Republicans have been telling us for weeks that they were pursuing their massive $1 trillion tax cut for their donors, with no qualms about saying that out loud. So when the Senate passed those massive tax cuts in the wee hours of Saturday morning, they sure did deliver to developers, banks, and big oil.
Far from simplifying taxes, the bill opened up a whole range of tactics to lower the amount owed to the Internal Revenue Service. "Business owners or managers that plan well and pay for good advice will be able to achieve much more favorable rates," said Adam Looney, a senior fellow at the Brookings Institution and a former Treasury Department official. "I'm not sure if that is a loophole or the intent of the legislation." [Spoiler alert: it's the intent.] […]
The ever-lengthening list of income that will be taxed at a cut-rate could be seen as "a Donald J. Trump loophole," said Steven M. Rosenthal of the nonpartisan Tax Policy Center. A large amount of that kind of income is on Mr. Trump's 2005 tax return, two pages of which became public in March, and on his 2017 financial disclosure forms, which show more than 500 pass-through entities, Mr. Rosenthal said.
That's the "pass-through income" tax break that Sens. Ron Johnson of Wisconsin and Steve Daines of Montana were holding out their votes for, because it helps … them! It's one real estate developers in particular love, and added about $114 billion to the costs of this bill. Half of the benefit of reducing the top tax rate here from 39.6 to 29.6 will go to the top 1 percent of tax filers, the Tax Policy Center says.
Thanks to an amendment offered by Senator John Cornyn, Republican of Texas, certain income from gas and oil operators could also qualify for the new, lower rate. Industry representatives said they would have been excluded from the intended benefits that the real estate investment trusts and other publicly traded industries were getting.
"The Senate went out of its way to confirm that passive investors in these publicly traded investment vehicles get the benefit of the pass-through discount tax rate," said Edward D. Kleinbard, a professor of tax law at the University of Southern California and a former chief of staff for the congressional Joint Committee on Taxation. "This is a working definition of a tax boondoggle." […]
Banks and other financial institutions will still be able to avoid taxes by making payments to offshore subsidiaries. The lawmakers had initially intended to prevent the tax benefits from such actions, but the banks got a last-minute reprieve for some transactions. In calculating the companies' tax bills, the bill excludes payments related to derivatives, a big source of income for financial institutions.
Of course Cornyn got some stuff in there for big oil, in addition to Sen. Lisa Murkowski's provision opening up parts of the Arctic National Wildlife Refuge to drilling. There's also a random last-minute (maybe scrawled by hand in the margins) stuff, like now car dealers are going to be able to deduct all the interest they pay, but only car dealers. And lower/middle-income people who do not live in blue states where paid leave is required can get employee credit for paid family and medical leave. That seems to be in there just to punish people in Democratic states. It also dings lower-income employees on everything they get from their employers—even a $25 gift card is going to be taxed as income.
All these giveaways to the really big donors—developers, banks, oil companies—they’re all permanent. There are a few things that help lower-income people, like extending the child tax credit by one year to 17-year-olds, but that help expires in 2024. These Republican Senate seats need to start expiring—in 2018.
So please give $1 to help us win the most vulnerable Republican seats in the Senate, starting with Alabama on Dec. 12.