December 19, 2017
The Center for Economic and Policy Research (CEPR) releases the following statements on the House passage of the Republican tax bill:
From Dean Baker, Co-Director, CEPR:
“The Republican response to four decades of upward redistribution of wealth before-tax income is a $1.5 trillion tax plan to hand over even more income to the richest people in the country. Most of the people responsible for this bill rank among the richest one percent, and they constructed a bill that is tailor-made to make them even richer. This includes provisions on the estate tax, pass-through income, and special provisions for the real estate and oil industry.
“The original promise was a tax reform bill that would benefit the middle class. This bill is not reform and does not benefit the middle class. It makes the code far more complicated with its special interest provisions and the beneficiaries are overwhelmingly the highest income people in the country.”
From Eileen Appelbaum, Senior Economist, CEPR:
“Middle-class taxpayers are not fooled by a tax plan that generously rewards corporations and the wealthiest individuals with permanent tax breaks while sun-setting the meager tax cuts they will get.
“Some, like those with more than two children, may actually see their taxes rise. Some will be subject to double taxation as the federal government now taxes income that goes to pay state and local taxes.
“The juiciest tax cuts go to real estate companies and real estate investment trusts like those in which Donald Trump and son-in-law Jared Kushner have a major interest.
“Businesses organized as partnerships got a major tax break in the original House and Senate tax plans. But to make sure the benefit went to businesses that might create jobs, only partnerships with a significant number of workers were eligible. The reconciled tax bill adds a provision, not in either of the original tax plans, that lets companies get around having to actually employ workers. It makes the tax break available to partnership businesses that own real estate that produces income, without the fig leaf of job creation.
“Trump and Kushner will benefit, but so will Tennessee Senator Bob Corker, who changed his tax plan vote from “no” to “yes” after this provision was added. House Speaker Paul Ryan and a dozen or more Republicans involved in writing the tax bill will also see their taxes cut.
“Wall Street has already taken note. Some surprising elements of the tax bill make leveraged buyouts of Main Street businesses less profitable for private equity. These firms have lost no time gearing up to add or expand real estate partnerships and REITs. Bain Capital, whose partners have made a fortune in private equity and venture capital deals, announced on December 15 that it was getting into real estate investing for the first time.
“The wealthy have not been paying their fair share of taxes for a long time. Taxpayers know, and will not forget, that this tax scam further reduces the taxes of the richest Americans while doing little for those who work for a living.”
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