TAX BILL PUZZLE | Thatcher Policies in Reverse

Thatcher's policies added homeowners and reduced the number of renters
of public housing. (Chart by The Guardian.)

Of all the puzzles posed by the tax bill now before the Congress, the impact on homeownership is the hardest to fathom. 

The bill reverses one of the major thrusts of Margaret Thatcher's administration in Britain, to use greater homeownership through right-to-buy programs to expand the ranks of the Conservative Party. 

Thatcher became leader of the Conservative Party in Britain in 1975 and became Prime Minister in 1979. She therefore led a conservative-laissez faire revolution in the 1970s that in 1980 returned the White House to the GOP by electing Ronald Reagan President.

Thatcher presided over large-scale selling off of Council Housing to the people who lived in the the rented homes. Her goal was to make them into homeowners who would care about their property... and vote Conservative in future elections.

The tax bill before the Congress removes incentives for homeownership and tilts the playing field toward renters. An astonishing reversal of a Thatcher program that has been widely viewed as brilliant.

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TAX BILL | Do You Consider the Tax Bill Immoral? Sen. Heinrich Does.

Senator Martin Heinrich (D-N.M.)

After the passage of the Senate Republican tax bill on Saturday, December 2, U.S. Senator Martin Heinrich (D-N.M.), Ranking Senate Member of the Joint Economic Committee, issued the following statement:

Today, Senate Republicans passed their tax bill that harms working families, will blow a huge hole in the deficit, and I fear will lead to drastic cuts to vital programs in the years ahead. 

Yet again, our children and our communities will end up paying the price for irresponsible and immoral Republican tax giveaways. 

Under the Senate bill, nearly 28 million working families will face a tax increase by 2027. 

This bill spends money we don’t have on tax breaks the rich don’t need. 

The legislation adds $1.4 trillion to the national debt, an average of $140 billion each year in increased deficits, further damaging our long-term fiscal situation. Blowing a hole in the deficit to give tax breaks to the wealthy and special interests is the standard Republican playbook. 

Meaningful tax reform is a big, complicated, and complex undertaking. It doesn’t happen behind closed doors, and doesn’t happen with one party calling all the shots. 

We could craft a better bill that would lower taxes in a way that doesn’t add to the deficit. I urge my colleagues—let’s work together to find real solutions to health care, to tax reform, and to all of our nation’s challenges.

For more information, contact Latoya Veal at Latoya_Veal@jec.senate.gov or 202-224-0379.

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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