Even before Senate Republicans introduced a plan to use the tax bill to repeal the individual mandate (thereby reducing the number of insured by 13 million), the GOP tax bill was on weak footing. A series of public polls shows that a large majority of Americans believe (correctly) it would benefit corporations and the rich more than ordinary Americans.
The Kaiser Health Tracking Poll now finds:
Overall, reforming the tax code is seen as a “top priority” for President Trump and Congress by about three in ten (28 percent), falling well-behind several health care issues such as reauthorizing funding for the State Children’s Health Insurance Program (CHIP) (62 percent) and stabilizing the ACA marketplaces (48 percent). Among Republicans, about half (51 percent) say reforming the tax code is a “top priority” which is similar to the share who say the same about providing funding for places in the U.S. affected by hurricanes (52 percent), repealing the ACA (50 percent), reauthorizing CHIP (46 percent), stabilizing the ACA marketplaces (46 percent), and addressing the prescription painkiller epidemic (46 percent).
There is high resistance to a number of GOP provisions. For example, “The majority of the public (68 percent) — including majorities of Democrats (77 percent), independents (66 percent), and Republicans (61 percent) — oppose eliminating the tax deduction for individuals who have high health care costs. One reason why the majority of the public may oppose eliminating the tax deduction for high medical expenses is because more than four in ten (44 percent) think eliminating this tax deduction would affect them and their families.”
A Quinnipiac poll finds: “American voters disapprove 52 – 25 percent of the Republican tax plan. Republican voters approve 60 – 15 percent, with 26 percent undecided. All other party, gender, education, age and racial groups disapprove.” In addition, “The wealthy would mainly benefit from this tax plan, 61 percent of American voters say, while 24 percent say the middle class will mainly benefit and 6 percent say low-income people would mainly benefit. … Only 16 percent of American voters say the Republican tax plan will reduce their taxes, while 35 percent of voters say it will increase their taxes and 36 percent say it won’t have much impact on their taxes. Only 36 percent of voters believe the GOP tax plan will lead to an increase in jobs and economic growth, while 52 percent do not believe it.” It’s hard to recall another major legislative initiative that was a key campaign promise — other than Trumpcare — that was so poorly received.
Republicans claim that huge corporate tax cuts (totaling $1 trillion) will trigger enormous growth and increase jobs. This is both analytically suspect and, as a practical matter, likely untrue.
Analyses from a variety of independent think tanks and economists across the political spectrum agree that whatever small boost in growth occurs, that blip fades as the negative consequences of increased debt take hold. On the corporate tax cuts, there is fierce debate about what percentage of those cuts inure to the benefit of workers (higher wages, more jobs) and how much to shareholders.
Moreover, on a practical level, the bill is simply not going to result in a rush of new jobs, not even with so-called repatriation of money from overseas under a special rate to induce domestic investment.
Senior economic adviser Gary Cohn personally witnessed the unenthusiastic reaction of top corporate executives. CNBC reports:
At a gathering of chief executives hosted yesterday by the Wall Street Journal, business leaders called into question one of Cohn’s top arguments for slashing the corporate tax rate to 20 percent. When one of the Journal’s editors asked the crowd if they planned to up their capital expenditure if the GOP’s tax plan went through, only a smattering raised their hands.
“Why aren’t the other hands up?” Cohn asked. … The informal poll was not the only disappointment for Cohn on Tuesday. Another non-scientific poll conducted at the gathering found that more than half of the CEOs present didn’t believe that Congress would pass a major tax bill by the end of the year.
Cohn should not have been surprised. “A National Bureau of Economic Research study published in 2014 found ‘little evidence that corporate tax cuts boost economic activity’ unless implemented in a recession. Far from being short on cash, corporations are sitting on record amounts.”
Even with the widespread conviction that the bill helps primarily the rich and big corporations, the GOP might still have been able to push it through. Republicans have convinced themselves that even a bad and unpopular bill is better than no bill (or maybe their donors have insisted that even a bad and unpopular bill is better than no bill). The Tax Policy Center explains:
Senate Finance Committee Chairman Orrin Hatch has come up with his solution to his tax bill’s Byrd rule problem. To help prevent the Tax Cuts and Jobs Act from losing revenue after 10 years, he’s proposing to make nearly all individual tax cuts expire after 2025. The expiring provisions would include the individual income tax rate reductions, the larger standard deduction and child tax credit, the 17.4 percent deduction of income from pass-through businesses, and the repeal of the individual alternative minimum tax. The proposed corporate tax rate cut from 35 percent to 20 percent would be permanent.
Hatch would also add a provision to repeal the individual mandate to purchase insurance through the Affordable Care Act. That would satisfy President Trump’s demands and free up another $300 billion. Hatch would use that revenue to increase the child tax credit to $2,000 and further reduce income tax rates for middle-income taxpayers.
These twists might be enough to sink the bill. Hard-line conservatives are now fixated once again on getting rid of the individual mandate, which would be an anathema to Democrats (even some red-state Senate Democrats inclined to vote for a tax bill) and would lose the support of moderate Republicans. A GOP Senate staffer not authorized to speak on the record says that with the individual mandate in there, “I don’t see how they get to 50 [votes].”
Rep. Don Beyer (D-Va.), about a week after a Democratic blowout election in Virginia, tweeted, “The GOP just combined their attempts to undo the Affordable Care Act with their tax cuts for the rich at the expense of working people. This would drive up taxes AND premiums for the middle class, and kick millions off their health coverage.”
Don’t count on the individual mandate repeal being part of the final bill. (The Post reports, “They could drop it just as quickly as they picked it up, a testament to how freewheeling the decision-making on policy fundamentals remains. Already, there are signs it could explode the fragile consensus that Republican leaders have been trying to assemble among their caucus.”) Its reintroduction, however, should highlight how far Republicans are from a viable bill that could pass both houses and survive the Byrd rule.
One wonders when Republicans will decide that a mammoth tax bill is unworkable and revert to a simple, much smaller tax cut. That might be the only “win” they have a chance of claiming.