What the GOP Tax Bill Means for You

After a brief kerfuffle over procedural rules on Tuesday, December 19, Republicans finally pushed through their controversial tax reform legislation on Wednesday morning — just in time for the winter recess.

This legislation will fundamentally alter not just the tax code, but also American society as a whole. Far-reaching provisions will affect access to health care, farm aid and assistance with student loans, among many other things. It’s entirely possible that this bill passed thanks to gerrymandering, which gave Republicans a distinct advantage in the 2016 election.

The legislation†aimed to achieve one of the biggest policy goals of the Trump presidency in a year when the administration failed to†gain traction on issues like gutting access to health care. Trump vowed to reform the tax code, and the Tax Cuts and Jobs Act certainly does that, deeply enriching wealthy people in the United States –†including Trump himself as well as an array of†senators and representatives.

Understanding what this bill might mean on an individual is tricky — after all, not even the people who passed it have read and analyzed it in entirety. In fact, that was a big bone of contention with critics of the legislation, who noted that many members of Congress didn’t understand fundamental elements of the bill.

Major legislative overhauls like this usually involve considerable time, discussion and hearings, with ample opportunities to read them in full before voting,†but that wasn’t the case here.

Furthermore, legislators kept tacking on sweeteners as enticements for Republicans like Senator Susan Collins of Maine, who remained on the fence up until the last minute. That was what caused the procedural hiccup on Tuesday,†when Democrats observed that three provisions violated the Byrd rule. This policy†governs†which kinds of measures can be put forward under budget reconciliation, the tool Republicans used to force this bill through with a simple majority.

The result is a snarled mess that only benefits†a select few — and one that will, in the long term, cause considerable harm to many others.

At stake are two issues: the tax policy, and everything else.

This detailed analysis takes a look at the tax implications of this bill. By 2027, 53 percent of Americans will be paying†morein taxes than they were before — and most of them are in the lower quintiles of earnings. Almost 92 percent of the top 0.1 percent will receive an average tax cut of over $200,000 over the same time period. Meanwhile, you can inherit up to $11 million tax-free.

The new tax plan is not just a good deal for wealthy individuals. It also slashes the corporate tax rate, something proponents say will facilitate innovation and encourage companies to keep operations in the United States. But in fact, other provisions of the bill create an active incentive to relocate manufacturing overseas. As economist†Paul Krugman†notes, tax rates don’t play as big a role in corporate decision-making as people seem to think.

After considerable uproar, the bill will retain†deductions for student loans and medical expenses; slightly increase the child tax credit; and continue to allow graduate student tuition waivers.

So how about the “everything else”? The bill strikes down the controversial individual mandate requiring everyone in the U.S. to buy health insurance or face a tax penalty. As a consequence, an estimated†13 million people will lose health insurance, thanks to rising costs as healthy people drop their policies. That means paying out of pocket for health care, when it’s available and affordable.

And in order to satisfy the requirements that it be revenue neutral, the tax bill contains a number of “triggers,” or automatic spending cuts that go into effect if the policy change threatens to increase the deficit. Spoiler: It absolutely will.

Those cuts include slashes to Medicaid and Medicare, along with huge†fund reductions†for a variety of other federal services, from farm aid to — believe it or not — Customs and Border Protection.

But this†legislation is much more than a tax bill: While the tax implications are considerable — and likely to be a nightmare for accountants in the coming months — the ramifications for social programs will be immense and irrevocable. Some critics argue†that the tax bill acts†a backdoor to dismantling social entitlement programs — the initiatives†taxpayers pay for in order to secure access to health care, nutrition assistance, Social Security payments and other measures designed to help everyone achieve a base standard of living.

What can you do?

  • Contact your elected officials to thank them, or express your disappointment, depending on how they voted. Ask them how they plan to defend Medicaid, Medicare and other services targeted for cuts by this bill.
  • Remind your elected officials that the American people are still very interested in seeing Donald Trump’s tax returns.
  • Ask them why the Senate vote wasn’t held off until the results of the Alabama election were certified and Doug Jones was sworn in.
  • Contact your state officials: If the federal government is going to slash funding to vital programs, will they step up to increase funding on a state level?
  • If you use an accountant or tax attorney, set up an appointment early in the new year to discuss how to move forward. If you don’t and you’re afraid of the cost, ask around — many communities offer free or low-cost financial counseling, often through credit unions and community action groups.
  • And if you’re a big-hearted tax professional, consider rounding up some colleagues reaching out to a local group that serves low-income or marginalized populations and offering to†provide a tax bill clinic in the new year.

Photo credit: John Ramspott

60 comments

Marie W
Marie W2 months ago

thanks for sharing

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Jamie Clemons
Jamie Clemons7 months ago

What the tax plan means is we may get a little break now, but we will pay for it way more later.

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Henry M
Henry M7 months ago

People get the democracy they deserve. Sadly.

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Lisa M
Lisa M7 months ago

Noted.

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Lisa M
Lisa M7 months ago

Noted.

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Angela K
Angela K7 months ago

noted

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Sarah Grayce P
Sarah Grayce P7 months ago

Thanks.

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Dan B
Dan Blossfeld8 months ago

Rhoberta E.,
No, it is not selfish. But It is accurate. It is precisely the working poor who do not to spend what little money they earn on health insurance. The government forcing them to do so, only makes them poorer. Not caring about the poor appears to get a little more selfish on your end. Obamacare helped the insurance companies earn thisecrecird profits, by mandating all those extra people buy in. Why do you think insurance companies supported the Democrats

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Janis K
Janis K8 months ago

Thanks for sharing.

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Carole R
Carole R8 months ago

The future frightens me.

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