Tuesday, September 21, 2021
Sept. 21, 2021

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Leubsdorf: Tax bill is another scandal


For weeks, behind-the-scenes scandals have dominated the headlines in Washington: the increasing evidence of Russian efforts to infiltrate Donald Trump’s 2016 campaign and the uncomfortable disclosures of how prominent men mistreated vulnerable women. In neither is the full extent yet known.

Unfortunately, less attention has been paid to the scandal taking place in full view on the floors and in the committees of Congress — the effort by its Republican majority to muscle through a tax bill that falls far short of Trump’s repeated pledges of giving middle-class Americans the biggest tax cut in history.

Independent studies show both House and Senate versions primarily benefit corporations and wealthy taxpayers. They reflect continuing Republican adherence to their questionable “trickle down” theory of economics, their preoccupation with proving to their financial supporters they can do something significant for them, and their leadership’s decision to exclude Democratic input that might have produced a far better bill.

You’d think tax cuts would be popular, but in this case, you’d be wrong. Polls show most Americans oppose this bill. And you’d think corporate CEOs would be itching to increase investment if they get the tax cut they have long sought. But when presidential adviser Gary Cohn asked how many would do so at a recent Wall Street Journal conference, he was stunned to see how few raised their hands.

Nevertheless, Republican lawmakers are under strong pressure to approve a tax bill — any tax bill — after failing to reform health care or pass any other major legislation in Trump’s first year, traditionally the time new presidents get major proposals enacted.

“My donors are basically saying, ‘Get it done or don’t ever call me again,’ ” Rep. Chris Collins, an upstate New York Republican, said shortly before the House vote. He was one of 24 House Republicans from the seven states with the highest state income taxes who supported the bill, though its provision eliminating deductibility of state and local income taxes will almost certainly raise taxes for many of their constituents.

Hurtful provisions

The Senate version is even worse because it eliminates deductibility of property taxes; most states with high property taxes have no or one GOP senators (except Texas, with two).

Here are the most problematic aspects of the Senate and House bills:

• Helping the rich. Wealthier taxpayers not only reap the bulk of the benefits, but the Senate bill also makes corporate cuts permanent and ends individual reductions after eight years to make the bill fit budgetary constraints. That means about half of all taxpayers would end up with higher taxes in the mid-2020s.

• Hurting many others. The bills are riddled with provisions that hurt various vulnerable segments of the economy. The House bill eliminates deductions for excessive medical expenses, educational supplies, interest on student loans and moving expenses, all to finance larger cuts for corporations and higher-income taxpayers. While increasing the standard deduction helps some, those who itemize deductions would lose.

• Raising the debt. Both bills would increase the national debt, already over $20 trillion, by at least $1.5 trillion — and probably more — over the next 10 years. The increased debt would trigger a $25 billion cut next year in Medicare; while Medicare costs ought to be reduced, this hardly seems the best way to do it.

• Limiting health insurance access. Equally ill-considered and damaging is the Senate’s belated insertion of a provision eliminating the requirement that all Americans have health insurance or pay a fine. Estimates are that this would cost more than 13 million Americans their health care coverage by 2020, reversing gains of the past decade.

The ostensible reason for passing the bill is to spur economic growth, but many analysts question the extent, since unemployment is already down to 4.1 percent. Bruce Bartlett, a longtime Republican deficit hawk, sees a darker purpose: to force future reductions of federal spending, meaning domestic programs.

“It’s a choice between passing an unpopular bill and looking incompetent to govern,” the always candid former Virginia Rep. Tom Davis told the National Journal.

But if it passes, most Americans may conclude the GOP did both.

Carl P. Leubsdorf is the former Washington bureau chief of the Dallas Morning News. Email: carl.p.leubsdorf@gmail.com.