From: Steve Schoettmer
Republican legislators believe in a monolithic god, and that god is tax cuts. Most recently they have slammed the budget with an additional $1.5 trillion tax cut, 80 percent of which goes to the top 20 percent.
I have read the Orchids and the letters to the editor praising this tax cut and slamming its detractors:
- Give the money back then, some say.
- Everyone will see an increased paycheck next year, says another.
But what they refuse to admit, or simply don’t grasp, is that the tax cuts for the poor and middle class were only teaser rates. You know, the type that you get on that new credit card: “Zero percent interest for one year.”
These teaser tax rate cuts of 2 to 3 percent for us go away in 2025. The only exception is the corporate tax rate cut from 35 to 21 percent, and the 20 percent deduction for limited liability companies (LLCs); those cuts are permanent. As a result of this new tax system, the majority of Americans will pay more taxes in 2026. That is, except for one small, influential group: the rich.
The top tax bracket may have only temporarily been cut from 39.6 to 37 percent, but rich people won’t take it that way. If they don’t already have an LLC, they will create one and pay themselves through that. There is a 20 percent deduction for pass-through entities such as LLCs, S Corporations and sole proprietorships.
The Tax Policy Center came out with an analysis that said by 2027, the top quintile (greater than 80 percent) will receive 107.3 percent of the tax cut. While 53 percent would experience a tax increase. Just let that sink in.
The rich didn’t gain a temporary 2.6 percent tax cut, they gained a permanent tax cut, far lower than the guy working at Cummins Inc., Faurecia, Enkei, etc. The rich had their taxes permanently cut, while the rest of us had our taxes temporarily cut by 2 to 3 percent.
So is that it? Is that the only thing wrong with the tax bill?
Well there is also the $1.5 trillion extra debt, the 13 million people expected to lose insurance and the $25 billion cut from Medicaid in fiscal year 2018 alone. I also have a slight problem with their plan that now that the deficit is growing bigger by $1.5 trillion, they want to come back next year and cut entitlements like Social Security and Medicare.
Other than that …