Last week, the Republicans in the U.S. Senate passed their version of the 2017 tax cut which they call the Tax and Jobs bill.
The 497-page legislation had a number of blank pages. This shows the authors of the legislation had not thought it through and left these pages blank to pencil in certain things later.
This is the first time in recent history that a tax bill of this magnitude was rushed through Congress without having hearings or without bi-partisan support.
In 2001, approximately 20 Senate Democrats supported the legislation. The only Republican to vote against the bill was Bob Corker of Tennessee. Three of the moderate Republicans — John McCain, Susan Collins and John Flakes — who had expressed reservations about the legislation ended up voting for it.
Some people are wondering why the senators voted for the bill after stating their opposition to it. This speaks to the wheeling and dealing which went on.
There is consensus that the legislation is flawed. However, time will tell if this assessment is correct.
Let me cite examples of two questionable provisions in the legislation. First, it will cut the corporate income rate from 35 percent to 22 percent.
Critics argue that corporations are already making billions of dollars. Therefore, cutting the rate will add to the billions they are already making.
There is also the assumption that cutting corporate income rates will create jobs. However, it is estimated that the legislation will increase employment by only 6 percent over 10 years. This amounts to less than 1 percent growth in employment.Second, there is the assumption that the tax cut will create tremendous growth in the economy, especially growth in personal income.
However, analysis of the legislation done by the Joint Congressional Budget Office CBO) estimates that the legislation will cause the economy to grow by only 0.8 percent. This amounts to less than one economic percent growth over the next 10 years.
Third, the data lends credence to the argument that this is not a tax cut for the middle class, but a tax cut for the wealthy, especially those who contributed to the Republicans in last year’s campaign.
The analysis also shows that the rich will benefit most from the legislation and middle income and lower income taxpayers will pay more taxes over the next 10 years.
Finally, it is estimated that the legislation will add $1 trillion to the present national debt of over $20 trillion. This will certainly be one of the issues Democrats will use in next year’s Congressional election.
Since the House of Representatives passed a different version of the tax bill, a conference committee consisting of Republicans in the House and the Senate will be appointed to come up with a compromise version of the legislation, which must be voted on by both Houses of Congress.
In all likelihood, no Democrats will be on the conference committee, since they had no input in the legislation.
Stay tuned for updated information on the final version of the legislation.
Dr. Noel A.D. Thompson is a political scientist who now teaches at Tuskegee University after many years as a professor at Auburn University.