Microsoft $25 billion, based on their Securities and Exchange Commission tax filings. [ITEP]
The bill caps at $10,000 the amount of state and local property and income or sales taxes that can be deducted from federal taxable income. This is one of the reasons that nearly 8 million families will see tax increases in 2018. The impact of this change will be felt especially in the 20 states that claim an average SALT deduction of more than $10,000. Limiting SALT will put pressure on state and local budgets, likely forcing cuts to education, health care, and infrastructure. [TPC, CBPP]
The estate tax is substantially weakened, losing $83 billion and allowing very rich families to inherit wealth tax-free. Under current law, the tax only applies to estates worth over $5.5 million per person or $11 million per couple—about 5,500 estates. Under the bill, only estates worth at least $11 million per person or $22 million per couple (about 1,800 estates) would pay the tax. [JCT, TPC, CBPP]
In addition to cutting the top individual income tax rate and creating a tax break for income from pass-through business entities (of which Trump owns 500), the bill preserves the many existing tax loopholes for real estate investors and even creates a new one. The final bill exempts real estate owners from a provision meant to limit abuse of the new pass-through income deduction. [ITEP]

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