It’s mostly a business tax cut, with many winners and losers. As TPC’s Howard Gleckman explains, the new bill released yesterday by the House GOP is basically a mid-sized tax cut--aimed mostly at businesses and their owners. It is not the biggest tax cut in history, as President Trump promised. In fact, many middle-income households are likely to pay more under this plan. It simplifies the tax code for many but adds complexity for others. It won’t generate permanent 3 percent economic growth and would almost surely add more to the deficit than the advertised $1.5 trillion over 10 years. Key business tax cuts are scheduled to phase-out after five years but very likely would not.
About the deficit: The Committee for a Responsible Federal Budget estimates that the GOP House bill, would “result in debt reaching the size of the economy by 2028 and exceeding its post-World War II record a year or two later.”
What will the bill cost? The Joint Committee on Taxation put out its official conventional score for the bill late yesterday. A dynamic score will come later. Over 10 years, the House bill would lose $1.487 trillion—just under the $1.5 trillion limit. But in 2019 and 2020, it loses more than $200 billion annually. The revenue loss declines as business breaks and a new $300 dependent credit expire. What would happen if Congress lets them continue? It isn’t hard to guess.
Business lobbyists are facing off over the bill.. The National Federation of Independent Business is opposed to the bill in “its current form.” The National Association of Home Builders and the National Association of Realtors are organizing grass-roots opposition to the plan. However, the US Chamber of Commerce and the Business Roundtable back the bill.
No climate change here. Unsurprisingly, the bill would protect tax subsidies for fossil fuel production but kill them for alternative energy and electric cars. Mr. Musk, call your office.
If enacted in its current form, there will be more unhappy taxpayers. The Washington Post offers a run-down: People in high-tax states like California, New York, New Jersey and Connecticut would miss the state and local tax deduction. Those in the bottom 35 percent of the income distribution will see no additional benefit from the tax bill. And the National Council of Nonprofits expects that charitable contributions will decrease under this bill.
November 6 should be interesting… That’s when the House Ways & Means Committee expects to start marking up this bill. Expect lots of amendments. Indeed, Hill sources say the bill may change as early as today.
What will the Senate’s version look like? Senate Finance Committee Chair Orrin Hatch hopes to release his tax plan next week and would like the panel to begin its own mark-up a few weeks after that. The Senate measure is likely to be very different than the House plan. Will the two chambers resolve their differences by the end of the year?
Find out what the Senate Finance Committee’s top Democrat thinks on Tuesday. Senator Ron Wyden joins TPC as the third Distinguished Speaker. Register to attend in person or view the live webcast here. The event starts at 9:00 am on November 7.
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