House passes tax cut for the rich
Paul Ryan (right) | AP

WASHINGTON–Now it’s up to the Senate, where the fate of the GOP tax cut for the rich is up in the air.

That’s because the GOP-run House brushed aside workers, seniors and congressional Democrats and passed it 227-205 on November 15. All the Democrats and 13 Republicans opposed it, while the rest of the GOP voted for it. But the upper chamber is another matter.

In the House, Republicans listened to last-minute lobbying by GOP President Donald Trump for the legislation, and then almost all of them voted for it.

The measure, HR1, would send 80 percent of its $1.5 trillion in tax cut benefits by 2025 to the top 1 percent and to corporations. It also would give a green light to further offshoring of U.S. jobs, would eliminate almost all deductions for state and local taxes, mortgage interest, student loan interest and kill the medical expense deduction. It even wouldn’t let teachers deduct $250 to buy pencils and paper – and food — for their poor kids.

HR1 also would cut top tax rates for firms from 35 percent now to 20 percent next year. Few firms pay that high rate. And it would cut top tax rates for the last dollars earned by the rich while raising the rate, from 10 percent to 12 percent, on the lowest-income people.

Whether the measure can get through the Senate is unclear. The GOP holds only 52 of the 100 seats and needs 50 senators to vote for it under special “reconciliation” rules, plus GOP President Mike Pence to break the tie. Sen. Ron Johnson, R-Wis., has already defected. He says HR1 gives too much to big business and not enough to so-called small business. Several other GOPers are undecided.

And the Senate version not only kills the entire state and local tax deduction, but blows a big hole in the Affordable Care Act, by dumping the small tax penalty for people who don’t get insurance. That will lead the young and healthy to drop insurance, driving premiums up for everyone else and knocking 13 million people off insurance rolls, the non-partisan congressional Joint Committee on Taxation calculates.

Workers, womens’ groups, older Americans and Dems blasted the GOP’s measure as a “tax scam.”

“This plan is a flashback to the 1980s, when trickle-down economics was all the rage,” said Teamsters President Jim Hoffa. Trickle-down “is now widely agreed to have been a failure, especially for those fighting to make ends meet.

“If Congress wants to provide real economic relief for middle-class Americans, it can start by repealing the 40 percent excise tax on high quality insurance plans. That’s the kind of change that will help those who need it the most,” he said.

“The Republican tax plan is a job killer that will give 50 percent of its tax breaks to the wealthiest 1 percent, while 25 percent of taxpayers ultimately will pay more in taxes,” the AFL-CIO warned. “Working people pay the price for huge tax giveaways to millionaires and big corporations.’

“Incredibly, the Republican bill would give huge breaks to companies that outsource jobs. Instead of creating good jobs here at home, this bill only will encourage corporations to relocate good jobs overseas.”

“Both versions of the tax plan moving through Congress were already a raw deal for working families,” AFSCME President Lee Saunders said. “The decision to tack on the repeal of the linchpin of the Affordable Care Act adds insult to injury. Not only will millions of middle class families see their taxes go up, 13 million Americans will lose their health insurance – all so the biggest corporations and powerful elites can get tax cuts they don’t need and don’t deserve. Any claim that this tax plan is designed to help working people is an absolute farce.”

“The House voted to cut taxes for corporations and the 1 percent and make working families pay,” Communications Workers President Chris Shelton said.

“House Republicans finally abandoned the pretense their tax plan will help middle-class families. According to the congressional Joint Committee on Taxation, in just a few years, millions of working and middle-income families — earning $10,000 to $75,000 — will be paying higher taxes. Many families will see their taxes increase immediately. Across the board, members of my union and middle-class families will be hurt by this plan.”

And Shelton also pointed out tax breaks for individuals – notably doubling the personal exemption – are temporary while tax breaks for corporations and cuts in deductions for individuals are permanent.

“This bill is a job killer.”

“The GOP tax bill would give companies a huge tax break for outsourcing. U.S. taxes on offshore profits would be eliminated, giving big corporations even more incentive to move jobs offshore,” added New York State AFL-CIO President Mario Cilento. “The GOP tax bill would kill construction jobs. Limiting the mortgage interest deduction at $500,000 would discourage construction of new houses,” he added.

The National Education Association calculated eliminating the state and local tax deduction would lead to spending cuts that put 245,000 education jobs at risk nationwide. The number of endangered jobs ranged from 36 in Alaska to 38,312 in California.

Seniors, women’s groups and Democrats slammed HR1, too. Several said their members would remember next November who voted for it.

“Eliminating the medical expense deduction means it will be harder for families with high medical expenses, most of whom are seniors, to make ends meet,” said Richard Fiesta, executive director of the Alliance for Retired Americans.

“But all older Americans will be hurt by this. The bill provides so many tax breaks to the wealthiest Americans and corporations the deficit will explode and automatic spending cuts will kick in. There will be a $25 billion cut from Medicare alone, and more from Medicaid.

“Retirees and working Americans know who this plan helps and who it hurts. And they will remember this when they vote in 2018.”

“This bill is a windfall for the wealthy and an utter betrayal of middle and low-income women and families. It would undermine the health and economic security of the vast majority of hardworking people,” said Debra Ness of the National Partnership for Women and Families.

The House GOP even snuck “fetal personhood” language into the bill, she added.  “We now look to the Senate to reject any tax plan that increases taxes for the middle class to give tax breaks to the wealthy.

“We urge senators to reject attacks on the Affordable Care Act in tax reform. The current proposal is appalling. It would take health coverage away from 13 million people, raise premiums for those fortunate enough to have health insurance at all, and undermine the stability of the health insurance marketplace.”

House Democrats, completely shut out of the drafting of HR1, were similarly caustic. Minority Whip Steny Hoyer, D-Md., said it took “no courage” for Republicans to vote for the tax cut for the rich. “I won’t ask you to raise your hand if you’ve read this bill,” he taunted.

“There is no courage in voting for this bill. It is easy to vote for a tax cut. What is hard to do is paying for what we buy, and neither side does that particularly well. There is no courage in voting for this bill – only a suspension of common sense and their now abandoned commitment to fiscal sustainability,” Hoyer said.

“Furthermore, my Republican friends call this bill a tax cut. The gentleman who just spoke, the Whip said, it’s a reduction in rates, but 36 million working Americans will receive a tax increase under this bill. So it was a very careful articulation of reduction of rates. A tax on 36 million Americans, working Americans.”

“The middle class needs help, and real tax reform could help accomplish that,” said Rep. Dan Lipinski, D-Ill., who previously tried to craft a bipartisan tax plan. “It is far past time that we reform the tax code by making it simpler, closing loopholes, and lowering rates.  However, the current Republican-led tax bill is not the answer for the middle class.”


Mark Gruenberg
Mark Gruenberg

Mark Gruenberg is head of the Washington, D.C., bureau of People's World. He is also the editor of Press Associates Inc. (PAI), a union news service in Washington, D.C. that he has headed since 1999. Previously, he worked as Washington correspondent for the Ottaway News Service, as Port Jervis bureau chief for the Middletown, NY Times Herald Record, and as a researcher and writer for Congressional Quarterly. Mark obtained his BA in public policy from the University of Chicago and worked as the University of Chicago correspondent for the Chicago Daily News.