Senior Director of Federal Tax Policy
Senate Republican leaders are rushing to pass a tax bill that will ultimately raise taxes on many middle- and lower-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.”
Republicans blame their choices on “the absurd rules of the Senate,” as White House Budget Director Mick Mulvaney asserted over the weekend. But that doesn’t make sense. The rules don’t force Senate 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, 2018-2027.
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-cut provisions expire. They chose the last approach. And they centered the bill around permanent corporate rate cuts and other tax cuts for multinationals.
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 or reduce federal expenditures for households with incomes below $75,000 by about $60 billion — while still giving large tax reductions (through its corporate tax cuts) to those at the top. (See chart.)
So, contrary to Republican claims that byzantine Senate rules forced them to sunset the individual tax provisions, they were free to choose the structure of this bill at every stage, and they chose to write a bill that favors corporations over individuals, and high-income households over middle-class and working-poor households.