David Leonhardt Op-Ed Columnist The big health care bills in Congress this year — the ones that failed — were probably the worst pieces of major legislation that I’ve seen. They would have harmed millions of Americans and had virtually no redeeming features. The tax bill unveiled by House leaders is a bit different. It does have some good ideas lurking in it, like reduced tax breaks for second homes and sports stadiums. Yet the full picture ends up being depressingly similar to what it was on health care. This is a hastily compiled bill — lacking the thoughtfulness of the Reagan tax reform, for example — and its main purpose is to benefit the wealthy. It would harm many middle-class and low-income families in the short term and the vast majority of families in the long term. Don’t be fooled by anyone who emphasizes the bill’s modest middle-class benefits in its early years. (I explained the bait-and-switch in my column last week.) The next few weeks will be important. Republican leaders have signaled that they will try to rush through a bill. They know it is already unpopular — as many polls, including a new one this morning from ABC and The Washington Post, show — and it’s likely to become more unpopular as it receives more attention. Keep your eye out in particular for the independent evaluations of how the bill will affect different income groups — the Tax Policy Center will probably release one sometime soon. These evaluations provide some accountability on politicians’ claims. In the meantime, Jim Tankersley of The Times writes, “The myriad changes in the code would actually raise taxes on nearly 13 million tax filers who earn $100,000 a year or less, according to preliminary calculations using the open-source economic modeling software TaxBrain.” I also recommend the initial analyses from Lily Batchelder of N.Y.U. Law, Michael Linden of The Hub Project, Eric Levitz of New York magazine, and Howard Gleckman of the Tax Policy Center. Other issues to watch: • There is some early opposition from industry-group leaders who think the bill would hurt their members, like the National Federation of Independent Business, an influential small-business lobby, and the National Association of Home Builders. Even if you don’t agree with all of their specific objections (and I don’t), their opposition is still welcome, because the overall bill is so dreadful. • The bill includes a mean-spirited penalty for immigrant families. It would take away the child tax credit from almost 3 million children who are American citizens but whose parents are not. Let me repeat that: The bill would take a tax benefit away from children who are American citizens. It does so, notes Jacob Leibenluft, by punishing families who file their taxes using an Individual Tax Identification Number rather than a Social Security number. The bill also hurts “Dreamers” — people who entered this country illegally when they were small children — in a couple of different ways. • The initial reaction from the Senate was mixed, which is somewhat encouraging. Senator Bob Corker, the Tennessee Republican, says he is worried about the large deficit increase that the bill would cause. Senator Jeff Flake, the Arizona Republican, says the same. If three Republican senators oppose the bill, it probably can’t pass. The bill may also violate a Senate rule known as the “Byrd rule,” because it would cause long-term deficits to rise. The Democrats’ future. Above, I mentioned a tax analysis by Eric Levitz; I also recommend his op-ed on Democratic politics in yesterday’s Times. His message isn’t a simple one, because it has parts that may be hard to hear for both the left and center-left. Levitz argues that Democrats should tamp down their emphasis on “identity politics” while offering more muscularly left-wing economic policies.
Make no mistake - if this tax bill passes, the fuse will have been officially lit on the national debt time-bomb. I have no doubt in my mind that the fiscal day of reckoning that policymakers / the Fed have pushed off for the last 30+ years will be upon us within a few years, maximum.
If this bill goes through in its current form the Tax-and-Spend Democrat states will be hit hard. State income tax will no longer be allowed to be used as a deduction against income for Federal tax calculation. Any relocatable business or businessperson would be foolish not to leave for greener pastures offering low or no state income taxes. This of course would leave behind non-mobile corporate workers, public sector fat cats and folks relying on government support. In fact I hope it happens - this will teach states like NY and CA a brutal lesson for all the decades of profligate spending and mismanagement.
You mean the states that return more to the Federal govt than they receive? Unlike pretty much every red state. Or the state that is reponsible for most of the technology that allows you to put out idiotic posts like this one? You clearly don't work in the tech industry, and even more clearly don't understand it if you think the folks in CA who generate all the wealth are going to abandon the state for the low tax mecca's of Kansas and Alabama any time soon. There's way more to generating wealth than low taxes, as pretty much everyone in Silicone Valley has figured out and you clearly haven't.
Wake up - we're in the 21st century. The new paradigm of a flattening world and location independence is unstoppable.
Sorry Charlie, you're a bit late with your narrative. http://www.ocregister.com/2017/04/23/leaving-california-after-slowing-the-trend-intensifies/
I run a location independent company, so no need to educate me on that. And I'm probably a better example than most having lived in more than a dozen states in a previous life in the military. When I started my first company I chose the place I wanted to live based on a variety of factors ranging from weather to the quality of public schools, availability of bike paths, walkable cities, good restaurants, cosmopolitan mix of people, lack of open racism,...the tax rate was frankly completely irrelevant to me. As it is to pretty much everyone with the skills that allow them to be location independent. Note that many of those things are paid for by state and local taxes that the people in those areas voted for because they value the community over maximizing every last penny to themselves. That's kind of how the whole federal system works, you like 4 day public school weeks and every last penny you live in Kansas and I value my quality of life so I choose where to live based on that. BTW, most of us living in the real world call the "Kansas Experiment" the epitome of mismanagement, while our "tax and spend" states continue to drive the majority of the county's economy, transfer our wealth to red states through our federal taxes, and invent and run the technology you're using to make your posts. Not sure why you're still so angry at us given that.
Actually pretty much every first world country has relatively high taxes. In fact if you looked at the level of taxes actually paid per citizen you'd find a pretty direct correlation between level of taxes and level of prosperity. You should get out and travel a bit.