After the U.S. Senate recently passed a massive tax reform bill, Democratic House leader Nancy Pelosi said, “This is Armageddon.” President Donald Trump called it “an incredible victory for the American people.” There’s been plenty of hyperbole going around about this historic legislation. Like it or loathe it, the Tax Cuts and Jobs Act of 2017 could be sent to Trump for his signature later this month. Here are some thoughts on both sides of the issue from politicians, economists and analysts.
10. “I can’t figure out how come we’re about to spend one and a half trillion dollars on a tax cut that will mostly benefit people in my income group instead of — if we’re going to run the debt up, we ought to at least spend it on infrastructure where there’s a high rate of return and we’ll get the money back.”
— Former President Bill Clinton. The non-partisan Congressional Budget Office estimated the plan would add $1.4 trillion to the deficit over 10 years, although supporters claim that would be offset by economic growth spurred by tax cuts.
9. “Residents of states with higher tax rates — like California, Connecticut, New Jersey and New York — might be facing bigger tax bills if the Republicans’ tax reform is kept in its current form. … Proposed changes to state and local tax and mortgage deductions could be especially damaging to those residents. State and local taxes (also known as SALT) include state sales tax, property and real estate taxes. Individuals can currently deduct those taxes as an itemized deduction.”
— CNBC.com, noting that the loss of those deductions could lead taxpayers in those states to oppose higher taxes, while some would choose to move to a state with a lower tax rate.
8. “I am not able to cast aside my fiscal concerns and vote for legislation that I believe, based on the information I currently have, could deepen the debt burden on future generations.”
— Sen. Bob Corker (R-Tenn.), the only GOP senator to vote against it.
7. “Good tax reform should make a complex economy more efficient and ultimately put money in people’s pockets. Some tax deals go heavy on benefiting individuals. This legislation does some of that. But the larger opportunity is on the business side, providing relief and investment incentives to employers. Therefore, our focus is on whether this bill reshapes tax policy in a way that helps Americans become more prosperous by spurring job and wage growth. We believe this tax reform bill will strengthen the American economy and create wealth, so we support passage.”
— A Chicago Tribune editorial
6. “More than 60% of U.S. households would get tax cuts from the Senate Republican tax plan in 2019, while 8% would pay more.”
— The Wall Street Journal, summarizing a report by the non-partisan Joint Committee on Taxation. The report also found that more than 10 percent of households earning between $75,000 and $500,000 would see tax increases for 2019, while 19 percent earning more than $1 million would pay higher taxes that year.
5. “This is so bad. We have just gotten list of amendments to be included in bill NOT from our R colleagues, but from lobbyists downtown. None of us have seen this list, but lobbyists have it. Need I say more? Disgusting. And we probably will not even be given time to read them.”
— Sen. Claire McCaskill (D-Mo.), complaining via Twitter that many senators had not had the chance to read the final version of the bill. Republicans pointed out this is akin to the scenario before the passage of the Affordable Care Act in 2010, when Nancy Pelosi famously said Congress would have to pass the bill to find out what’s in it.
4. “The core of the bill is a huge redistribution of income from lower- and middle-income families to corporations and business owners. Corporate tax rates go down sharply, while ordinary families are nickel-and-dimed by a series of tax changes, no one of which is that big a deal in itself, but which add up to significant tax increases on almost two-thirds of middle-class taxpayers.”
— New York Times columnist and Nobel Prize-winning economist Paul Krugman, citing data from a University of Chicago poll of economists around the country. Krugman goes on to note that most middle-class families would see modest tax cuts the first few years, but they’re scheduled to expire at the end of 2025.
3. “The Democratic class warfare will continue even after President Trump signs the bill, and that will create two big problems. The first is that the Democrats will probably pursue a long-term campaign to repeal the pro-growth elements of the bill, as they did with the George W. Bush tax cuts. The second is that if Republicans attempt to cut spending in the coming months and years, the Democrats could make political headway by complaining that tax cuts for the rich led to benefit cuts for everyone else.”
— Chris Edwards, director of tax policy studies at the conservative Cato Institute, in commentary in National Review.
2. “It is the end of the world. The debate on health care is life/death. This is Armageddon.”
— Democratic congressional leader Nancy Pelosi, alluding to the part of the tax reform bill that repeals Obamacare’s individual mandate.
1. “So right now, America’s tax code is a total dysfunctional mess. The current system has cost our nation millions of American jobs, trillions and trillions of dollars, and billions of hours wasted on paperwork and compliance. It is riddled with loopholes that let some special interests — including myself, in all fairness. This is going to cost me a fortune, this thing — believe me.”
— President Donald Trump, at a rally in Missouri. It would be impossible to verify whether the president would lose a “fortune” due to the tax cut, because he has not released any of his tax returns. But the Washington Post examined the partial 2005 tax return that was leaked to the media last year, and found that President Trump would have saved up to $42 million on those taxes under the House bill and $35.1 million under the Senate bill. Perhaps his tax situation has changed in the past decade. Yet contrary to what some people believe, just because high earners would benefit from tax reform doesn’t automatically mean it’s a win-lose situation that would harm the middle class and others.