Category: Taxes

The Republican tax plan puts another knife into American Democracy

The Republican tax plan puts another knife into American Democracy

The Wall Street Journal
By Tom Steyer
Image courtesy of Tom Williams/Zuma Press

After more than three decades as an investor, I fully appreciate that folks on Wall Street don’t have time to follow every detail of Capitol Hill’s policy debates. What matters to the financial industry is the bottom line. So how does the current Republican tax proposal look with that in mind?

On the surface, the GOP plan might seem to offer the kinds of short-term rewards that really resonate. But let’s face it: Republicans’ supposedly pro-business ideas have seemed that way before. While business owners and investors may have made extra returns in the near-term, however, America’s economy ultimately suffered.

Less than a decade ago, after years of dramatic deregulation coupled with revenue-draining tax cuts, the entire U.S. financial system effectively collapsed. It took down with it millions of American consumers, workers, small businesses, retirees and middle-class homeowners.

The country can’t afford this kind of outcome again. That’s why I want to be as straight as possible: Despite what you may believe, the Republican tax plan taking shape is a sham. It will lead to more pain and less prosperity for the vast majority of Americans. Investment professionals have a moral obligation and a personal interest in opposing the bill.

Republicans turn their irresponsible tax bill into monumentally unwise social policy

Republicans turn their irresponsible tax bill into monumentally unwise social policy

The Washington Post
By Editorial Board
Image courtesy of Andrew Harrer/Bloomberg

Republican Senators remade their tax bill into an Obamacare repeal bill, announcing Tuesday that they inserted an Obamacare sabotage device into the text. In a stroke, they turned a fiscally irresponsible tax plan into a monumentally unwise piece of social policy that would do much more than widen the deficit. If passed, it would be the most significant health-care shift since the 2010 Affordable Care Act — and in a decidedly negative direction.

The Senate GOP’s new bill would eliminate Obamacare’s “individual mandate,” which requires all Americans to get health coverage if they can afford it. Independent health-care analysts and the Congressional Budget Office, Congress’s official scorekeeper, agree that this move would deeply undercut the Obamacare system. The CBO estimated last week that ending the mandate would lead to 13 million more Americans lacking health-care coverage.

Yet, for Republicans, the coverage loss is not a regrettable side effect of an otherwise sensible policy. It is the point. Fewer people covered means that the federal government would save money that the treasury would have otherwise spent on their health care, such as by helping them buy health insurance or offering them Medicaid — $338 billion over a decade. Republicans want to use that cash to help finance the rest of their tax bill. They could have removed some of the bill’s expensive and unnecessary giveaways to the wealthy, such as its rollback of the estate tax. But they opted instead to raise money by ballooning the ranks of uninsured.

 

Republicans search for proof their tax plans will pay for themselves

Republicans search for proof their tax plans will pay for themselves

The New York Times
By Jim Tankersley
Image courtesy of Tom Brenner/The New York Times

Republican leaders keep insisting that their plans to cut taxes by $1.5 trillion over the next decade will not add to the national debt — yet economic analyses of the Senate and House proposals keep predicting that the plans will do just that.

The disconnect is prompting House and Senate Republican leaders and the Trump administration to hunt down — and promote — more optimistic forecasts, even if they exclude large parts of the tax bills from their analyses or assume growth-boosting features that are not, in fact, in the bills.

Republican leaders have said the tax cuts they are planning will essentially pay for themselves. Lawmakers gave themselves, via their 2018 budget resolution, space for $1.5 trillion in revenue losses from tax cuts, but they have promised those losses will be offset by increased economic growth spurred by the tax overhaul. Finding a model that supports the ambitious economic growth projections is critical to their ability to pass a tax cut along party lines.

The House and Senate bills have been introduced and amended at a rapid clip, and economists are only now beginning to plug their details into sophisticated models that predict how much additional growth the cuts might produce. So far, every so-called dynamic analysis that scrutinizes the full details of the bills and factors in economic growth finds that those plans would add at least $500 billion and as much as $1.7 trillion to the deficit.

In an interview on Friday, Senator Mitch McConnell of Kentucky, the majority leader, said that “we’re confident that the $1.5 trillion gap would be filled” by economic growth. Mr. McConnell said the tax bill would add 0.4 percentage points to annual economic growth, though he did not cite a specific analysis suggesting that assertion. “So we believe this is a responsible budget and a responsible tax reform,” he said.

Speaker Paul D. Ryan of Wisconsin insisted last week that the House bill would not add to the deficit, even after an analysis by the independent Tax Foundation, which uses a model that tends to find large growth effects from tax cuts, found that the bill would add $1 trillion to deficits over a decade.

“We believe that we’re going to be fine on that,” Mr. Ryan said. “We believe that when you look at other analysis, whether it’s going to be Treasury or the rest, that we’re right there in the sweet spot, with economic growth that gives us more revenue with where we need to be.”

Paul Ryan is choking on his own mystery meat

Paul Ryan is choking on his own mystery meat

The New York Times
By Paul Krugman

House Republicans were supposed to unveil their tax proposal today, but it has been put off — and not, as you might imagine, because they’re a bit worried that their grand opening might be overshadowed by the indictment of Trump’s campaign manager and sworn testimony of collusion between campaign officials and Russia.

No, they’re delaying because on the verge of trying to pass a huge change in the U.S. tax system, they still haven’t settled on key parts of the proposal — specifically, how to pay for huge corporate tax cuts and large cuts to wealthy individuals.

But wait — how is this possible? Republicans, and specifically Paul Ryan, the speaker of the House, have been talking about tax “reform” and putting out white papers for years — actually, since 2010. How can basic things be up in the air at this late date?

The answer, of course, is that Ryan and friends have been faking it all these years.

So will the GOP pass something? Probably — but it’s more likely to be a miniature Christmas tree of handouts to the wealthy than the grand tax reform they’ve been promising.

And let’s hope that whatever happens gets reported as the failure it is. Ryan and company promised big stuff, but never had any way to deliver. When it comes to big lies, Donald Trump is actually a very good, very normal Republican.

Sorry GOP, tax reform will not be easier than replacing ObamaCare

Sorry GOP, tax reform will not be easier than replacing ObamaCare

The Hill
By Howard Gleckman
Image courtesy of Tom Williams

You hear it all the time these days: Republicans should just move on to tax reform. It will be so much easier than overhauling the law on healthcare.

No, it won’t. Indeed, if the GOP thinks replacing the Affordable Care Act has been a nightmare, just wait until they try to reform the tax code.

Tax reform, at least the version that raises the same amount of revenue as the current code, will create far more losers than a health bill. It will divide the business lobby, produce a storm of criticism from charities and home builders, and set off a firestorm among political ideologues. It will sow confusion and uncertainty among ordinary taxpayers. And it will split congressional coalitions, not just by party, but by geography.

Think of it this way: Nearly two-thirds of Americans get insurance through their employers, Medicare, or the military, and they would be largely immune from changes to the ACA. By contrast, nearly every American and all businesses could be touched by a major tax bill. Even those who currently pay no federal income tax could be at risk, depending on how reform is structured.