TAX BILL | Details, details

New York City, December 2, 2017 — The Tax Bill has passed the Senate. 

Now the House Republican leadership will seek to take up this bill as passed, to avoid a long conference over the differences between the Senate and House bills.

But will GOP Members of Congress accept all the changes that the Senate made to get to 50 votes? Will the House pass it by the looming December 8 debt-ceiling deadline?

Here are some of the issues facing the House, as outlined in an early-morning email from Dana Chasin, who has been following the proceedings in Washington, used here by permission:

• The Senate grants owners of pass-throughs a deduction rather than a maximum rate, zeroes out the individual mandate penalty, and retains a panoply of deductions eliminated in the House bill.
• The bill is unpopular. This is possibly the least-popular tax package that the Senate has ever passed. A Quinnipiac poll reports only 25 percent of voters approve of it. Representatives will all be facing their constituents in 2018, and many are concerned about how the tax bill will be perceived by voters.
• The December 8 expiration of the debt ceiling and the Alabama special Senate election create deadlines. If the bill is not passed by the House by the 8th, hostility to the bill's impact on the debt and on the GOP's electoral future could overwhelm it.

Some Republican Senators threatened to break ranks over these issues:

• Fiscal (Debt) Impact. Senators Corker and Flake threatened to revolt over the tax plan's debt impact. The standoff came after the Senate parliamentarian shot down Corker’s proposal to insert a “trigger” that would automatically increase taxes in the event the bill did not produce enough growth to cover its deficit impact. Earlier in the day, the Joint Committee on Taxation (JCT) reported that H.R. 1 would add $1 trillion to the debt, even after accounting of dynamic growth effects. The standoff sent leadership scrambling to find ways to raise revenue, but not enough for Corker, who voted against the bill (the sole Republican defection).
• Small Business Treatment. Republican leadership earlier in the week was confronted by  Senators Johnson and Daines, who threatened to withhold their support unless more generous concessions were given to pass-through businesses. Both Senators have indicated their support after the bill was changed to increase the deduction for passthroughs from 17.4 percent to 23 percent. A 23 percent deduction translates into a maximum rate of 29.6 percent, based on the 38.5 percent top rate in the Senate bill. Republicans plan on paying for their generosity by increasing the size of the one-time excise tax on the repatriation of foreign corporate earnings.
• Property Tax Deductibility. Senator Collins, one of the last Republican holdouts, signaled support after announcing that leadership had accepted her amendment to allow individuals to deduct up to $10,000 in state and local property taxes, the same treatment as the tax bill that the House passed last month. Winning Collins’ swing vote came at a steep price. Eliminating state and local deductions is a key revenue raiser for the Byrd Rule-constrained Senate bill. Early indications are that Republicans have opted for keeping a modified version of the Alternative Minimum Tax (AMT) to pay for Collins’ amendments.
• ACA Individual Mandate Repeal. Senator Paul raised eyebrows last month when he announced that the Senate bill would zero out the Affordable Care Act’s individual mandate. The provision was needed to buy Paul’s vote and raise perhaps $300 billion in revenue. It was a risky compromise.  Senators Collins, Murkowski, and Moran have all expressed concern about the bill’s treatment of Obamacare. Collins indicated her support of the bill after getting promises on health insurance premiums, Murkowski signed on after an addition of ANWR oil drilling, and Moran never seriously dissented. McConnell's bargaining appears to have paid off. 

While Senators sparred over pass-through deductions and budget holes, few addressed the tax burden that will weigh heavily on the middle class following passage of this bill. The Joint Committee on Taxation’s “dynamic analysis” estimates only a 0.8 percent increase in GDP and just $408 billion generated from economic growth over the next ten years, while other reports provide even lower estimates.

Reps. Ryan and Brady promised to save the average family of four earning $59,000 a year an estimated $1,182. But this works only for the first year of the plan. After that, the cuts decline and the Family Flexibility Credit is phased out and chained CPI (which indexes spending and taxes, slowing adjustment for inflation) reduces future benefits from what they would have been. These families face tax increases in 2024, paying approximately $450 more by 2027. Furthermore, these hikes are expected to affect families earning less than $30,000 in 2019 and less than $40,000 in 2021.

Senator McCaskill noted amendments from lobbyists bundled together as the Manager’s Amendment and geared to expanding pass-through and corporate deductions to various stakeholders. The chances of legislation that favors the middle class receiving such consideration appear bleak.

That this unpopular tax bill could pass the Senate so quickly is astonishing. However, Americans won’t be filing under the new tax system, if it passes, until April 2019 and most Americans won’t suffer a tax increase until after the 2020 election.

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DE BLASIO | #1, Passes 43%, Quinn #3

Sept. 3, 2013–At 43 percent and rising, de Blasio may win the Democratic nomination outright, with no runoff.

Thompson and Quinn are competing for the runoff spot–if there is a runoff. Thompson is flat at 20 percent; he did not pick up any votes from the falling stars. The memory is still fresh of his close finish behind Bloomberg in Bloomberg's third election to the mayoralty. That is the closest Thompson has come to being Mayor.

Quinn fell below Thompson for the first time since the polling started in July.

Wiener and Liu are competing for the bottom spot, with 7 and 4 percent. Wiener's role in the election may have been to start off tall he surprises by coming in first at the beginning.

Bill de Blasio and his son (under

the Afro) Dante.

The Quinnipiac Poll cites a campaign ad featuring de Blasio's charming son Dante with a big Afro as helping pump up de Blasio's popularity. De Blasio not only leads Speaker Christine Quinn among women, he also leads former Comptroller Bill Thompson among black voters.

In a runoff, the projected vote as of the date of the poll would be
De Blasio over Quinn, 66-25 percent;
De Blasio over Thompson, 56-36 percent;
Thompson over Quinn, 59-33 percent.

With seven days left, only 24 percent of likely Democratic primary voters now say there is a good chance they will change their mind. The Thompson voters (61 percent, i.e., 12 percent of all those polled) and de Blasio voters (59 percent) are more loyal than Quinn supporters (56 percent).

De Blasio oriented his campaign for the Democratic nomination around the theme of income inequality–a good issue for the likely Democratic voters in New York, who tend to favor strongly progressive positions.

DeBlasio's Leap to #1

De Blasio's hugely successful ad 

features his appealing son Dante.

De Blasio's spurt to a decided lead in the race for the Democratic nomination has huge implications. He is ahead in two independent polls - leading by 32% vs. 18% for Thompson in the NYTimes-Siena College poll (with Quinn #3) and by 36% in the Quinnipiac poll, which despite its name put Quinn in second place with 21%. The possibility that de Blasio could win 40% of the vote and avoid a runoff now presents itself.

De Blasio's appeal to the Democratic primary electorate has been twofold -

1. His "al Dante" (my term) campaign appeals to the minority vote (taking away from Thompson) by featuring his charming afro-topped son Dante giving him an unmistakably sincere endorsement as a father. De Blasio is now being attacked for using his son in this way. That may work - or it may be seen as a desperate move by his opponents and may backfire.

2. His fix-the-tax-mix approach appeals to the soul of the Democratic primary electorate by noting the high degree of income inequality in New York City and the fact that it has been increasing. Valid concerns, but hard to do much about at the local level. The biggest problem is that the Federal payroll tax is regressive, taxing the first dollar of payroll and cutting out at $113,700. NYC has hungry competitors to the north, west, east and south who have numerous Tax Foundation charts (both fair and unfair) to point to if NYC tries to fix income inequality on its own.

De Blasio leads the other candidates in every main category - among both men and women, both young and old, and both the optimists and pessimists about NYC. Of likely Democratic voters, the NYTimes-Siena College poll indicates that 45 percent view Quinn unfavorably (the de Blasio and Thompson figures are 17 and 16 percent), perhaps thanks to the well-financed anti-Quinn campaign.

I'm a Registered Democrat.  However, I try to be objective when I am asked by friends to comment on the implications of the new NYC polls for possible political outcomes. Quinn and Thompson have been keeping the tone of the campaign fairly somber. The new polls suggest this isn't working, and with ten days to go till the election, it's hard to change the strategy. Attacking de Blasio's son for supporting his father, or vice versa (#GoWiththeFro), doesn't sound to me a good way to turn the tide. If the battleground is who can do the most for young people and black youth in particular, it seems to me de Blasio wins.

What it means for November in my view  is that if the de Blasio lead in the polls continues to hold up, the GOP candidate (Catsimatidis and Lhota are the two most likely to be nominated) has a better chance now than any of them had any right to expect hitherto.

To find out more about candidates you hadn't paid any attention to  heretofore, go to the Campaign Finance Board, which has an on-line Primary Election Voter Guide now available here or here.