In their haste to pass their disaster of a tax bill before the window of opportunity to do it with a simple majority closes behind them, Senate Republicans may have included a fatal flaw in the handwritten, dumpster fire that they jammed through at 2 AM on Saturday.
Ostensibly, the purpose of the bill is to provide tax cuts to “job creators,” a laughable notion that’s been disproved so many times it beggars belief at the gullibility of the people who vote for those still running on it. In fact, in this case, the “job creators” — that is to say, the CEOs and business owners for whom this bill was crafted — came right out and told the public that they had no intention of hiring people or raising wages or any of that “good for America” nonsense. Their plan all along was to hand the savings they enjoy from lower tax bills directly to their shareholders.
But the REAL problem with passing a bill without holding a single hearing, without the Senators voting on it even reading it, is that they were bound to screw it up. And boy, did they.
As the GOP frantically crossed out passages and scribbled notes in the margins of their massive giveaway of wealth to the people who need it least, they accidentally eliminated all the deductions that corporations — the Republicans’ biggest donors — use to get out of paying taxes under the current code.
The problem is twofold: First, because of rules that I’m sure Republicans are hating right about now, the tax bill can only add $150 billion per year to the deficit, or $1.5 trillion total over the next decade. Before the GOP got down to the brass tacks (no pun intended) of wrangling votes from holdout Senators by promising them things that would benefit them or their constituencies personally, the bill already cost that much.
In order to get those holdouts on board,
Yertle the Turtle Mitch McConnell had to promise Susan Collins, for example, that there would be an additional property tax deduction; that’s an increase in the deficit. He had to promise Ron Johnson a business income deduction for his company; that’s an increase in the deficit. McConnell was forced to find new “revenue” elsewhere — that’s a fancy way of saying “increase taxes on someone else, so he can cut them over here.”
To get that revenue back up to where this bill raised the deficit by “only” $1.5 trillion, Mitch came across something that the GOP had eliminated: The Alternative Minimum Tax. That’s a tax that has been historically used to make sure that corporations paid at least a bare minimum in taxes if they were using deductions to get around the 35% corporate tax rate (and they all were). The AMT was set at 20 percent, a number below which big companies could not legally go.
But the GOP was all set to cut the actual corporate rate — the percentage that companies were trying to dodge — down to 20 percent already, and get rid of the AMT, so that companies with clever enough accountants might end up paying no taxes at all.
So let’s see, a 20 percent corporate tax rate in the bill, and Mitch put the 20 percent AMT rate back in the bill… Looks like nobody’s paying any less than 20 percent! All of the deductions that corporations used to take are now worthless, because they can’t get below the corporate rate anyway.
And remember how I said there were two parts to the Senate GOP’s problem?
The other mess, now that they have a bill passed that their corporate overlords hate, is that not only will they have to pass a new one before they actually get what they want, but they will have to get that AMT down to a lower rate, which will — da-da-da-DAAAA — raise the deficit by over $1.5 trillion. So Mitch still has to find other revenue to make up for it, and the options they have on the table — stuff that was in the House version that the Senate hated — will likely just end up being deal-breakers for some other Republican Senators whose votes they will need to pass the final bill.
So maybe this will be the first and last time you’ll ever read an article about a complicated piece of legislation regarding every sector of the American economy with a meme in it, but it can hardly be helped at this point:
Featured image via Mark Wilson/Getty Images