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Thursday, September 28, 2017

A leopard can’t change its spots: Newest Republican tax framework is what we knew it always would be—tax cuts for the rich. [feedly]

A leopard can't change its spots: Newest Republican tax framework is what we knew it always would be—tax cuts for the rich.
http://www.epi.org/blog/a-leopard-cant-change-its-spots-newest-republican-tax-framework-is-what-we-knew-it-always-would-be-tax-cuts-for-the-rich/

The framework of the Republican tax plan was released today. In recent months, architects of the plan repeatedly promised that they had no "intention" to release a tax plan that disproportionately cut the taxes of the rich. Some too-credulous writers repeatedly chastised those of who thought that past Republican plans would provide a decent roadmap for the future and pre-emptively warned about all of the creative ways their new plan would likely try to cut the taxes of the rich. So, did Republicans unexpectedly veer and deliver a "middle-class tax cut"?

Nope.

They have once again rolled out a tax plan that is basically the same as all their previous tax plans. Not only does it deliver big tax cuts for the rich, it actually pretty creatively ensures that the crumbs that fall to the middle-class will be as small as possible.

The most obvious giveaways to the rich are a reduction in the top individual rate to 35 percent and a cut in the top corporate rate to 20 percent. As we've noted before, cuts to corporate rates are cuts to the rich, period.

But these are just the most-obvious tax cuts for the rich.

Contradicting their claims to simplify the tax code, Republicans are adding loopholes. Anybody who studies taxes knows that they are not complicated because of the rates—you look those up in a table after you've done the hard part of wrestling with deductions and exclusions. So making 7 rates into 3 does nothing to deal with the complexity of the tax code. But adding further loopholes for the rich and big corporations does exacerbate the code's complexity and unfairness.

One of their more egregious loopholes is hidden behind rhetoric about helping "small business." The loophole caps the rate that individuals must pay on "pass-through" income at 25 percent. The first thing to note about this is that there is no small business tax code. Small business owners pay nothing at the business level, but then simply pay taxes on profits they take home on their individual income tax forms, just like you and I. So, the new tax rate does not cut taxes on small businesses. Instead, it cuts individual tax rates on small business owners who currently are in tax brackets above 25 percent. This is an extremely small share of all small business owners (less than 3 percent of all tax units are above the 25 percent tax bracket). So, this carve-out does not serve genuine small businesses, but instead serves only to ensure that rich households won't have to actually pay the top individual tax rate on money they earn from "small businesses" like hedge funds and law firms, but can instead pay a lower 25 percent.

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