Tax cut bill: Corporate Christmas, New Year wish come true

WASHINGTON—It’s not just the big tax cut for the 1 percent, and the even bigger tax cut for corporations. The tax cut bill the GOP-run Congress passed could be termed a corporate Christmas and New Year’s wish list, too. GOP President Donald Trump, who lobbied hard for it, signed the bill, HR1, on Dec. 22.

Josh Bivens of the Economic Policy Institute points out workers are left holding an empty bag as a result. His calculations show most middle-income and lower-income workers will see their taxes go up, starting with their 2019 tax filing, covering next year’s income.

“The GOP tax bill represents nothing short of wholesale looting by the Republican Party, on behalf of the wealthiest Americans and large corporations,” Bivens says.

“Despite claims that it will trickle down to working people, there is no evidence corporations will do anything with the money they save in taxes other than reward shareholders with more dividends and executives with higher salaries—a fact many high-profile CEOs have admitted to.

“When fully phased in, the bill will give 83 percent of its benefits to the top 1 percent. Incredibly, it raises taxes on half of working families. To add further injury, the bill kneecaps the Affordable Care Act by eliminating the individual mandate — destabilizing health insurance markets, raising health insurance premiums, and leaving 13 million people without health insurance.”

By a party-line Senate vote – all Republicans for and all Democrats against – and a 227-203 House vote, with only 12 Republicans defecting, lawmakers sent the $1.5 trillion 10-year tax cut plan to Trump.

Then the Republicans, in a staged show, boarded buses for a White House photo-op/pep rally – call it what you will – patting themselves on the back for approving a deeply unpopular piece of legislation.

Meanwhile, Democrats predicted voter retribution at the polls next November, and several union leaders agreed, vowing to remind members, their families and their allies about how the tax cut skews towards the 1 percent.

Corporate interests are crowing

Besides the overall cuts for companies, HR1 has a grab bag of corporate goodies, from cuts in beer and wine taxes to opening the Alaska National Wildlife Refuge (ANWR) to oil and gas drilling. There’s even a special 10-year tax break for Florida citrus growers who lost orange groves to recent hurricanes.

The ANWR project, favored by big oil firms, drew the key vote of Sen. Lisa Murkowski, R-Alaska. Without her, the Senate margin would have been 50-49, not 51-48. Opening 2,000 acres of ANWR’S “non-wilderness 1002 area” to oil and gas drilling is “a significant opportunity” to create jobs and U.S. energy security, Murkowski claimed.

The American Petroleum Institute – the oil and gas lobby – lauded the opening of ANWR, but also said its industry needs faster tax write-offs of its investments in drilling and exploration. The tax cut bill enacts those faster write-offs, which lower revenues, for every business. Oil and gas firms have contributed $2.17 million to Murkowski’s campaigns over the years.

The Beer Institute cheered lawmakers’ decision to cut excise taxes on wine and beer for two years – a tax cut Sens. Rob Portman, R-Ohio, and Roy Blunt, R-Mo., pushed. Naturally, neither mentioned it on their websites or in their floor speeches. The lobby said the tax cut would add $320 million to its members’ coffers. That’s a big return on the industry’s campaign contributions over the years of just under $216,000 to Blunt and $150,000 to Portman.

Then there’s the real big goody for private real estate investors

Lawmakers put it in during negotiations over the final version of HR1. International Business Times reported privately owned real estate limited liability companies — firms with lots of buildings and few actual workers — would get an extra “pass-through” 20 percent deduction from their earnings. The congressional bargainers added the LLCs’ deduction while cutting or killing deductions middle-class and working-class people use, like home mortgage interest, medical expenses and state and local taxes.

“If you’ve got an LLC that’s a trade or business with a bunch of real estate holdings and few employees, [I] think you’re now golden. You get the deduction,” David Kamin, an NYU law professor and former economic assistant to Democratic President Barack Obama, told the publication. Trump’s company owns or controls many LLCs.

The Communications Workers pointed out that Wall Street will make out like bandits, particularly Wells Fargo. Total Wall Street savings could be $6 billion, CNN reported.

“In recent months, Wells Fargo announced layoffs at call centers in Bethlehem, Pa., (eliminating 460 jobs), Fort Mill, S.C. (eliminating 120 jobs), and Vancouver, Wash. (eliminating 72 jobs),” the union, which has been organizing call center workers nationwide, noted.

“While the company blamed this new round of American worker layoffs on new technologies and changes in the mortgage servicing marketplace, Wells Fargo failed to mention its significant and growing presence of call centers overseas that are servicing the U.S. marketplace.”

Wells Fargo had 100 call center workers in the low-wage exploitative Philippines in 2011, jumping to 4,000 now, with plans for 7,000.

“Unfortunately, among the many disturbing provisions of the tax legislation are components that would incentivize and reward companies such as Wells Fargo who practice offshoring,” CWA said. Numerous independent analyses of the tax cut bill report those incentives and rewards include zero percent taxation of corporate overseas revenues.

And remember those deductions the bill yanks from most taxpayers, for such things as moving costs, medical expenses, mortgage interest and state and local taxes? They’re still there for businesses. Ditto for casualty (hurricanes) and theft (burglars, art heists) losses. Regular taxpayers won’t get any of them.

Not only that, but for rich individuals who will still itemize on their tax returns, the last line on the itemized schedule – the one that limits the total amount of deductions you can take in any year if you’re in the 1 percent, in so many words – will be gone.

The tax bill also includes some social engineering. The individual itemized deductions for business expenses, which you now can use only for amounts above 2 percent of your gross income, are eliminated. That includes union dues. You’ll now pay full taxes on them.

Elimination of the state and local tax deduction especially hits taxpayers in states with high income taxes and high services. Six of the eight states with the highest percentages of affected taxpayers are “blue states” which consistently elect Democrats: New York, New Jersey, California, Illinois, Massachusetts and Maryland. That’s no coincidence, the Washington Post reported weeks ago. The sole “red state” on the list of those with high percentages of hurt taxpayers is Texas, while Pennsylvania is a “purple” state.

Do you bicycle to work? Up to now, your employer could give you $20 a month for commuting costs, tax free. Starting Jan. 1, forget it.

And the bill taxes college and university endowments for institutions with at least 500 students and endowment assets worth at least $500,000 per student. Not surprisingly, elite and selective institutions are most of the 35 that must pay the 1.4 percent tax on endowment income, leaving less for their students. They include four Ivy League schools (Harvard, Yale, Princeton and Dartmouth), plus others in that class such as the University of Chicago, Bryn Mawr, Stanford and the Massachusetts Institute of Technology. Notre Dame is on the list, too.

And Puerto Rico, hit hard by two hurricanes, with a pre-hurricane jobless rate in double digits and hemorrhaging people – it lost 100,000 in the 12 months before the storms hit and thousands more since then – would get clobbered by the tax bill, too.

Business and government leaders explain HR1 treats Puerto Rico, whose 3.3 million people are U.S. citizens, as a foreign country, and imposes a 20 percent excise tax on goods produced by U.S.-based multinationals and shipped from there to the mainland.

But there are two pieces of positive “social engineering,” though, in the legislation: Employers will now get a credit, starting at 12.5 percent of wages paid, if they have a paid family leave program. And now people who get alimony must pay taxes on it. Under the new bill, the alimony payers are taxed.

In addition, one favorite right-wing cause – more social engineering – got knocked out: Trump Education Secretary Betsy DeVos’ scheme to extend tuition savings accounts.

Parents can now set aside the money tax-free to save for college tuition for their kids. DeVos and radical right-wing Sen. Ted Cruz, R-Texas, wanted to let them use the accounts to pay “private or religious elementary and secondary school expenses,” too. But that provision broke the special Senate rules which let Majority Leader Mitch McConnell, R-Ky., jam the tax cut bill through with the bare 51-vote majority, so the Republicans had to dump it.