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As expected, the Republican tax cut bonanza passed the House and Senate yesterday, paving the way for the Trump administration's only legislative victory of the year, which they are sure to celebrate. But it didn't all go exactly as planned. Even though the House cleared the $1.5 trillion tax cut bill along party lines, representatives will have to vote on it again today. That's because the Senate parliamentarian removed three provisions from the Senate bill, and both chambers have to pass identical bills. Despite the hiccup, however, the bill is expected to head to Trump's desk in the coming days. Per The New York Times:
- "Three small provisions in the final tax bill agreed to by the House and Senate were found by the Senate parliamentarian to violate the budget rules that Republicans must follow to pass their bill through a process that shields it from a Democratic filibuster. As a result, the bill changed slightly in the Senate, and the House will now need to vote on it again since both chambers must approve identical legislation. Among the items that were deemed out of order was the title of the bill: the Tax Cuts and Jobs Act."
- Parliamentary stumble aside, it's worth revisiting who would actually make gains under the sweeping tax rewrite. News outlets have found that it would largely benefit the ultra-rich. Let's take a look at what some of them have to say.
- WaPo: "The sprawling plan would cut the corporate tax rate dramatically and provide new breaks for other businesses. It also would lower income tax bills in 2018 for the vast majority of households, though the wealthy would see far more relief than the middle class and working poor."
- "The plan would revise nearly every part of the tax system by lowering income tax rates at all levels and restructuring deductions. And it extends beyond taxes and into health care by scrapping a central part of the Affordable Care Act."
- NYT: "Any back-of-the-envelope math shows that in both dollar terms and in percentage terms, the largest tax cuts clearly benefit the rich."
- NBC: "The ultra-rich fare well in the tax bill overall. An analysis by the non-partisan Tax Policy Center found that 83 percent of households in the top 0.1 percent would receive a tax break in 2018 with an average benefit of $193,380. For the middle 20 percent of earners, the average tax cut would be $930. Over half the bill's total benefits would go to the top 10 percent of earners."
- Business Insider outlines seven ways rich people will benefit under the bill: "Higher-income taxpayers will get the largest tax cuts; the estate tax, which benefits about 5,500 taxpayers a year, will be eliminated; the AMT, which increased Trump's leaked 2005 tax bill from $5.3 million to $36.5 million, will be repealed; private school tuition could be paid through a 529 plan; rich people will still be able to reduce their taxes by donating to charity; 'hedge fund guys,' as Trump called them, and other fund managers will still have access to a loophole that allows them to pay a lower tax rate on investment profits; the stock market could go up thanks to a one-time repatriation tax included in the bill; and the Senate bill would keep the home-mortgage-interest deduction."
- WaPo: "The new Tax Policy Center analysis of the bill tells the story. It finds that in 2027, 53 percent of taxpayers will see a tax hike, relative to current law. That’s because the plan makes the individual rate cuts and the preferences that will benefit lower earners temporary, while establishing an inflation index that nudges people into higher income brackets over time, to limit the impact on the long-term deficit. Meanwhile, the bill makes the corporate tax cuts (which overwhelmingly go to shareholders and capital, and thus mainly to the rich) permanent."
- Politifact: "About half of the households filing returns had incomes below $50,000, according to the Joint Committee on Taxation, but they collectively get just 6.6 percent of the tax gains in the bill. By contrast, only about 1 percent of households filing returns had incomes above $500,000, but they stand to gain 23 percent of the benefits from the bill. (It’s worth noting that the United States has a progressive tax system, which means that taxpayers with higher incomes pay a larger share of their income in taxes. So it’s not surprising that wealthier taxpayers would receive a greater share of the benefits in a tax bill.)"
WHAT IT MEANS: Ok, so there is widespread consensus that the bill will be great for the ultra-rich, which doesn't exactly fit in with the populist rhetoric of Trump's campaign. And that this is a historically unpopular bill seems to be of little importance to Republicans, who are desperate to score a major legislative win. Whether or not, however, that will portend well for the midterm elections is another question entirely. A CNN poll recently found that "opposition to the bill has grown 10 points since early November, and 55% now oppose it. Just 33% say they favor the GOP's proposals to reform the nation's tax code.”
- That opposition was clear last night, as activists in the public gallery repeatedly interrupted Republicans as they introduced the tax measure in the House. WaPo: "A woman in a wheelchair chanted, “Shame! Shame!” as she was removed from the gallery."
- But Paul Ryan appears unfazed by the bill's polling. "Results are going to make this popular," he said.
- The resistance even came from...a North Carolina Republican? Yes, you right that right (again). NC GOP Rep. Walter B. Jones was among the twelve Republicans who voted no against the tax plan—and the only one among them who wasn't from California, New Jersey or New York.
- Jones explained his position in a press release: “I’m all for tax reform, but it must grow the economy, not the debt. Unfortunately, the tax bill voted on today will be financed not by cutting spending elsewhere in the budget, but by adding $2 trillion to America’s debt."
- Since the new rules take immediate effect, everyone is scrambling to figure out how to comply. From Politico: "America’s new tax system will go into effect in just 12 days, and payroll companies are bracing for confusion as they figure out new withholding rules that will affect millions of American paychecks."
- "The Treasury Department and the IRS will have to quickly write new regulations to implement the new law, governing everything from the tax regime for businesses that don’t organize as corporations to the endowments of the nation’s elite universities and how multinational corporations are taxed on the profits they make abroad."
- How will the bill affect your paycheck? CNN has put together this handy calculator.