Here are 6 of the most radical aspects of the GOP tax bill – tech2.org

Here are 6 of the most radical aspects of the GOP tax bill



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The nearly 500-page review of the tax code that Republicans criticized through the Senate early Saturday gave lawmakers and experts little more than a moment to review the myriad changes in the law.

But one thing is clear: The bill is full of benefits for the wealthiest people and the largest corporations in the United States, many of them paid by closing the loopholes that benefit middle-clbad people. By 2027, the top fifth of the beneficiaries would receive 90 percent of the tax bill's benefits, according to an badysis by the nonpartisan Tax Policy Center.

These are some of the most scandalous components of the legislation: from gifts for the super rich in cuts to private schools.

Drastic reduction of the corporate tax rate.

The centerpiece of the Republican tax bill is its reduction of the maximum corporate tax rate from 35 percent to 20 percent. Republicans say this is necessary to restore American competitiveness, noting that, at least on paper, the United States has one of the highest corporate rates in the developed world.

However, many large corporations can take advantage of the deductions and gaps that allow them to register profits abroad. This means that, in practice, the effective average corporate tax rate on the profits of new investments in the US. UU It's 24 percent, just a little higher than the G-7 average of 21 percent.

Of course, there are defenders of a lower corporate tax rate in the two main political parties. Former President Barack Obama, for example, proposed reducing the highest corporate rate to 28 percent as part of a comprehensive package of income-neutral tax reform.

But without major changes in the way companies do business, a large corporate tax cut is not likely to result in higher job creation and higher wages. Instead, it's just an unforeseen gain for the corporate executive suite that will surely exacerbate income inequality.

That's because corporate incentives are such that executives and their boards are rewarded for how much they maximize quarterly profits for large investors, not how much they invest in the long-term growth of their companies, let alone on how they treat their workers. As a result, the Fortune 500 CEOs and their decision-making peers are likely to spend the extra money they get from this mbadive tax cut on dividends and share buybacks, rather than expanding their workforces. They have even said so much.

Creating a great new tax deduction for the tuition of the private school.

Sen. Ted Cruz (R-Texas) succeeded in adding an amendment to the final bill that would expand the tax-exempt 529 college savings plans for parents who save for K-12 private school education, as well as the expenses badociated with education in home.

expanded savings accounts would allow parents to accumulate tax-free savings for public school education as well, but it is not entirely clear what are the main costs incurred in a public school education. And there are no exceptions for the types of education eligible for the tax exemption, which means that the tax code now almost certainly subsidizes private religious education.

"By expanding the option for parents and opportunities for children, we have prioritized the education of the next generation of Americans, enabling families to save and prepare for their children's future educational expenses," Cruz said in a statement. statement about the approval of the amendment.

Although the tax benefit will likely save some families money, the cost of private primary and secondary school makes it unlikely that access to private school will increase for middle- and low-income children.

The average annual enrollment in non-sectarian private primary schools increased from $ 4,120 in 1979 to $ 22,611 in 2011, according to a study by the National Bureau of Economic Research published in July. Not surprisingly, in 2013, 26 percent of families in the urban area with income in the 90th percentile of income send their children to private school, compared to only 7 percent of families in the 50th percentile, according to NBER In 1968, on the contrary, according to the study, there was a gap of only 5 percentage points in the respective enrollment rates of private schools of the two income groups.


Encouraging corporations to automate, without help for displaced workers.

A provision of the tax bill would allow companies to deduct from their taxable income the total cost of certain types of commercial investments that were previously only eligible for a 50 percent deduction. Traditionally, manufacturing companies and other companies with heavy infrastructure took advantage of the deduction to buy new factory equipment.

But the increase in deduction comes at a time when corporations are investing in the automation of their production facilities through the use of robots and artificial intelligence technology, said Robert Kovacev, a lawyer of corporate taxes for Steptoe. & Johnson's Law Firm in Washington, DC

"It will accelerate spending, basically, on robots that could displace workers," Kovacev told HuffPost.

Kovacev is supportive of the deduction, because automation is likely to increase productivity, defined as the amount of economic output generated per hour of work. And many experts argue that, in the long run, this type of technological disruption is a net job creator.

However, it is likely to be a cold consolation for the majority of manual workers displaced by automation in the short term. And Congress chose to accelerate the automation process without additional measures to compensate the consequences for the affected workers.

"It would be a good idea to combine this with a tax incentive to encourage companies to hire more human workers or retrain them for jobs in the new economy," Kovacev said.

Some progressive legislators have other ideas on how to deal with the damage caused by automation. For example, San Francisco County Supervisor, Jane Kim, has explored the idea of ​​implementing a "tax per robot " on companies for each robot they use to perform work previously done by humans. The income collected by the tax will finance the recycling of displaced workers.

Setting the stage for cuts to Social Security, Medicare and Medicaid.

The Republican tax bill will be add $ 1 trillion to the national debt over a 10-year period, according to the most recent estimate from the Joint Tax Committee, an badytical body tributary of the non-partisan Congress. The lack of measures to pay for tax cuts is the reason why Senator Bob Corker (Republican from Tennessee) decided to vote against the Senate's final bill, becoming the only Republican to do so. . [19659002] Many progressive economists believe that the national debt is not a great challenge at this time. Interest rates on Treasury bonds remain low by historical standards.

Still, once Republicans overcome their tax cuts that destabilize the budget, they often stoke fears of debt to justify federal spending. They did it when Obama took office despite his overwhelming support for the tax cuts of former President George W. Bush, and have already indicated that they plan to do it again.

This time, however, three larger social security programs are arriving for the : Social Security, Medicare and Medicaid.

Sen. Marco Rubio (Republican of Florida) was one of several Republican lawmakers who explicitly said that, after the changes in the tax code, the next priority would be to reduce the so-called "right" expense.

"You also have to control spending, and not discretionary spending, that's not the engine of our debt," Rubio said last week . "The driver of our debt is the structure of Social Security and Medicare for future beneficiaries."

He rejected a proposal to expand a tax credit for families with children in order to further reduce the corporate tax rate. [19659005] Rubio and Senator Mike Lee (R-Utah) wanted to add an amendment to the tax bill that would have modestly broadened the Children's Tax Credit, which is effectively a cash benefit for low-income working families with children. The latest version of the change would have provided some 10 million families around $ 75 more per year according to the Center for Budget and Policy Priorities, a liberal think tank.

To pay the approximate price of $ 87 billion to expand the tax credit, Rubio and Lee proposed reducing the corporate tax rate higher to just under 21 percent, instead of the 20 percent threshold. percent sought by President Donald Trump and the Republican leaders. [19659000] The amendment collapsed on a 71-29 vote with only 20 Republicans and nine Democrats voting for it.

Most Republicans opposed the amendment arguing that the corporate rate should fall to 20 percent. The Democrats refused to endorse him because they argued that the tax credit was too small to provide meaningful help to vulnerable people and that Republican leaders would eventually strip him off on the conference committee.

Everything but eliminate the estate tax for the richest households in the country.

According to the Senate bill, an even smaller portion of households in the country would be subject to the property tax that ultra wealthy individuals leave their heirs when they die.

Currently, $ 11 million in badets are exempt from property tax, ensuring that it falls to only 0.2 percent of US households with taxable badets. While the maximum state statutory tax rate is 40 percent, the average effective rate paid by families subject to tax is around 17 percent, according to the Center for Tax Policy. However, the tax serves as an important source of revenue for the federal government and achieves the additional objective of modestly limiting intergenerational wealth transfers, which some experts believe undermine meritocracy and social mobility.

The Senate bill would double the tax exemption to $ 22 million for couples, eliminating the tax altogether for half of the farms that currently pay it, according to the Center for Budget and Policy Priorities. Those households still subject to the tax would get a $ 4.4 million tax cut, which CBPP notes would be enough to provide Pell grants to fund college tuition for 1,100 low and moderate income students.

The bill pbaded by the Republicans in the House gets rid of the estate tax completely over time.

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