The House of Representatives on Friday voted for a permanent extension of tax cuts for individuals and unincorporated businesses passed in the GOP tax reform law late last year.
At present, these changes are set to expire in 2025 (or sooner, in some cases), after which tax rates will return to previous, higher levels unless a measure like this is approved. However, the Senate has no plans to consider the extension, suggesting the House vote may be more a campaign tool for GOP representatives than a meaningful policy action.
The bill's supporters cast it as a necessary move to maintain economic growth. "It's critical we keep this strong momentum going," said House Ways and Means Committee Chair Kevin Brady (R-Texas), arguing the measure would "keep America's economy booming and middle-class families growing again."
The committee's ranking Democrat, Rep. Richard Neal (Mass.), pushed back with the contention that lessening revenue via "tax cuts for the wealthy" will undermine entitlement programs and prove Republicans "are hardly the party of fiscal rectitude or conservatism."
All but 10 House Republicans supported the extension; just three Democrats voted yes. Bonnie Kristian
Congressional Republicans planned to run for re-election on their biggest legislative accomplishment, the $1.5 trillion tax overhaul they passed in December with zero Democratic votes. Taxes are the top issue in GOP ads, mentioned in a third of those that ran Aug. 29 to Sept. 12, USA Today reports, but more than two-thirds of those ads attacked Democrats rather than defending the GOP tax cuts. An internal survey commissioned by the Republican National Committee suggests why: By a 2-to-1 margin, voters believe the tax cuts benefit "large corporations and rich Americans" over "middle-class families," according to Bloomberg News, which obtained the poll.
The survey, completed Sept. 2, found that 61 percent of voters said the tax overhaul helps the rich while 30 percent picked the middle class. Independents agreed about the wealthy benefiting by 36 percentage points. Overall, 44 percent of voters approved of the law, 45 percent opposed it. "Voters are evenly divided on the Tax Cuts and Jobs Act," the report said. "But, we've lost the messaging battle on the issue." (According to the Tax Policy Center, 25 percent of the law's gains will accrue to the top 1 percent by 2025, rising to 83 percent for the top 1 percent by 2027.)
Internal GOP poll finds voters overwhelmingly believe the tax law benefits the rich rather than the middle class. "We've lost the messaging battle on the issue." https://t.co/VS3k3s17U2 pic.twitter.com/9aeZXRcvtH
— Joe Light (@joelight) September 20, 2018
"Most voters believe that the GOP wants to cut back on" programs like Social Security and Medicare "to provide tax breaks for corporations and the wealthy," the RNC survey concludes, attributing this to "a fairly disciplined Democrat attack against the recent tax cuts." Clearly, Democrats running on ObamaCare and Republicans shying from touting tax cuts was not how Republicans thought this would play out. "If we can't sell this to the American people," Senate Majority Leader Mitch McConnell (R-Ky.) said after the Senate passed the tax bill, "we ought to go into another line of work." Peter Weber
Fifty-three percent of Americans say the tax overhaul Republicans pushed through in December will have a negative impact on the U.S. — deficits and unbalanced benefits for the wealthy and large corporations — versus 39 percent who say it will have the positive effects of a stronger economy, more jobs, and more pocket change, according to a new NBC News/Wall Street Journal poll. Overall, 27 percent called the tax bill a good idea, down from 30 percent in January, while 36 percent called it a bad idea.
For a Republican Party that has said it hopes to ride the tax cuts to victory in November, this is "not a great starting point," said Democratic pollster Fred Yang, who conducted the survey with GOP pollster Bill McInturff. The tax overhaul was popular among a majority of men, unpopular with a larger majority of women, and opposed by rural Americans, older men, the working class, middle class, and upper class; women with college degrees dislike is by a nearly 3-to-1 margin. The poll, of 900 Americas, was conducted by telephone April 8-11, and it carries a margin of error of ±3.27 percentage points.
A new SurveyMonkey poll for The New York Times was more positive — 48 percent approve and 47 percent disapprove. But "that is down from a 51 percent approval rating in February, and it suggests that the law may have hit a high-water mark among voters — if they're even thinking about it anymore," the Times says. President "Trump has lost some interest in the $1.5 trillion tax overhaul that he signed into law last year — even though the White House keeps scheduling events to promote it," and "the country is right there with him." There's "a brief flurry of activity" planned around tax day, the Times notes, but "by all sorts of metrics" — cable news coverage, Google searches, Trump comments — "Americans aren't talking very much about a law that Republicans had hoped to make a centerpiece of their midterm election message." Peter Weber
In your periodic reminder that the U.S. has a for-profit health-care system, health insurers and other health-care companies will save tens of billions from the Republican tax overhaul but "patients should not expect the health industry's windfall to lead to lower premiums, reduced prices, or major industry changes," Bob Herman and Caitlin Owens report at Axios. They discovered this by listening to the health-care companies, perusing their fourth-quarter financial reports and conference calls with investors.
The 21 publicly traded companies Axios looked at "collectively expect to gain $10 billion in tax savings in 2018 alone," Herman and Owens write. "Most of the money is going toward share buybacks, dividends, acquisitions, and paying down debt — with just a sliver for one-time employee bonuses, research, and internal investments." Few pharmaceutical companies were included in the Axios data, but drugmakers are already spending at least $50 billion on new stock buybacks, and they and medical device companies are also repatriating tens of billions from offshore accounts, bolstering their bottom lines.
It isn't just health care — U.S. companies have announced more than $218 billion in share buybacks since the GOP passed the law in December, investment research firm TrimTabs said last week. The $153.7 billion in buybacks in February alone broke the previous record of $133 billion in April 2015, and "if the pace keeps up, this year's volume will smash totals from all other previous years going back more than a decade," TrimTabs analyst Winston Chua said in the report.
"Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies' stock," Matt Phillips explains at The New York Times. "A company purchasing its own shares is a time-tested way to bolster its stock price. But the purchases can come at the expense of investments in things like hiring, research and development, and building new plants — the sort of investments that directly help the overall economy." Peter Weber
Secretary highlighted by Paul Ryan for her $1.50 pay bump suggests Ryan didn't 'read the whole article'
On Saturday, House Speaker Paul Ryan (R-Wis.) tweeted an Associated Press article about workers finding modest bumps in their paychecks due to the new tax law he championed, and he highlighted the story of a Pennsylvania high school secretary who discovered an extra $1.50 in each paycheck, or $78 a year. Since that's considerably less than what the wealthy (not to mention corporations) get in the tax bill, critics pounced and Ryan pretty quickly deleted the tweet, which had already been screengrabbed and gone viral. CBS News' David Begnaud tracked down the secretary, Julia Ketchum, and asked her about her newfound notoriety.
"The paragraph above me, my quote, and the paragraph below my quote — those people got hundreds more and I got a $1.50 per paycheck more," Ketchum said, en route to a field trip. "So it shows me he may not have read the whole article."
— Tim Hogan (@timjhogan) February 5, 2018
Ketchum took the whole episode in stride, though, and said that while she was "really surprised" Ryan highlighted her comment, she wasn't opposed to the extra cash. "A dollar-fifty's a dollar-fifty, I'm not going to — I noticed it," she told Begnaud. "I watch my finances and I noticed it, so that was good. I was pleasantly surprised because it went up, it did not go down." Peter Weber
Starting in 2019, for the first time in 77 years, alimony won't be deductible for U.S. taxpayers, thanks to the Republican tax overhaul passed in December. That means that the new tax law "could soon lead to a surge in married couples calling it quits," Politico reports, citing divorce lawyers. "Now's not the time to wait," said Mary Vidas, former chairwoman of the American Bar Association's family law section. "If you're going to get a divorce, get it now."
For wealthy divorcés, especially, the deduction meant they could pay roughly 60 cents for every dollar of alimony. Divorce lawyers say the change in the tax law could lead to more contentious divorce cases and lower alimony payments when it kicks in, disproportionally hurting women. But ending the deduction is also projected to raise $6.9 billion over 10 years, helping defray the $1 trillion-plus cost of the tax bill. "This is one of the many provisions of the law that removes special rules applicable only in certain circumstances in order to help simplify the code and reduce tax rates for all Americans," said a spokesman for House Ways and Means Chairman Kevin Brady (R-Texas), who put together much of the tax legislation.
Couples have all of 2018 to "use the alimony deduction as a bargaining chip in their negotiations with estranged spouses," Politico says, but in some states, the clock starts running down fast, thanks to cooling-off periods of up to six months. "You can't just file for a divorce today, and expect that you're going to be divorced tomorrow," said Los Angeles lawyer Ed Lyman. You can read more about the ramifications for divorce settlements at Politico. Peter Weber
The U.S. government will now run out of cash in early March, thanks to the GOP tax law, the CBO says
Congress will have to the raise the debt ceiling in the first half of March, weeks earlier than forecast, or the federal government will run out of cash, the Congressional Budget Office said Wednesday. The CBO attributed the shortened deadline to the tax overhaul Republicans passed in late 2017, which will lower tax receipts by $10 billion to $15 billion a month starting in February. In all, the U.S. will take in $136 billion less tax revenue in 2018 under the new tax law, the nonpartisan congressional Joint Committee on Taxation estimates.
The Treasury Department has been taking emergency measures to keep the U.S. solvent since the debt limit was suspended Dec. 8, but if Congress doesn't raise the federal borrowing limit in early March, "the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both," the CBO warned. The federal government ran a $23 billion deficit in December and a $666 billion deficit for all of 2017, the biggest shortfall since 2013.
Congress hates raising the debt ceiling but has never failed to do so, brinkmanship notwithstanding. Lawmakers also have to pass a spending bill by Feb. 8 to keep the government open, and deal with the immigration status of DREAMers before President Trump's March deadline. It's possible all these items will be rolled up into a big, must-pass package, The Washington Post notes, though House conservatives would balk "and it's unclear what political coalition will form this time to help raise the borrowing limit." Peter Weber
Republicans start 2018 with full control of the federal government, at least one government shutdown under their belt, a historically unpopular president, and a potentially ominous sea change among white women. But "Republican strategists are plotting an election-year survival strategy to steer the midterms away from the dangerous terrain of Trump's tweets and Capitol Hill dysfunction," The Washington Post reports: "Talk up job growth, highlight the soaring stock market and, most of all, convince voters that the tax-cut legislation that stands as their only major accomplishment is bringing back the good times."
About 60 percent of U.S. adults in a new Washington Post/ABC News poll say the GOP tax overhaul favors the rich over the middle class, and 46 percent say passing it was a "bad thing," versus 34 percent who call it a "good thing." But there's a large swathe of persuadable voters, and Republicans, wealthy donors, and the U.S. Chamber of Commerce are throwing tens of millions of dollars into a full-court press to convince voters to love the tax cut.
"Answer this question and I will tell you if we keep the House or not," says Corry Bliss, head of the GOP-aligned American Action Network, which pumped $24 million into GOP tax-cut boosterism last year and plans to spend $10 million more this quarter: "In 10 months, does the middle class think we cut their taxes?"
Without a push, most people won't really notice a 2018 tax cut until they do their taxes in 2019, though a single person making $50,000 should see $35 extra in each paycheck this year — or about $3,600 a year. The top 1 percent of households will get a tax cut of about $50,000. Luckily, the wealthy donors bankrolling the tax pitch were already thriving before the tax cuts — 82 percent of all wealth created last year went to the top 1 percent, Oxfam says in a new report, and the three wealthiest Americans now have the same wealth as the bottom 50 percent, or 160 million Americans. Peter Weber