Senior Director of Federal Tax Policy
The final Republican tax bill, which Republicans are rushing to pass this week, will ultimately raise taxes on many lower- and middle-income households and leave 13 million more people uninsured, to pay for permanent tax cuts for profitable corporations — the opposite of their claim that the bill will “strengthen the middle class.”
During the tax debate, Republicans blamed their choices on “the absurd rules of the Senate,” as White House Budget Director Mick Mulvaney asserted. But that doesn’t make sense. The rules don’t force Republicans to write the bill as they did. They chose to do so — and to prioritize permanent deep corporate tax cuts above all other concerns.
They chose, for example, to use a special legislative process (“reconciliation”) so the bill could pass the Senate with a bare majority — and no Democratic votes — rather than the 60 votes that most legislation requires. They also chose to set up the reconciliation process so that the tax bill could add $1.5 trillion to deficits over the first decade, 2018 to 2027.
Because Senate reconciliation rules prohibit the bill from adding to deficits after 2027, Republican leaders then faced another choice: set the entire bill to expire by the end of the decade, so there were no costs after 2027; revise it so that it pays for itself after ten years; or make certain priority tax cuts permanent and pay for them with other permanent measures that raise revenues or reduce program spending, while letting lower-priority tax cuts expire. First in the Senate bill, and now in the final bill, they chose the last approach. And they centered the bill around permanent corporate rate cuts and other tax cuts for multinationals, raising taxes on low- and moderate-income households to pay for it.
Overall, in 2027 — when only the corporate tax cuts, slower inflation measure, and individual mandate repeal would remain in place — the Senate bill would, on average, raise taxes for households by about $83 billion while cutting taxes for corporations by $50 billion. (See chart.)
So, contrary to Republican claims that byzantine Senate rules forced them to sunset the individual tax provisions, they were free to choose what to do in this bill at every stage, and they chose to write a final bill that favors corporations over individuals, and high-income households over middle-class and working-poor households.