Tax Bill a Christmas List for the Wealthiest, and Big Fossil

December 4, 2017

oilhands

Good day to call your rep about the monstrous tax bill making its way thru congress.

The House has to reconcile changes made when the Senate passed it the other night with a host of new provisions and virtually no review, so almost no one has actually read it.
Here’s what we know.

New York Times:

One of the bill’s biggest windfalls for the wealthy — cutting taxes on income received through so-called pass-through entities like partnerships, popular with real estate developers — got even more generous. The richest taxpayers will be taxed at a rate of about 29.6 percent on such income, a big cut from the current top federal income tax rate of 39.6.

The ever-lengthening list of income that will be taxed at a cut-rate could be seen as “a Donald J. Trump loophole,” said Steven M. Rosenthal of the nonpartisan Tax Policy Center. A large amount of that kind of income is on Mr. Trump’s 2005 tax return, two pages of which became public in March, and on his 2017 financial disclosure forms, which show more than 500 pass-through entities, Mr. Rosenthal said.

Thanks to an amendment offered by Senator John Cornyn, Republican of Texas, certain income from gas and oil operators could also qualify for the new, lower rate. Industry representatives said they would have been excluded from the intended benefits that the real estate investment trusts and other publicly traded industries were getting.

“The Senate went out of its way to confirm that passive investors in these publicly traded investment vehicles get the benefit of the pass-through discount tax rate,” said Edward D. Kleinbard, a professor of tax law at the University of Southern California and a former chief of staff for the congressional Joint Committee on Taxation. “This is a working definition of a tax boondoggle.”

Globe and Mail:

Why did the senators do this thing? Because they were being blackmailed by a few powerful oligarchs, the very people who will benefit most from the tax cuts. Between kowtowing to those oligarchs and the President’s brow-beating of the press, it’s getting harder and harder to tell the difference between the United States and Russia.

Over the past few months, extraordinarily wealthy men (they are almost all men) who bankroll the Republican Party became so frustrated by the lack of progress on dismantling Obamacare or cutting their taxes that they threatened to put away their chequebooks.

“Anybody who was there knew that I was not happy,” retired oil and gas tycoon Thomas Wachtell, told Politico, after a tense meeting between the Republican congressional leadership and a group of wealthy donors in Los Angeles last month. “You’re never going to get a more sympathetic Republican than I am. But I’m sick and tired of nothing happening.”

The Associated Press reported that a network of donors centred on the billionaire Koch brothers also sounded the warning: dismantle Obamacare and pass tax reform or face the fundraising consequences.

Without the oligarchs’ cash, and facing the headwinds of a highly unpopular President, the Republicans risked losing control of the House, and possibly even the Senate, in next year’s midterm elections.

Despite the warning, efforts to repeal the Affordable Care Act failed because a few Republican senators couldn’t stomach cancelling health insurance for millions of lower-income people. But tax reform was a different matter. The House and the Senate got their bills through in one month flat.


The Republicans are gambling that enough middle-class voters will benefit, at least in the short run, that they won’t notice or mind that most of the tax cuts flow to upper-income earners, and especially to those who own their own companies or who are major shareholders in large corporations.

The Congressional Budget Office predicts that 13 million people will be without health care insurance, because the Senate version eliminates compulsory enrolment in a health-care plan. Without that enrolment, many young, healthy people will opt out, forcing up insurance premiums for the rest, which will force lower-income people to give up coverage.

And by reducing federal tax deductions for state and local taxes, people who live in states with higher taxes, such as New York and California, could end up paying more tax. But they don’t vote Republican, anyway.

As for the $1.4-trillion (U.S.) that this tax cut is expected to add to the national debt over the next decade – well, that’s for another Congress.

Such a naked, debt-financed transfer of wealth to the very richest while cutting health care and education subsidies isn’t something you do in the light of day, especially since there were some squeamish Republican senators who had to be wooed with special promises. The Hill reported Sunday that Sens. Ron Johnson of Wisconsin and Steve Daines of Montana only came on board after promises to treat smaller businesses as favourably as large corporations. Senator Susan Collins of Maine required some assurance of additional help for those impacted by the cuts to health-care funding.

 

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