Susan Redden: GOP tax proposal remains in play

With all the focus on sexual misconduct on both sides of the aisle, it’s easy to forget that Congress is getting ready to enact major changes in the nation’s tax system.

Republicans dominate the House, so the GOP version of a tax plan was passed quickly, without much opportunity for questions.

Quick action is less likely in the Senate, where Republicans control only 52 votes. But GOP leaders, including Sen. Roy Blunt, are predicting passage and are working to get a measure on the president’s desk to give him a legislative victory by year’s end.

Consideration of the plan by the Senate Finance Committee prompted a heated exchange recently between Sen. Claire McCaskill, D-Mo., and Sen. Orrin Hatch, R-Utah, committee chairman.

The measure includes a repeal of the individual mandate for health insurance that is part of Obamacare. Republicans say it will save more than $300 billion, but McCaskill said it will result in Medicaid cuts and the end of insurance subsidies to people who make less than $50,000.

McCaskill in a release cited a report from Congress’ Joint Committee on Taxation, which said the plan would raise taxes on those earning between $10,000 and $30,000 in the next 10 years, and by 2027 most Americans earning $75,000 or less would see a tax hike.

That would cover a lot of Missouri residents, where the median income is about $45,000 — less in Jasper and Newton counties.

According to the Tax Policy Center, 50 percent of all Americans will see a tax increase starting in 2027. While tax cuts for individuals will be reduced over time, the Senate plan makes tax cuts for corporations permanent.

Blunt has said the plan translates to immediate tax relief for middle-income working families and that economic growth by making U.S. corporations more competitive will offset the deficit from the cuts.

The Wall Street Journal reported on a presentation of the plan by presidential adviser Gary Cohn to a group of business executives. When he told them of the substantial savings their companies would receive and asked how many would invest in business expansion and hiring more workers, hardly any raised their hands, the Journal reported.

David Stockman, director of the Office of Management and Budget in the Reagan administration, the architect of so-called trickle-down economics, said that plan didn’t work and what is being proposed currently would balloon the deficit.

In an interview with a sometimes argumentative host on the Fox Business channel, he described President Donald Trump as a “70-year-old kid in the candy store who wants more of everything,” adding, “You can’t pile on more debt.”

A study by the Tax Policy Center estimates the plan would generate only $160 billion in growth, and a $1.3 trillion deficit over the next decade.

The report said only limited growth is possible because the richest taxpayers who will receive the most benefit spend relatively less, adding to the deficit will result in higher interest rates and hiring will be limited since the economy already is at nearly full employment.

The Institute on Taxation and Economic Policy said the effect of the plan, by 2027, would be a tax cut of $9,000 for the richest 1 percent of Americans while the bottom three-fifths of income earners would face an average tax hike of $160.

Susan Redden is a former reporter for The Joplin Globe.