Happy days are here again! The coffers of the Republican campaign committees of the U.S. Senate and House of Representatives, which have been in a drought this year while the party struggled to deliver the huge tax cuts so long promised to businessmen, will get a deluge now that the deed is about done.
A Republican senator whose candor is often shocking said his colleagues had to pass the tax cuts, no matter how unpopular they might be, because big donors were counting on recompense. Once the party finally had a working majority in both houses and the White House, it could not afford to disappoint the corporate forces that had spent so much in recent years to elect Republicans in statehouses and Washington.
Sen. Bob Corker (R-Tenn.), who had voted against the first Senate tax bill because it would have added $1.3 trillion to the federal debt, agreed to supply the crucial vote this time — right after finding out that the conference committee had added another big loophole that will mean a giant payout for people like him and Donald Trump. It added real estate companies to the list of pass-through businesses that qualify for a tax break that isn’t available to wage earners.
The tax votes this week are a gamble for the party, for polls show that most people don’t believe the tax cuts will help them. A CBS poll said 76 percent of people believe that the tax bill will benefit large corporations, 69 percent think the beneficiaries will be wealthy people generally and only 31 percent believe the beneficiaries will be middle-class families.
The great unwashed in this instance are not far off the mark. All the analytics done by experts who apply the various terms of the bill to the trove of IRS data from last year’s tax returns conclude that while most people will get some temporary and often minuscule relief, mainly owing to a larger standard deduction, most will eventually pay more. Corporations will see large permanent benefits, and wealthy businessmen whose incomes depend on pass-through entities like partnerships and limited liability companies can count on politicians to keep their benefits flowing.
But the president and Congress count on H.L. Mencken being right in the end: No one ever went broke underestimating the intelligence of the American people. Every Republican congressman’s message — we see it in Arkansas — is the same as Trump’s: This is great for working people.
Mencken may have been right this time, too. Many people give credence to the words rather than the deeds of the politicians they like. Thirty-one percent in the CBS poll believe the tax bill mainly benefits the middle class. The Gallup daily tracking poll this week shows that 34 percent like the job Trump is doing. Are they the same people?
“This [the tax bill] is going to cost me a fortune, this thing, believe me,” Trump said. There is no way to tell except by the three summary pages of his 2005 tax return, which his tax preparer apparently leaked to a reporter because it showed him paying some taxes that year.
Trump’s 2005 return makes it clear that the tax bill should deliver a small fortune to him and his family. Most of his income came from real estate companies and other pass-through entities that will get big tax cuts. The tax bill keeps the most egregious tax loopholes, like carried interest, that were supposed to drive the crusade for “tax reform.”
Trump paid some taxes in 2005 mainly owing to the alternative minimum tax, the device Congress installed in 1969 to force rich people to pay some taxes even if deductions and exemptions left them owing no regular income tax. Trump’s point man, the treasury secretary, tried to get the tax abolished, but the bill keeps a trace of it.
The GOP bill doubles the exemption for the estate tax, the century-old tax on large sums of inherited wealth that Trump may one day pass on to his offspring. A person will now have to inherit $11 million or a couple $22 million before owing a dime.
A narrative recited by Arkansas Republican leaders in op-ed articles is that the bill simplifies the tax code so that people can file on a postcard. Trump said people could do their returns on a single page. Most people do that now by claiming the standard deduction, but the bill actually complicates tax reporting immensely by adding, not eliminating, loopholes.
There is the little matter of the bill’s driving up health insurance costs for low- and middle-income Americans by torpedoing the Affordable Care Act. Congress’ fiscal analysts concluded that the bill will cost 13 million people with low and middle incomes their health insurance.
Happy days are here again!