Sacrifice the middle class — this is how Republicans solved their tax math problem. In an attempt to correct their tax bill, the G.O.P.’s new plan turns to increase rates for everyone except corporate America. Their attempt to comply with the Byrd rule only leaves their bill with more loopholes. Find out more about this news from The Vanity Fair below.
G.O.P’s Tax Math Problem Answer Is a Blow to Middle Class
So on Tuesday night, lawmakers took a step back and decided upon some radical changes to come up with the revenue necessary to ensure the bill complies with the Byrd rule. First, as expected, they threw in a repeal of Obamacare’s individual mandate, which frees up some $300 billion over 10 years thanks to an estimated 15 million people going uninsured. But the real coup de grace was deciding to completely sacrifice the nominal tax cuts being tossed to the middle class: under changes proposed by Utah Senator Orrin Hatch, tax cuts for the middle class—as well as other individual tax cuts, plus the doubling of the standard deduction—would expire after 2025. The reduction of the corporate tax rate from 35 to 20 percent, on the other hand, would be permanent.
With the 15% cut in corporate tax, it’s easy to see why Republicans’ tax bill is labeled as a “trickle-down tax bill.” Such changes in taxes would move trillions to corporate America, widening the gap between the rich and poor further. But unfortunately for them, it has too many loopholes to pass with a simple majority.
Adherence to The Byrd Rule
The Republicans’ tax bill can bring only $1.5 trillion increase to the deficit in the first 10 years. No more increase can happen after that window.
Because of this, their tax reform bill fails to pass the complicated “Byrd Rule.” A bill that follows the budget reconciliation process must adhere to every section of this rule.
Then comes the radical changes they did to meet the revenue needed to pass the Byrd Rule. They answered their tax math problem by sacrificing the common people.
Relegates The Middle Class
I don’t believe one middle-class person in America should have her taxes raised in order to do tax giveaways to billionaires. – @elizabethforma on the GOP’s new tax bill. #LSSC pic.twitter.com/BBn4XbAMxK
— The Late Show (@colbertlateshow) November 21, 2017
How will the common man benefit from this tax rate drop? The Republicans argue that would incentivize companies to invest. But outside what they claim, the majority of those tax savings will go towards dividends and share buybacks.
If the corporate tax is sliced off this much, who’s to make up for it? The middle class. This puts the common people in a relegated position. They’ll take a backseat to corporations.
According to VOx’s Matthew Yglesias, this would have been avoided had they opt to propose a more realistic tax rate. At the present rate of 35%, most corporations can exploit loopholes to pay taxes in rates as in the mid to high 20s.
Watch this video from The Young Turks explaining Republicans’ Tax Bill:
What are your thoughts on how the Republicans answered their tax math problem? Let us know in the comments section below!
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