Later this week, the House of Representatives will vote on a second round of tax cuts once again favoring the rich. This new tax plan is a sequel to the tax law that the Republican-led Congress enacted in December, which is informally known as the Tax Cuts and Jobs Act (TCJA). The TCJA was badly skewed to wealthy Americans, exacerbating the decades-long trend toward greater inequality of income and wealth. The law created new loopholes for well-heeled taxpayers to exploit. Moreover, its massive cost was financed by higher budget deficits that will put even more pressure on vital programs that serve all Americans. The newly proposed tax plan shares each of these failings. Congress should reject it. Instead, federal lawmakers should work toward real tax reform, beginning with undoing the damage caused by the TCJA.
Tax Scam 2 is just more of the same
During the week of September 24, Republican leaders plan to bring up a package of three bills that they call “Tax Reform 2.0”—that critics rightly call Tax Scam 2—for a vote in the House. The centerpiece of this package is H.R. 6760, a bill to permanently extend the individual and estate tax provisions of the TCJA beyond their scheduled expiration at the end of 2025. The reason these provisions were made temporary was that congressional leaders chose to move the TCJA through Congress using the process known as budget reconciliation, which enables bills to pass the Senate with a simple majority but only if they are not estimated to increase deficits over the long term. Under these procedural constraints, the TCJA’s authors chose to make the legislation’s corporate tax provisions permanent and its individual and estate tax provisions temporary (with some exceptions). H.R. 6760 would permanently extend both the provisions of the TCJA that cut individual taxes, including the reductions in individual tax rates and higher standard deduction, and the TCJA’s tax increasing provisions, including the elimination of personal exemptions and the cap on the deduction for state and local taxes (the SALT deduction).
The House Ways and Means Committee reported H.R. 6760 along straight party lines on September 13. The bill has been scored by the Joint Committee on Taxation (JCT) to increase deficits by $631 billion over 10 years. As discussed below, the cost over a longer time horizon would be much greater.
NOTE: Rep. Erik Paulsen sits on the House Ways and Means Committee, and voted for this.