Reason.com

Free Minds & Free Markets

Tax Bill Mixes Very Encouraging Developments With Very Disappointing Ones

The GOP would be on higher ground if it stood on principle for a tax code that treats everyone the same.

People protest against tax reform in front of the US Capitol Xinhua/Sipa USA/NewscomWhat to make of the Tax Cuts and Jobs Act, the legislation passed by the Senate at 1:36 a.m. Saturday, by a 51 to 49 vote, with only Republicans in favor?

Any final assessment has to await a conference with the House of Representatives that will attempt to bridge differences between the Senate bill and the one already passed by the House.

For now, though, the legislation is a mixture of really encouraging developments and really disappointing ones.

Encouraging is the reduction of the corporate tax rate to 20 percent from 35 percent. Politicians from both parties have long acknowledged that the U.S. corporate rate is so high that it hurts American competitiveness. President Obama in 2012 proposed reducing the rate to 28 percent, and eventually talked about a 25 percent rate for some manufacturers.

A 20 percent rate, or even 22 percent, would be an improvement. It would still leave America's corporate tax rate higher than places like Ireland, where the rate is 12.5 percent. But it'd be a big step in the right direction, toward solving what even Obama acknowledged was a problem. The Senate waits until 2019 to deliver the 20 percent corporate rate, while the House bill puts it into effect in 2018.

Also encouraging is the prospect—somewhat shocking, isn't it?—of politicians actually following through on a campaign promise. The potency of tax cuts as a political issue has been eroded over time by politicians who pledge them but fail to deliver. The Republicans haven't managed to achieve their long-promised repeal of ObamaCare. Successfully getting a tax cut passed into law after being elected in part to bring one about is almost enough to warm a voter's heart, or to restore a person's faith in government's ability to act on the signals sent by elections. It's an antidote to cynicism.

Unfortunately, by that same standard, aside from the rate cuts, the content of the bill itself and the process behind it so far are pretty disappointing. The middle of the night, weekend, party-line vote is the sort of thing that Republicans complain about, with some merit, when Democrats control Congress. A full text of the 479-page bill was provided to senators only hours before the voting began, and it was full of hand-written cross-outs and marginal emendations. The Senate bill doesn't meaningfully simplify the tax code. A lot of Americans will need not just a journalist or a politician but an accountant or a tax lawyer to explain to them how it will affect them.

There's an element of the whole thing that reminds me of the home renovation horror story about the guy who starts out replacing a doormat and winds up having to redo the entire kitchen—what project managers call "scope creep." The Republicans set out to lower the corporate tax rate. Once they did that, then rates for businesses organized in other ways looked low, so they had to lower those, too. And once that was done, budget rules meant they had to "recover" the "lost revenue" somehow, with a variety of minor adjustments, even tax increases. Together, those add up to lots of work for lobbyists and accountants. They can be revisited in coming years as a way to milk campaign contributions out of the interested parties.

Particularly dangerous is the practice of a political party using the tax code to reward its backers and punish its enemies. Republicans, who now control the White House and both parties of Congress, may find it humorous or convenient to raise revenue by increasing taxes on a handful of well endowed universities with overwhelmingly liberal faculties, and on the mostly Democratic-leaning cities and states with high state and local income taxes.

But there will come a time when the tables are turned, and Democrats will then be tempted to alter the tax code in a way that punishes Republicans. The GOP would be on higher ground if it stood on principle for a tax code that treats everyone the same.

Avoiding this sort of petty political vindictiveness is one of many reasons why a lot of people would prefer keeping their money in their own pockets in the first place, rather than sending it to Washington to be doled out by politicians to favorites in the form of either spending or narrowly targeted and easily reversible tax breaks.

In the end, the best news of all about a tax cut may be that it leaves the politicians and lobbyists in the Washington swamp even less of our money to mess around with.

Photo Credit: Xinhua/Sipa USA/Newscom

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Diane Reynolds (Paul.)||

    They should pass it so we can find out what's in it.

  • NotAnotherSkippy||

    But there will come a time when the tables are turned, and Democrats will then be tempted to alter the tax code in a way that punishes Republicans.

    How quickly we forget 1993 and 2013. It isn't temptation when it's their entire economic philosophy.

  • Diane Reynolds (Paul.)||

    In the end, the best news of all about a tax cut may be that it leaves the politicians and lobbyists in the Washington swamp even less of our money to mess around with.

    Referring to Washington as a "swamp" gets you labeled a Trump supporter.

  • Matt J.||

    That's your best critique? Trump supporter?

    Perhaps you are correct, but, the biggest problem is that even though politicians and lobbyists will have less money, they will keep spending as if nothing has changed.

  • Hank Stamper||

    In the end, the best news of all about a tax cut may be that it leaves the politicians and lobbyists in the Washington swamp even less of our money to mess around with.

    Wait did this bill make it illegal for the fed to borrowing or print money?

  • Eric Bana||

    I think it did.

  • Just Say'n||

    Prediction: this Reason article will not be reprinted in the New York Times. For shame

  • Utilitarian||

    I'm sick of these bills being called a "tax cut" when both of them would raise my federal income tax bill by nearly $5,000.

  • Just Say'n||

    This was primarily a corporate tax cut. But, your grievance should be with your high tax state

  • Utilitarian||

    I'm going to blame the people who claim to be against tax increases, but just voted to increase my tax bill, thank you very much. My own representative pledged to not raise taxes for ANY of her constituents. She violated that pledge when she voted for the bill. That's going to come back to haunt her.

  • BYODB||

    Technically, and I realize this argument will carry zero water with you or anyone in your boat, your taxes are only going up because of your States decision to up your taxes with the understanding that you would never know or care about that fact.

    I'm mad about it too, but mostly over how they're going about it. I'm curious to see, if this passes, if states with high income tax rates will follow suit and lower their taxes. Something tells me they'll just pin their hopes on Democrats pretending to give a tax break by masking state taxation again.

  • Utilitarian||

    You're right. It carries no weight.

    Republicans could simply reduce rates and leave deductions alone, but that wouldn't "balance the budget" and they would need 60 votes in the Senate. So rather than do things the right way, the difficult way, they are taking the easy way out and making me pay for it. More money will come out of my pocket because Republicans are lazy cowards.

  • buybuydandavis||

    They did it the possible way.

    That Dems wouldn't vote for tax reduction is not the fault of Republicans.

    If you don't like your state taxes being so high, take it up with your state representatives.

  • EscherEnigma||

    Technically, my federal taxes are going up because Republicans passed "tax reform" that raised my taxes. The exact bookkeeping may be interesting, but you really can't erase that bottom-line. If this "tax reform" hadn't passed, my federal taxes wouldn't be changing.

  • BYODB||


    Technically, my federal taxes are going up because Republicans passed "tax reform" that raised my taxes.


    This is also true. Honestly it never really occured to me that functionally state taxes could be raised and no one would notice. Mostly because Texas doesn't have an income tax so I've literally never paid one. Interesting stuff, but less so when you're talking real money out of your wallet.

  • Diane Reynolds (Paul.)||

    Think of all the homeless people that will now find shelter.

  • Ken Shultz||

    Which tax is that?

    Income?

    Is that a function of the state tax deduction going away?

    If so, blame your state legislature for that.

  • EscherEnigma||

    The fed changes the status quo, resulting in a federal tax hike, and you think folks should blame their state legislatures?

  • Ken Shultz||

    IF IF IF his federal income taxes are going up--solely because the federal taxpayer will no longer be bearing the burden of his state's income taxes--then he can blame his state legislature for keeping their tax rates so high.

    In fact, over the long run, those states will be charging lower taxes in the future than they would otherwise specifically because they can no longer take advantage of what amounts to moral hazard.

    Sacramento certainly wasn't about to lower state income taxes so long as the federal government were covering their asses with deductions. Now they have to pay the full political price for their own high taxes? Cry me a river, or better yet, yell at your state representative.

    Do you not understand that federal taxes might not be as high as they are if states like California weren't making it possible for Californians to write off so much of their state income taxes--that would go into federal coffers otherwise?

  • BYODB||

    This is actually the chain of reasoning that helped me arrive at 'if I'm paying higher taxes, it's actually for the betterment of society' in this particular case (because it could conceivably lower taxes for everyone later on as their disgust increases).

    Of course, I live in Texas so it's a little easier to swallow than if I were a Californian but rest assured my taxes will be going up as well. Especially if I need to count my health insurance as actual income this year, which I'm being led to understand will be the case. Not good.

  • EscherEnigma||

    I can see that. But Shultz here is going beyond saying "this will be better in the long run", he's saying folks should actively blame their state legislature for higher federal income taxes.

  • BYODB||

    Yes, but I think that people should also not be insulated from the true price of raising taxes in their state too. So that is a good thing, even while I'm not really satisfied by the lack of corresponding spending cuts to accompany their tax plan.

    I'm also no fan of the expiration in ten years. Seems like they're playing politics and banking on being rewarded for this long term. Seems doubtful, though.

  • EscherEnigma||

    The SALT deduction is over a century old. Blaming state legislators for planning around it is idiotic.

    Petition them to seek redress? Go for it. But blaming them for what Congress just did? Yeah, your bias is showing dude.

  • Utilitarian||

    Ken seems to think that SALT is only about income taxes. He conveniently ignores the sales and property tax aspect because acknowledging it kills his argument.

  • Ken Shultz||

    "Encouraging is the reduction of the corporate tax rate to 20 percent from 35 percent."

    It's the alternative to socialism.

    Communism is when the corporate tax rate is 100%. Central planning is when corporate profits are spent by the government.

    Dropping the corporate tax rate by more than 40%, therefore, effectively amounts to privatization. It's a kick in the crotch of socialism.

    Hallelujah!

    And you want to focus on the downside?

    P.S. If taxation is theft, corporate taxation is double theft.

  • Ken Shultz||

    Here's another thing in the tax reform bill to celebrate--ending the deduction for state taxes.

    If federal income tax rates are higher than they would be because California has a high income tax and is overspending and the state's residents are writing it all off of the federal income taxes, then how is that efficient or fair? Why should the people of Texas effectively have to pay for California's bullet train?

    The best effect of all is that California will have less spending and/or lower taxes than they would have had otherwise--over the long run--because there are now more negative consequences to their overtaxing and overspending. It was basically a moral hazard situation. Before, they could tax people up the ying yang and the state's tax payers would just write it off.

    A new day has dawned in Sacramento. The next time they want to raise taxes or spend more money, the legislators there are going to hear a question much louder than they heard it before the tax reform bill cleared the senate in Washington. You want to spend how much money? Who's gonna pay for ALL this stuff?

    One of the reasons California is a one party state of progressives may be because the issue of taxation was muted since people could write them off of their federal taxes anyway. If you're a voter in California who doesn't want to pay more in taxes, you might need to consider voting for a candidate or a party to the state legislature that cares about high taxes.

  • Rhywun||

    Over/under on the reconciliation removing this bit from the final bill?

  • Ken Shultz||

    No way.

    The states with high taxes are all deep blue.

    New York, Massachusetts, California . . .

    Nothing to lose there, politically. They aren't about to flip for the Republicans or Trump anyway.

    That's the price Democrats pay for ignoring the heart of the country.

  • EscherEnigma||

    California is one of the states where the fed receives more dollars from the state then it spends in the state, so no, the people of Texas aren't subsidizing shit in California.

  • Ken Shultz||

    "California is one of the states where the fed receives more dollars from the state then it spends in the state, so no, the people of Texas aren't subsidizing shit in California."

    I'd say you don't understand what I'm saying, but what you're saying doesn't even make any sense.

    The question isn't whether California has more people, Silicon Valley, the movie industry, the tourism industry, and California's ag (from wine country on up)--where Texas has nothing like that.

    The question is whether Texans are paying more in federal taxes than they would be otherwise because Californians (and New Yorkers and Taxachusetts) are writing so much off of their federal tax bill because of high state taxes.

    Texas has no state income tax.

    If the people of New York, California, and Massachusetts don't want to pay income tax, there's something they can do about that--but it needs to come from their state legislatures.

    In the meantime, if and when California decides to build a bullet train crisscrossing the state and finance it through income taxes, that means Californians will be writing off even more of their federal taxes. Can't you see that?

    Effectively, in that case, Texans are paying more in federal taxes to make up for the money that California is diverting from federal tax revenues. Texans, with no state income tax, are effectively underwriting California's incredibly idiotic budget. Why should the federal government create that moral hazard?

  • EscherEnigma||

    Yes, I'm aware of how the SALT deduction works.

    But here's the thing: even with the SALT deduction, California is still a net-payer state. So no. Texas is not, was not, and won't be subsidizing California.

  • buybuydandavis||

    If Californians want to pay less federal tax, they shouldn't be sending Democrats to Congress.

  • Earth Skeptic||

    So, why are California and other whiny blue states net payers?

    On the revenue side, the strongly progressive income tax system takes in much more from higher income earners. And where do many of them live? (Hint: think blue.)

    On the spending side, with about 70% allocated to benefits, most of that goes to poor and/or retired people. And where do most of them live? (Hint: think red.)

    So feel free to undo the progressive slant on both revenue and spending (or maybe mandate redistribution of high and low income families).

  • Utilitarian||

    I'll answer your question with another question:
    Are Californians paying more in federal taxes than they would be otherwise because Texans are writing off so much of their federal tax bill because of high property and sales taxes?

    The answer to both your question and mine is obviously "no". Congress doesn't work that way.

  • Trolic||

    What he is saying is that the income taxed in California is lower due to the state taxes which are/were? deductible, meaning they now pay less in federal.

    You are partially correct that this is somewhat offset by a higher property tax in Texas but on average that is only about 1000 per year per household. Where the state tax is a much larger deduction.

    Sales taxes are about the same for both states.

  • Robert||

    Taxing income on the amount before deducting state & local taxes is double theft too. Part of it is a tax on tax. If it's supposed to be a tax on income, why aren't taxes themselves considered a cost of doing biz, even if you're an employee, & deductible for that reason alone?

  • Ken Shultz||

    The federal government is taxing your income. If I could only do one thing, I'd strike the income tax. It's the most socialist aspect of our society.

    The federal government is not responsible for shielding you from your state's legislature. If your state legislature wants to tax you more, then the state legislature is to blame for that.

    Again, if people can simply write off their state's income tax, that creates a moral hazard situation. There are fewer negative consequences for the state legislature's misbehavior on taxes and spending if the federal government is letting people write off the state's income tax.

    In order for high tax states to stop their misbehavior, there need to be more negative consequences for that behavior. If you have a problem with how high your state's taxes are, go look to your state legislature to remedy that. They're the ones who set those tax rates so high, and that's their right, isn't it?

    It's called federalism.

  • Utilitarian||

    Right, Texas has no state income tax. If you haven't ever itemized, you might not know this, but you can also deduct sales taxes. You have a choice between sales and income taxes. You choose one or the other. You don't get both.

    Texans has been deducting sales taxes when they itemize. Texas's sales tax rate is 12th according to the following link:
    https://taxfoundation.org/ state-and-local-sales-tax-rates-2015/

    Also, Texas's property tax rate (1.9%, 6th highest in the country) is more than twice as high as California's (0.81%,34th highest):

    https://taxfoundation.org/ how-high-are-property-taxes-your-state/

    Texas has been funding its state government through property and sales taxes, knowing full well that its residents can deduct those from their federal income tax returns. I wonder if Texas will reduce its astronomically high property tax rates now that...oh wait...you can still deduct property taxes from your federal income tax return.

  • Ken Shultz||

    Are you denying that some states have higher taxes than others, or that California's taxes are higher than in other states?

    Because other states also have taxes does not mean that all states are taxed the same.

    California is heavily taxed, and their spending is out of control--which wouldn't auger well for future tax rates either.

    Like Greece, they won't cut their tax rates or spending until they have no other choice. Making them face the voters they're overtaxing is one way to give them no other choice.

  • Utilitarian||

    California's budget is California's problem. As long as California, as a whole, pays into the system as much as they get back...and they actually pay in more than they get back...they can do whatever they want.

    If it were up to me, no state would be allowed to receive more in federal benefits than it pays in federal taxes. I'd block-grant everything, including funding for federal courts, military, etc. in each state and give them only what they paid in. Both California and Texas would be fine. South Carolina, Virginia, and pretty much every rural state? They'd be in trouble. Rural states are very, very dependent on federal subsidies and have been for years. We can thank the Senate and pork barrel politics for that.

  • Ken Shultz||

    "As long as California, as a whole, pays into the system as much as they get back...and they actually pay in more than they get back...they can do whatever they want."

    This is horseshit.

    Individuals are taxed by the federal government. If they're unhappy with the level of federal taxation, they can elect anti-tax representatives to congress.

    There's no state level net +/- consideration whatsoever.

    Individuals are also taxed by the state of California. If we're unhappy with the way Sacramento taxes, don't go crying to the federal government. You have representatives in Sacramento. Go complain to the people who are causing the problem. Their job is to be responsive to the voters.

    It's called federalism.

  • Utilitarian||

    I wish you would keep your California problems to yourself instead of trying to make them my problem by advocating for raising my taxes. The current system works perfectly fine for my Midwestern state. We have no budget issues and we aren't subsidized by the federal government.

    If you think the current system encourages California to spend too much money, that's your own damn problem. When you advocate for legislation that raises my taxes, you make it my problem. And when you make it my problem, you make an enemy, Marxist.

  • Earth Skeptic||

    Well, then you would have to also limit interstate migration. Given that most federal spending is for benefits, including payments to retirees, then somebody who worked and paid SS for 50 years in California has to stay there, and not move to Arizona to collect his checks.

  • Utilitarian||

    1. California is not being subsidized. California pays more in federal taxes than it receives in federal benefits.

    2. California tax rates are not set by the legislature. They are set by public referendum.

    3. California does have a very high income tax rate, but they have a property tax rate that is among the lowest in the country. Texas has one of the highest property tax rates in the country.

    4. Every state generates revenue one way or another. Some states do it through income taxes. Some states do it through property taxes. Some states do it through sales taxes. Some states, like Texas, do it through both high property and high income taxes. Some states, like South Carolina and West Virginia, can't generate enough revenue, so they rely on federal money to balance their budget. Those are the states that are being subsidized.

  • Ken Shultz||

    California has the highest marginal rate in the country at 13.3%, and that's not surprising. Our budget is completely out of control.

    https://tinyurl.com/ydb4ek63

  • Ken Shultz||

    Because taxes can be set or ratified by proposition doesn't mean they can't be set by the state legislature.

    Regardless, the state's budget on spending is by the legislature, and we don't like the way the Democrats have been spending our future earnings, then we should vote for other politicians.

  • Utilitarian||

    So you ignore #1, #3, and #4 and focus on the least important point, #2. Lame, but not unexpected.

    If you think California's state income tax is too high, you are free to move out. You seem to have an affinity for Texas. Maybe you should try moving there.

  • Ken Shultz||

    I already answered #1. You just either didn't notice the answer or refused to acknowledge it.

    The fact is that if Californians are paying less in federal taxes because they can write off their state taxes, then people elsewhere in the country are paying more in federal taxes than they would have to otherwise to make up for that.

    Right?

    Right.

  • Utilitarian||

    Wrong. That's not how Congress works.

  • Ken Shultz||

    You think paying lower taxes wouldn't be more popular, or that politicians don't want to keep taxation levels as low as they can--while still funding their dreams and aspirations?

    That is the way congress works.

    If Californians, people from Massachusetts, and people from New York weren't writing their state taxes off, there would be less inertia behind having taxes as high as they are.

    Hell, congress just cut taxes with the justification, in part, that people in high tax states would no longer be able to write those taxes off. How can you say, "That's not how congress works" after congress just cut taxes, in part, with that same logic?

  • Ken Shultz||

    Texas has no income tax. Nevada has no income tax.

    Some taxes are more destructive and less voluntary than others.

    The income tax is the most destructive form of taxation. Taxing income is socialist and stupid.

    Regardless, because Texas taxes people and California taxes people, that doesn't mean the tax burden is the same in both states.

    If you don't like the way you're taxed in California, I suggest you blame the government in California. Why should federal taxpaying Texans or Nevadans or other people in states with income taxes lower than in California have to make up for California's high tax rates?

    I would ask you to consider, too, that one of the reasons why California's tax rates might be so high is because the federal government let Californians write those taxes off. I would bet that before the end of tax year 2018, Sacramento finds a way to cut taxes--before taxes are due.

  • Utilitarian||

    Taxing income is socialist and stupid? What a profound statement! I've got one even better. All taxes are socialist. Did I blow your mind?

    I would argue that wealth (property) taxes are more destructive and less voluntary than income taxes. If you stop earning income, you stop paying income taxes. There is no way to avoid wealth taxes. Even if you rent, you still pay property taxes, indirectly. If you own your home and have no income, you don't have to pay income taxes, but you still have to pay property taxes. And if you don't pay, the government will seize your property.

  • Ken Shultz||

    "Taxing income is socialist and stupid? What a profound statement! I've got one even better. All taxes are socialist."

    Not all taxes are as socialist as others.

    Income taxes are the first half of the equation, "From each according to his ability, to each according to his need". And without the former, there's no so much to distribute to the latter. Income taxes aren't just socialist--they're crucial to socialism.

    Sales taxes aren't only not about the redistribution of wealth from the wealthy to the poor, they're also more voluntary and less destructive to the economy. They're more voluntary because you can look at the price tag and choose not to pay them. Can't do that with income taxes.

    Two of the ways that sales taxes are less destructive to the economy than income taxes is that 1) they subject taxation to market forces and 2) their costs are considered by consumers at the time of purchase. 1) means that if the government sets the taxes too high, they'll actually reduce their revenue, and the effects of that on their revenue stream are immediately apparent--unlike they are with income taxes. 2) means that consumers can figure the cost of taxation into their consumer decisions, much like they do with other costs. That's what economic efficiency is all about. Income taxes deducted from your paycheck aren't subjected to the scrutiny, interests, and utility of consumers, but sales taxes are.

  • Ken Shultz||

    I could mention other destructive, anti-libertarian aspects of income taxes, like subjecting individuals to the threat of criminal prosecution for failing to report each and every penny they make every year, or the fact that income taxes artificially inflate the cost of hiring unemployed people and keeping unskilled workers on the payroll--after all, those people would be willing to work for their take home pay. The company has to pay them more so they can cover their income taxes. That would be bad for anybody, but especially for relatively unskilled workers, who can only differentiate themselves in the labor market on price, that's especially hard.

    Suffice it to say, yeah, income taxes are the most socialist and stupidest form of taxation, and sales taxes are, by far, the least socialist, the least coercive, and the least stupid.

  • Utilitarian||

    LOL, I said property taxes were worse than income taxes, and you go and write a post about sales taxes. Your reading comprehension is positively awful.

  • EscherEnigma||

    You keep trying to make this about other states "subsidizing" California, but the bottom-line hasn't changed: if every state was as "subsidized" by federal dollars as California is, we'd have a budget surplus. We aren't the drains on the federal coffers.

  • Brendan||

    How do you define subsidized?

    Maybe California should start courting more federal prisons, ship building, aircraft manufacture, etc. so they can see more of that federal money come back.

  • EscherEnigma||

    Seeing as the context is taxation and dollars: monetarily.

  • creech||

    "California pays more in federal taxes than it receives in federal benefits."
    If true, one more reason for Cal to secede from the U.S. and most posters here would be glad to say "buh-bye."

  • EscherEnigma||

    And there's plenty of Californian's that wouldn't cry if Texas were to secede again. Face it, 2017 ain't no 1864. If the south tried to "rise again" by leaving, the country would let 'em.

  • BYODB||

    And lose America's southern oil fields? I wouldn't be so sure, although I wouldn't be a fan of living in the petro-state that Texas would be likely to become, either. That hasn't worked very well for other nations, although it's possible we could swing oil/tech into a winning economy.

  • Ken Shultz||

    Why no mention of the repeal of the individual mandate? Isn't that in the tax bill? Isn't that cause to celebrate?

    "Any final assessment has to await a conference with the House of Representatives that will attempt to bridge differences between the Senate bill and the one already passed by the House."

    Not necessarily. The House could simply pass the Senate bill word for word and be done with it.

  • Rockabilly||

    Flat tax -

    everyone pays 0%

    That's only fair.

  • maddarter||

    Re: "Also encouraging is the prospect—somewhat shocking, isn't it?—of politicians actually following through on a campaign promise."

    Promises Trump made that seem unlikely to be kept as this process unfolds:

    1. eliminating carried interest -- "As part of this reform, we will eliminate the carried interest deduction and other special interest loopholes that have been so good for Wall Street investors, and for people like me, but unfair to American workers."
    2. no cuts to Medicaid, Medicare, or SocSec -- "I was the first & only potential GOP candidate to state there will be no cuts to Social Security, Medicare & Medicaid"
    3. cuts focused on middle class: "By eliminating tax breaks and loopholes, we will ensure that the benefits are focused on the middle class, the working men and women, not the highest-income earners. They can call me all they want. It's not going to help. I'm doing the right thing, and it's not good for me. Believe me."
    4. "You're going to have such great health care, at a tiny fraction of the cost—and it's going to be so easy."
    5. "We're going to have insurance for everybody. ... There was a philosophy in some circles that if you can't pay for it, you don't get it. That's not going to happen with us."

    etc

  • JosiahS||

    From what I'm reading the Senate accidentally fucked up corporate tax deductions on accident. Which is a pity. If they had done it on purpose I would've given them some credit for consistency instead of this "socialism for the rich bootstraps for the poor" reality they've been pushing forever. I'm sure they'll fix it right quick, and have all so many explanations about why we need to keep our corporate subsidies.

  • Eric L||

    As far as tax simplification goes the tax code is still a Rube Goldberg contraption. Sure, congress got rid of the alarm clock and the chicken playing the piano but they were replaced by a box of marbles and a mouse in a spinning wheel.

    Also, Republicans talk about wanting less regulation but the Senate bill has a requirement to use FIFO for determining the cost basis on all stock sales, but it only applies to individual investors. The mutual funds industry was able to lobby for an exclusion for themselves. How will this work if I have multiple brokerage accounts? if I hold shares of a stock in several accounts must I sell first from the account where I made the earliest purchase? What if I own some of those shares in an IRA that are older than shares in a taxable account - would I have to sell those from the IRA first? As the wash-sale rules don't distinguish between IRAs and taxable accounts why would they under this legislation?

  • Brian||

    "What to make of the Tax Cuts and Jobs Act, the legislation passed by the Senate at 1:36 a.m. Saturday, by a 51 to 49 vote, with only Republicans in favor?"

    That reminds me of Obamacare.

    So the takeaway must be: why can't any democrats be reasonable and compromising? Don't they want tax reform? Why the stubborn obstructionism?

  • buybuydandavis||

    Republicans, who now control the White House and both parties of Congress, may find it humorous or convenient to raise revenue by increasing taxes on a handful of well endowed universities with overwhelmingly liberal faculties, and on the mostly Democratic-leaning cities and states with high state and local income taxes.

    But there will come a time when the tables are turned, and Democrats will then be tempted to alter the tax code in a way that punishes Republicans.

    When Dems carve out tax exemptions for their constituencies? Crickets.
    When Republicans end those carve outs? Outrage!

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online