The conservative from Eden Prairie called it long overdue “reform” that’s sure to restore “the hope of prosperity for American workers.”
Rep. Jason Lewis (R-Woodbury) went into hyperbole mode: “This plan is about defending the American Dream — the right to fly as high as your wings will take you.”
Rep. Tom Emmer (R-Delano) also came out in support of the blueprint that’s big on cuts, scarce on details. It’s estimated to amount to a $5.8 trillion tax break while doing away with $3.6 trillion in deductions. That comes out to a $2.2 trillion net cut.
Whether America can afford it or not is another conversation.
Here’s what’s known: The corporate tax rate would drop from 35 percent to 20 percent, which in theory greases the wheels for multinational companies to bring money back into the U.S. In the past few years, America’s largest companies have been hoarding cash overseas to skirt their obligations to Uncle Sam.
It would also kill the estate tax, which currently charges as much as 40 percent when a dead person’s assets are transferred to their heirs. Yet this too would be a bonanza for the rich, since it only applies to estates of $5.5 million and greater.
The GOP bill provides another bonus to the financier caste, proposing to lower rates on investment income, which are presently taxed between 15 percent and 23 percent.
What would it mean to working Minnesotans earning $25,000 per year? Or $65,000? Not much.
It looks like a wash now, according to Mark Haveman of the Minnesota Center for Fiscal Excellence, a nonprofit that focuses on fiscal policy. But he’s quick to qualify that: “There’s a lot of details missing. There’s blanks to be filled in here.”
It promises to bump the child tax credit, which stands at $1,000. But doesn’t say how much. The three new tax brackets — 12, 25, and 35 percent — don’t show which income groups will be subject to the new rates.
Haveman points to the standard deduction, which would double to $12,000 for those filing singly and $24,000 for those filing jointly. At the same time, personal exemptions would be eliminated.
“That sure would take a lot of the benefit away from the doubling of the deduction,” says Haveman. “These benefits of the standard deduction are partially, potentially, and largely — and maybe in some circumstances — could be completely offset depending on the household size.”
In other words, some families might be paying more.
It promises to bump the child tax credit, which stands at $1,000. But doesn’t say how much. The three new tax brackets — 12, 25, and 35 percent — don’t show which income groups will be subject to the new rates.
Haveman points to the standard deduction, which would double to $12,000 for those filing singly and $24,000 for those filing jointly. At the same time, personal exemptions would be eliminated.
“That sure would take a lot of the benefit away from the doubling of the deduction,” says Haveman. “These benefits of the standard deduction are partially, potentially, and largely — and maybe in some circumstances — could be completely offset depending on the household size.”
In other words, some families might be paying more.
“I mean, really,” says Haveman with a laugh. “It’s really difficult right now to access what will happen, and how burdens will shift, and who wins and who loses because there’s so many important details yet to be determined.”
Like how to create massive cuts without adding trillions of dollars to the national debt.
For now, it looks suspiciously like a trickle-down plan the GOP has peddled since the days of Reagan. THey’ve led to an economy that harkens back to the 1920s, with wealth congregated in the hands of a few and stagnant wages for the rest.
Hamline University profession Joe Peschek looks to history for what lays ahead. President Ronald Reagan’s 1981 plan featured billions in lower taxes for corporations and slashed estate taxes. It reduced income tax rates for every bracket.
President George W. Bush’s tax plans in the early 2000s were essentially crafted in the same trickle-down mold, according to Peschek, who argues the GOP’s sales pitch in 2017 isn’t much different.
“If we look back through those two periods,” he says, “wages were pretty flat, there was sluggish growth, and economic inequality grew. It’s hard to argue these kind of tax cuts trickle down very much.”
Rep. Betty McCollum (DFL-St. Paul) offered the best summation of the Democratic view, calling it “a multi-trillion dollar giveaway to billionaires and big corporations” that leaves “working families footing the bill.”
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