Muftic: Unwrap Trump’s tax reduction Christmas present and weep
At last we get the “giant, beautiful” Christmas present President Donald Trump promised. Some tears will be for joy and others from dismay. The final version has emerged and as you read this, the president may have already signed it.
The GOP is celebrating because they finally got one piece of major legislation passed and it brings into reality many of the denizens of the swamp’s visions of sugar plums dancing in their heads. Everyone else will be affected differently. Some financial impacts will happen sooner than later.
If you are already wealthy, an oil driller in the Arctic wilderness or a real estate oligarch like the Trump family, your tears will be of joy. If you love the reduction in corporate taxes to 21 percent, do a happy dance. You still got your same corporate tax breaks plus repeal of the AMT tax on top of it. If your income is mostly from Wall Street, yahoo! That is where most of those corporate benefits will go because there is no incentive in the legislation for job creation or wage increases, or even to expand and build more plants. Corporations are already cash rich and already could have done it if they wanted to.
The dismaying damage to pocket books is done by the legislation’s hit on health insurance. Your take-home check will look bigger beginning this February due to increases in individual standard deductions and in withholding due to tax reductions in lower brackets for 2018. On the other hand, if you are lower middle class: four million in 2019 with a total reaching 13 million by 2027, will not be able to afford or want to afford, or be required to carry health insurance. Those losing insurance should be prepared to face bankruptcy since they will now be billed for the full cost of services including check ups, ER visits, birth control pills and cancer screenings and treatments just like the old days before Obamacare. If your children’s health care was covered by CHIP, dig into your own pockets. The program has not been renewed. If you are rich or poor, your health insurance premiums will increase by 10 percent than otherwise in the coming years thanks to the removal of the mandate for individuals to carry insurance.
Political fallout could dim the GOP’s victory glow in 2018 and 2020. Polls of public approval of the tax bills (Marist, CBS, Quinnipiac, Gallup) earlier in December ranged from below 30 percent to 35 percent, split along party lines, but swing independents were even more negative. Polls reflected a perception of unfairness, that the rich benefit more than the middle class, though most of the middle class with exceptions in upper brackets will get some degree of temporary tax reductions. The final version tinkered with some details, but did little to change the math facts that the rich and corporations still benefit the most.
In 2025 all of these tax breaks to individuals will go away. Tax reductions to business and corporations are forever.
There are many media takes on specific winners and losers in this legislation.
The opinion that counts is from the non-partisan Congressional funded Congressional Budget Office because it is more often relied upon by those shaping legislation. The clearest up-to-date analysis expressed in plain English and CBO-based I found was done by the Associated Press and published on Yahoo News: https://finance.yahoo.com/news/look-winners-losers-under-gop-205042006.html.
For more, visit http://www.mufticforumblog.blogspot.com.
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