8 Winners and 5 Losers in the GOP Tax Bill

By Yuval Rosenberg and Michael Rainey The Republican’s sweeping tax overhaul, the largest in three decades, is heading for the finish line this week, even if runs into a few last obstacles along the way. The latest: - Sen. Susan Collins (R-ME) says [she’s a yes]( on the tax plan. - Sen. Mike Lee (R-UT) confirms [he’ll vote yes]( too. - The Committee for a Responsible Federal Budget says the bill, which will cost $1.456 trillion under conventional scoring, could cost up to [$2.2 trillion](. Factoring in economic feedback effects and interest costs, the real tab is likely to be around $2 trillion, the group says. - The conservative [Tax Foundation’s dynamic analysis]( of the bill shows it reducing revenues by $448 billion over 10 years. - According to the centrist [Tax Policy Center]( the majority of households will receive tax cuts next year, with the largest benefits going to high-income taxpayers. By 2027, however, 53 percent of households will see tax hikes due to the expiration of the individual tax cuts. Pushing Back on the ‘Corker Kickback’ Sen. Bob Corker (R-TN), who said Friday he’d vote for the bill despite his previous objections to its deficit-raising effects, got caught in a firestorm of criticism over the weekend after the [International Business Times]( reported Saturday on the late addition of the tax break that could deliver a [windfall]( to him, President Trump and other members of Congress with large, income-producing real estate holdings. Corker said he wasn’t aware of the new provision, and in a letter to Senate Finance Committee Chairman Orrin Hatch (R-UT) he asked how the break got added to the bill. That didn’t stop the #CorkerKickback hashtag from trending on Twitter, where critics on the left slammed the senator for flipping his vote and called for him to release his tax returns. Corker’s denying knowledge of the changes also didn’t play well. Martin Sullivan of Tax Analysts [tweeted]( that “now we have absurd situation where senator is trying to prove to public he did not know what was in the bill. He is admitting he did not read, understand or review it--not even close. Yet he will vote for it.” On Monday, Hatch responded with a letter of his own admitting that he had authored the new provision and that Corker had nothing to do with it. Hatch also wrote that the claim “that a new pass-through proposal was created out of whole cloth and inserted into the conference report is an irresponsible and partisan assertion that is belied by the facts.” 8 Winners and 5 Losers in the GOP Tax Bill Although the Republican tax bill will likely pass this week, it will take months for experts to wade through the 503-page document to fully understand the implications of the many breaks and loopholes buried in the legislation. Here are some of the clear winners and losers so far: 8 Winners 1. Big business: Slashing the top corporate tax from 35 percent to 21 percent is a clear win for U.S. businesses, especially those who currently pay higher rates, like [big retailers](. The bill also eliminates the corporate alternative minimum tax, making it possible for some businesses to lower their rate below 21 percent through the use of various deductions. And multinationals with billions of dollars in profits offshore will be forced to bring that money home, but at rates ranging from 8 percent to 15.5 percent. 2. Real estate investors: Property owners already receive considerable benefits from the tax code, and a last-minute tweak added to the tax bill [sweetens the pot]( allowing landlords — including such notable figures as President Trump and Sen. Bob Corker — to take advantage of new tax breaks for pass-through businesses. 3. Pass-throughs: Most businesses in the U.S. are organized as pass-through entities, and the tax bill gives most of them a big break — a 20 percent deduction straight off the top line. Most of the benefit will flow to high-income households. 4. Individual taxpayers — until 2026: The majority of taxpayers will get a tax cut starting next year, though for many the size of the cuts will be modest. Although the alternative minimum tax remains in place, it now kicks in at a significantly higher level, shielding more upper-middle income households. 5. Wealthy heirs: The cutoff for paying estate taxes will be doubled to roughly $11 million for individuals and $22 million for couples, further reducing the number of estates exposed to the tax. 6. Wall Street: During the 2016 presidential campaign, Trump frequently complained about the rules for carried interest that allow some large investors to pay a lower tax rate. Those rules remain in place for the most part, much to the relief of many fund managers. 7. Tax planners: Republicans have talked about simplifying the tax code, but the Tax Cuts and Jobs Act is anything but simple. NYU tax expert [Dan Shaviro]( predicts “there will be many billions of dollars” in transactions designed to reduce tax liability in the near future, meaning lots of billable hours for tax experts. 8. Supply-side conservatives: “This, if it passes, will be the single biggest policy triumph for conservatives since the 1996 welfare reform,” supply-side economist Stephen Moore [told Politico](. Long-time supply-sider Grover Norquist added that he thinks there’s more coming: “This tax cut and reform will drive further reforms and reductions for the next 50 years.” But will supply-siders still be crowing in five years? 5 Losers 1. Most individual taxpayers after 2025: The corporate tax cuts are permanent but many of the individual cuts expire after 2025. The majority of households will see higher taxes after that date, assuming Congress doesn’t step in to maintain the cuts. 2. Top earners in high-tax states: The tax bill imposes new limits on deductions for state and local taxes ($10,000) and mortgage interest ($750,000 on new purchases). Many high-income households in New York, California and other high-tax states will feel the pinch. 3. Workers on payroll: The tax bill gives a [larger tax break]( to owners of businesses than to their employees, even if they do the same kind of work for the same pay. 4. Doctors and lawyers: Some high-income pass-through businesses, including many law firms and medical practices, will be unable to take advantage of new tax breaks for pass-through income. 5. Deficit hawks: It’s not clear that there are many deficit hawks left in the Republican Party, but anyone concerned about the size of the national debt can’t be happy with a bill that adds more than $1 trillion — and potentially as much as $2.2 trillion — to it. [Share]( [Tweet]( [Forward]( Send Us Your Tips and Feedback: Email Yuval Rosenberg at yrosenberg@thefiscaltimes.com and follow me on Twitter [@yuvalrosenberg](. Follow The Fiscal Times on Twitter [@TheFiscalTimes](. Why the GOP Tax Bill Could Send More US Jobs Overseas Some experts are warning that the tax bill could make it easier for U.S. companies to move jobs out of the country. “This bill is potentially more dangerous than our current system. It creates a real incentive to shift real activity offshore,” former Treasury official Stephen Shay [told]( The Washington Post. The bill creates a minimum 10 percent tax on income earned overseas above a certain level. However, the fine print of the system will make it possible for companies to escape some of the tax, according to experts interviewed by the Post. Here are three of the problematic provisions: - The more equipment a company has overseas, the lower its taxes. The bill exempts "routine” profits earned overseas from taxation, based on the rate of return on tangible assets held in foreign countries. This creates an incentive for companies to own more factories and equipment overseas, not less. - The tax rate on routine profits from equipment is unusually high at 10 percent. The assumed rate of return on equipment is more typically just a few points above Treasury yields, currently 2.4 percent. Again, the higher rate provides more incentive to move overseas. - The tax is based on a global average rather than on the individual countries in which a company operates. Taxes paid in a few high-tax countries such as France could shield income from elsewhere around the world. This leaves the door open to moving profits from the U.S. to tax havens such as the Cayman Islands as long as the global average of taxes paid remains above 10 percent. News - [GOP Leaders in House, Senate Endorse Conflicting Shutdown Strategies]( – Politico - [Tax Bill Calculator: Will Your Taxes Go Up or Down?]( – New York Times - [Trump Pushes Infrastructure Plan After Deadly Amtrak Crash]( – Politico - [White House Still Eyeing Gas Tax Hike to Pay for Infrastructure Plan]( – The Hill - [GOP Betting That Its Fix for US Economy Will Defy Warnings]( – Associated Press - [Here's How Much Your Health Insurance Premiums Could Go up If the Tax Bill Passes]( – CNBC - [Republicans at State Level Fret Over GOP Tax Overhaul]( – The Hill - [Trump and the GOP Are Rigging Our Tax System for the Rich. This New Report Explains How]( –Washington Post - [Majority Says Trump Policies Have Not Helped Middle-Class Families]( – The Hill - [No, a Guy Didn't Scam $1 Million by Selling Chuck E. Cheese Tokens as Bitcoins]( – Gizmodo Views - [Trump Risks Losing What’s Left of His Populist Street Cred with GOP Tax Bill]( – James Hohmann, Washington Post - [A Tax Plan to Turbocharge Inequality, in 3 Charts]( – David Leonhardt, New York Times - [Economic 'Fertilizer' Buried in Tax Plan Will Spur Growth]( – Brian Hamilton and Mary Ellen Biery, The Hill - [The Republican Tax Bill Is a Gift to the Washington ‘Blob’]( – David Dayen, New Republic - [The GOP's Final Tax Bill Has Four Fatal Flaws]( – Kimberly Clausing, The Hill - [Goodie for Trump Oozes Out of Tax-Reform Fog]( – Timothy L. O’Brien, Bloomberg View - [Distracted Democrats Blew Their Chance to Defeat Tax Reform Bill]( – Jake Novak, CNBC - [Trump's Tax Bill Isn't Economics, It's Brute-Force Politics]( – Richard Reeves, The Guardian - [How Corporations and the Rich Are Fueling Inequality]( – Nell Abernathy and Steph Sterling, USA Today Copyright © 2017 The Fiscal Times, All rights reserved. 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