After having already slashed taxes on the rich, the Republican-controlled House of Representatives on Friday approved another huge reduction.
“The GOP doubled down on last year's giveaway to the donor class known as the Tax Cuts and Jobs Act (TCJA),” Morris Pearl, who chairs a group called Patriotic Millionaires, told Common Dreams. “Tax Cuts 2.0 gives nearly $3 trillion to the wealthiest Americans, and will become yet another excuse for Republicans to slash Medicare and Social Security.”
Rep. Richard Neal of Massachusetts, the top-ranking Democrat on the House Ways and Means Committee, declared that “in less than a year, House Republicans have handed out trillions of tax cuts for the wealthy and big corporations.” He predicted that “now, middle-class families are on the hook for higher health-care costs, and Medicare and Social Security are on the chopping block.”
The congressman proclaimed that “this is all borrowed money that will go to corporations and high-income earners,” and “another reckless tax cut for the wealthy that leaves behind average, hardworking families.”
Ryan Thomas of the Not One Penny coalition accused Republicans of showing “blatant disregard for our families and our economy.” He explained: “This is yet another shameful tax law that would swindle working families and siphon even more funding from the programs that help our communities thrive — all in order to give more tax breaks to millionaires and billionaires and wealthy corporations.”
The legislative package includes the American Innovation Act, the Family Savings Act, and the Protecting Family and Small Business Tax Cuts Act (PFSBTCA) 2018. The measures, despite their innocuous-sounding titles, would primarily benefit wealthy Americans.
According to Business Insider, the third bill is the most significant. It would continue the TCJA, which initially gave tax relief to the middle class as well as high-income earners and large corporations. But the legislation called for the individual cuts to end after 2025, while the reductions for corporations were to be permanent.
The PFSBTCA would extend the individual tax breaks indefinitely. Three Democrats (Reps. Conor Lamb of Pennsylvania, Jacky Rosen of Nevada and Kyrsten Sinema of Arizona) joined the House's GOP majority in passing the measure 220-191. Only 10 Republicans voted against it. The other two bills in the package, involving retirement accounts and deductions for business start-up expenses, won by wider margins.
Experts think the PFSBTCA would modestly stimulate the nation's economy. The nonpartisan Tax Policy Center (TPC) predicts a 0.5 percent boost in the gross national product in 2026, 0.4 percent in 2028 and 0.1 percent in 2038. The Tax Foundation expects a 2.2 percent improvement over time.
However, the TCP's Howard Gleckman wrote that the legislation “is an enormous budget-buster that primarily benefits high-income households.” He added: “The bill to extend the TCJA's individual and estate tax cuts has the same structural flaws as the original.”
The average family with an income of less than $28,600 per year would see its tax bill drop just $100 in 2026. For the middle class, those earning between $54,800 and $95,000, the typical cut would be $980. The top 1 percent of Americans, who rake in more than $836,200, are in line to save an average of $40,180.
Though the legislation would give some relief to two-thirds of all filers, it would raise taxes on nearly one of 10 households by repealing certain tax credits. One-fourth of U.S. families would save $100 or less.
The Joint Committee on Taxation warns that continuing the individual tax cuts beyond 2025 would inflate the federal deficit by $545 billion by 2028. The TPC believes the deficit would soar $631 billion by then, and another $3.8 trillion between 2029 and 2038. The Tax Foundation, which took into account projected economic growth resulting from the legislation, set the figures at $576 billion through 2028 and $113 billion each succeeding year.
Business Insider, noting that last year's TCJA narrowly passed the Senate, reported that the new bill faces an uphill struggle in the upper chamber. Sixty votes are needed to avert a Democratic filibuster. That means all 51 Senate Republicans, plus nine Democrats, would have to vote in favor of the measure.
The Associated Press pointed out that Republicans, worried about losing the House and possibly the Senate in November's mid-term elections, are hoping the tax cuts will help their candidates. The party is particularly concerned about House races in suburban areas where Democrats are mounting challenges to GOP incumbents.
One of the other parts of the package calls for a “universal savings account” that would allow families to withdraw nontaxable earnings more easily than they can with current types of retirement accounts. People could use some of their retirement money, without tax penalties, for certain child-related expenses.
The third measure would enable businesses to deduct as much as $20,000 in first-year costs, double the current limit.