GOP Senate leaders on Thursday plan to unveil legislation that would delay cutting the corporate tax rate from 35 percent to 20 percent until 2019, four people briefed on the planning said, a major departure from [President] Trump’s insistence on immediate changes that he says are necessary to spur the economy.
Some Senate Republicans objected internally to the one year delay, but they were overruled.
To try to prevent companies from waiting until 2019 to invest, Senate Republicans will propose to allow companies to immediately deduct all capital investments in 2018 to incentivize them to spend more money immediately, the people said.
This comes after Trump tells Senate Democrats they’ll like the Senate version better. That kind of cutting the legs out from under the House GOP is on a par with calling the House health-care bill “mean.” In this case, Trump’s comments are actually worse because the House hasn’t yet marked up the bill, let alone brought it to the House floor for a vote. And now, after Trump signaled that their bill is going into the trash, what Republican worried about corporate giveaways and insufficient help for the middle class will vote for a bill that is polling terribly? (This really is health-care reform all over again.)
The House bill has already been taking a beating from critics who point out that it’s a love letter to corporations and the rich. The Tax Policy Center (which reworked its figures after an initial error) finds, “In 2018, the bill would cut taxes for middle-income households by an average of about $800 or 1.5 percent of their after-tax incomes. Those in the top one percent would get an average tax cut of $37,000, or 2.5 percent of their after-tax incomes.” Moreover, “By 2027, about 31 percent of middle-income households would pay an average of $1,150 more in taxes than under current law. Two-thirds would still get a tax cut, averaging the same $1,100 as in 2017. Among the top 1 percent, two-thirds would pay an average of $123,000 less, and one-third would pay an average of $62,000 more.”
Aside from House Republicans’ “tax cuts for the rich” problem and the problem of a president who never has a bottom line or defends his own party, the challenge in merging two very different bills will be substantial, making passage of a final bill problematic and passage by the year’s end almost impossible. “The one-year delay would lower the cost of the tax cut bill by more than $100 billion, and negotiators are trying to preserve as much revenue as they can for other changes,” The Post reports. “But it could also delay decisions by companies to move back to the United States from overseas or have companies hold off on other decisions as they wait for the corporate rate to fall.” All this is going on as House Republicans are struggling to stuff their bill into the allotted space in the budget for a tax bill.
And finally, Republicans have managed to come up with the worst possible salesmen to peddle this turkey of a bill. The multi-millionaire alum of Goldman Sachs, Gary Cohn, insists repeal of estate tax, now with an $11 million exclusion for married couples, isn’t really just for the rich. He asserts that “it benefits farms, it benefits small businesses, it benefits a lot of different people.” Well he has a point — there are Jared and Ivanka, Eric and Donald Jr., and all their children who would benefit tremendously. Indeed, the children and grandchildren of Trump’s Cabinet I’m sure are a wide array of scions.
No wonder Senate Minority Leader Charles E. Schumer (D-N.Y.) was taunting Republicans from the Senate floor, practically daring them to vote for the tax bill. “If House Republicans don’t kill it now, it will come back to haunt them,” he said. “The overwhelming Democratic turnout in suburban districts in Virginia, New Jersey, and Pennsylvania should send shivers down the spines of House Republicans who represent those districts. Voting to repeal the state and local deduction, which wallops the middle-class and upper-middle-class suburbs, would be political suicide, all to bow down to the special, wealthy, big interests of large corporations.” It’s hard to tell whether he’s rooting for this to pass or fail. It truly has become a lose-lose proposition for harried Republicans.