GOP Tax Reform a Scam Harming Working Families and the U.S. Economy

Posted Dec. 6, 2017

MP3 Interview with Frank Clemente, executive director of Americans for Tax Fairness, conducted by Scott Harris

taxes

Now that the Republican-controlled House and Senate have both passed their different versions of tax reform legislation, a conference committee is tasked with reconciling the differences between the two bills, after which the measure will be brought back to both chambers for a final vote. Although President Trump and congressional Republicans predict that they’ll succeed in final passage and have their tax bill signed into law by the end of the year, public opinion polls reveal that the measure is overwhelmingly unpopular. A recent Gallup poll found that 56 percent of those surveyed disapproved of the tax bill, while only 29 percent supported it.

At least one Nobel prize-winning economist has labeled the GOP tax bill the biggest scam in U.S. history. According to various objective analyses, the bill would hurt most Americans, with the only big winners being the wealthiest one percent. That’s because the core of the legislation transfers wealth from low-income and middle-class families to corporations and business owners. What’s worse, due to the elimination of various deductions in the bills, almost two-thirds of middle class taxpayers will find themselves subject to significant tax increases. And the Republican tax plan could also trigger an automatic $25 billion cut to Medicare because of a steep rise in the federal deficit.

Between The Lines' Scott Harris spoke with Frank Clemente, executive director of Americans for Tax Fairness, who assesses how the two versions of Republican tax reform bills will impact working families and the U.S. economy.

FRANK CLEMENTE: Well, I'd say there's three big things to think about in the tax legislation. One is how much of the tax break is going to wealthy people, especially the top one percent, we say. Those are people who make, depending on whose doing the estimating, anywhere from $500,000 to $700,000 a year in taxes. So, they're pretty much millionaires. The Senate bill that just passed, about 60 percent or so is going to those folks in 2027 when this thing is fully implemented. And in the House, it's about half. So you know, they're sort of close. A little bit more is going to the rich in the Senate bill.

The second big thing is sort of, what happens with middle-class families. Folks in the middle, as you know. The Trump administration and probably the Congress are promoting it as major tax break for middle-income people. And what you find in the Senate bill about – once this thing is fully implemented again, after 10 years, you have to look at certain things expiring along the way – 87 million people, about half of the middle-income people are going to be paying more in taxes under this plan. In the House, it's about 40 million people. So, they touted it as being a huge middle-class tax break, but for tens of millions, up to 87 million people, it actually will be a tax increase once the tax breaks are fully phased in and the tax increases are fully phased in.

Another big thing to think about is what happens to the corporate tax rate. Basically both bills are very similar to how they treat big corporations. That is where the most big chunk of the revenue is lost in these bills. In the Senate bill, about half of the tax break goes to businesses and corporations and three-quarters of the tax break in the House bill goes to them.

So, you can see roughly the shape of these things are pretty similar. They're both giving big tax breaks to the people at the top. The reason most of the tax breaks go to the people at the top is because most of the tax breaks go to businesses and corporations and those are the people who tend to own corporate stock. They get dividend payouts from corporations or they own what are called pass-through businesses: law firms, doctors' offices, accounting firms. Even Donald Trump. The Trump organization has 500 pass-through businesses. Pass-through businesses are businesses that don't pay taxes at the corporate tax rate. They pay taxes at the individual tax rate so essentially, the profits flow through to the owners and they pay them as individuals, not as corporations. So they get big, big tax breaks in this bill. So both of these pieces of legislation are very heavily tilted toward the wealthy and to corporations.

BETWEEN THE LINES: Frank, I wanted to ask you about the debt. Estimates are that this tax reform bill, in one version or another will bring about $1.5 trillion in debt to the United States. And there are those out there who believe the Republicans are consciously and purposely ramping up the debt so they can justify deep cuts to federal programs. Social safety net programs, entitlement programs like Medicare and Social Security and the like. What can you say about the debt and it being used as really a Trojan horse to justify major cuts to federal programs?

FRANK CLEMENTE: Yes, well, we feel their agenda right now is to get big tax breaks to the wealthy and corporations. We've talked about this constantly with our work. Republicans were fine to not worry about the deficit this year because they wanted to give away trillions of dollars in tax breaks. They will turn around next year without any embarrassment, any shame and they will say, "Well, all of a sudden because of the tax cuts we passed last year, the deficit now isn't 75 percent of Gross Domestic Product, it's now 90 percent of Gross Domestic Product, and so we're going to have to cut a trillion or $2 trillion from the places where you can actually get the money, which is Medicare, Medicaid and Social Security." Remember, the budget resolution that both the House and Senate passed just two months ago called for $1.5 trillion in cuts – half a trillion dollars in cuts to Medicare and a trillion dollars in cuts to Medicaid. So, that's what their agenda is.

They're already talking about how they want to enact welfare reform and entitlement reform and so we're expecting them to come around.

BETWEEN THE LINES: Lastly, I'd ask you this: What is your group and a coalition of organizations across the country doing to oppose this Republican tax reform legislation. What are you all doing in the coming weeks as the House and Senate have this conference committee where they're supposed to negotiate and hammer out a final version of the bill that needs to pass both houses again, the House and Senate?

FRANK CLEMENTE: The real fight is in the House now, since it just passed the Senate and the House is more likely to take up the Senate bill, which the House has not yet voted on. We're expecting that vote to occur within the next week or so. We have 13 people in the House who voted against the tax bill the first time around. And we need to add 11 people to that. The place to add them are from people who voted against repealing the Affordable Care Act. And there's about 18 people who voted against repealing the Affordable Care Act. Eighteen members of Congress. So, we've got about 13 people who voted against repealing the Affordable Care Act. We need to win 11 of those people. A lot are in New Jersey, New York, Pennsylvania and California.

We would love you to call your representative to make sure that you register your position, which is that you are against the tax bill, the Republican tax bill that will soon be voted on in the House. The phone number to use – our toll-free number is 877-795-7862.

For more information, visit Americans for Tax Fairness at americansfortaxfairness.org.

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