Tax Policy Winners And Losers

I’ve posted previously about the GOP’s tax “reform” plan, and some of the truly despicable provisions hidden in the fine print. As more details emerge, it appears that my list–like the one below–barely scratches the surface.

Whatever the arguments in favor of the $1 trillion in corporate tax breaks contemplated by the measure, the original idea–the justification for reducing the rate– was that the rate could be lowered if the loopholes that allow large profitable corporations to pay little or no tax despite the published rate were eliminated. Somehow, however, the current version of the “reform” bill leaves corporations with both lower rates and their loopholes.

Speaking of corporations, Dana Milbank reported a revealing exchange in a recent Washington Post column.

Individuals lose the ability to deduct state and local taxes, tax preparation, moving expenses and most medical expenses. But corporations — think of them as Very Important Persons with superhuman privileges — can still deduct these same expenses.

At Monday’s markup, Rep. Suzan DelBene (D-Wash.) quizzed a tax expert on this corporate exceptionalism:

“Will a teacher in my district who buys pens, pencils and paper for his students be able to deduct these costs from his tax returns under this plan?” He will not.

“Will a corporation that buys pens, pencils and papers for its workers be able to deduct those costs from its tax returns?” It will.

“Will a firefighter in my district be able to deduct the state and local sales taxes that she pays from her tax return?” She will not.

“Will a corporation be able to deduct sales taxes on business purchases?” It will.

“If a worker in my district had to move because his employer was forcing him to relocate . . . can he deduct his moving expenses under this plan?” He cannot.

“Can a corporation under this plan deduct outsourcing expenses incurred in relocating a U.S. business outside the United States?” It can.

We Americans just love our corporations….they’re people, you know.

And isn’t it nice that Republican Americans are so “pro-life”? (Well, they’re pro pre born life; once that little bugger emerges from the womb, they are considerably less solicitous.) Among the non-fiscal measures in the tax “reform” bill is one intended to “protect babies”–aka fetuses and fertilized eggs. You’d think these pro-life men (they’re all men) would do anything they could to support  adoption as an alternative to abortion. But you’d be wrong.

The House Republican tax reform bill would completely eliminate the adoption tax credit, which has been in the tax code since 1997. It was a bipartisan achievement pushed through by former Texas Republican Rep. Bill Archer, who was chair of the House Ways and Means Committee. Designed to help cover “reasonable and necessary adoption fees, court costs, attorney fees, and other expenses,” the credit is available for up to $13,460 per child.

Some employers also offer adoption assistance in the form of financial aid and paid leave time. As of now, this type of assistance is tax-exempt, but the proposed bill would make such benefits subject to taxation.

The bill would also make adoption assistance from employers — which usually takes the form of financial aid and paid leave time — taxable.

Words fail.

I’m less surprised by the measures that would effectively destroy graduate education; the current crop of Republicans considers educated people snotty elitists. GOP officeholders sneer at scientists, oppose research funding, and think college professors are unAmerican.

Most graduate students get through their degree programs depending on assistantships, tuition waivers and lots of ramen noodle dinners. As Forbes reports,

Currently, these tuition waivers are paid by the college directly to itself, on behalf of the graduate student, and are not counted as taxable income. Under the current “reform” proposal, tuition waivers would be taxed as regular income, making graduate school an unaffordable proposition except for those already independently wealthy.

And then there’s that pesky little detail that the Congressional Budget Office finds problematic: this monstrosity will add 1.7 trillion to the deficit. (And that’s evidently after robbing Medicare and Social Security…) If you are looking for some of those Republican “deficit hawks” of yore, you are probably out of luck.

On the other hand, if you’re wondering why Paul Ryan is reportedly optimistic about passing this Thanksgiving turkey, Representative Chris Collins explained it the other day.

Rep. Chris Collins (R-NY) got points for honesty Tuesday while advocating for Republicans’ tax bill to slash the corporate tax rate and eliminate the estate tax, among other things.

“My donors are basically saying, ‘Get it done or don’t ever call me again,’” Collins said.

I’m sure those donors are selfless patriots who simply want to see middle-class Americans get some tax relief. (And if you believe that, I have a swamp in Florida to sell you…).

 

[Originally published at SheilaKennedy.net on November 11, 2017]

Sheila Kennedy is a former high school English teacher, former lawyer, former Republican, former Executive Director of Indiana’s ACLU, former columnist for the Indianapolis Star, and former young person. She is currently an (increasingly cranky) old person, a Professor of Law and Public Policy at Indiana University Purdue University in Indianapolis, and Director of IUPUI’s Center for Civic Literacy. She writes for the Indianapolis Business Journal, PA Times, and the Indiana Word, and blogs at www.sheilakennedy.net. For those who are interested in more detail, links to an abbreviated CV and academic publications can be found on her blog, along with links to her books..

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