There are a lot of differences between the Senate version of the tax cut bill and the House version. A lot. The two sides chambers must now forge a new bill working out their differences in conference committee in order to get the final version to the President’s desk to sign it before Christmas, as hoped.
The Senate version has seven tax brackets the House version has four. The Senate version delays the cut in the corporate tax rate for a year and the Senate version does not. The Senate version keeps the Alternative Minimum Tax (AMT) the House version repeals both the individual and corporate AMT.
The biggest problem I have with both versions is that they don’t go nearly far enough. This isn’t really tax “reform” — it’s a tax cut for MOST Americans, but it’s become clear over the past several weeks that a fair number of people who itemize right now will not get any tax relief, and will likely end up paying more in taxes when all is said and done.
Missouri Congressman Jason Smith, who serves on the House Ways and Means Committee – the tax writing body of Congress where all tax bills must start – told me this week that there are changes to every tax *bracket* but there’s no way to guarantee a tax cut for everyone.
Huh? What? I thought the goal here was to make sure that everyone had more money in their pockets? If the bill passes and the withholding charts change early next year it’s true that working American’s who get a paycheck every two weeks will see less money confiscated from their paychecks. That’s certainly a good thing, but it doesn’t mean that in the Spring of 2019 when people start doing their taxes that a pretty good portion of middle to upper middle income taxpayers won’t have a heavier tax burden compared to the current system. Couldn’t that potentially come back to haunt Republicans at the ballot box? They don’t seem too worried. But I am.
I’m worried that not everyone is going to get tax relief. I’m worried about the hypocrisy on both sides. The Democrats rammed Obamacare through Congress and Nancy Pelosi infamously told us that they had to pass the bill to figure out what was in it. But at least in that case the legislative timeline was about a year—compared to barely more than a month with this bill. The GOP’s defense is that they’ve held hearings on tax legislation for six years now—but that doesn’t pass the smell test. Meantime Nancy Pelosi is squawking about how this bill busts the deficit but she wasn’t too worried about that when they passed the FY 2009 and 2010 budgets that had a combined deficit spending of about $2.6 trillion in just two years. On the flip side the Republicans have always been concerned about out of control spending, but they’re tossing all that aside with this process.
Whatever final version of the bill passes, it’s important to recognize that this isn’t anywhere close to tax reform. Sure it adjusts the tax brackets and gives a little relief to millions of Americans, but it’s not true reform along the lines of a flat tax or another consumption tax plan like a “fair tax,” which would get rid of the income tax once and for all.
This isn’t bold, this isn’t true reform and this isn’t a smart process or marketing strategy for Republicans. The aforementioned differences in the two bills could mean big trouble ahead for the conferees trying to craft a final version. There’s no guarantee that a new bill would pass the Senate, let alone the House, if things get too controversial.
The president wanted a big, tax-cutting Christmas present from Washington D.C. left under the tree this year, but we still might get left with a giant lump of coal.