Congress has sent the Tax Cut and Jobs Act, a historic and controversial rewiring of the U.S. tax code, to the White House. President Trump will be hosting congressional leaders later today but it was not clear when he will actually sign the T.C.J.A. into law.
This G.O.P.-devised overhaul of U.S. tax laws delivers significant permanent tax cuts to corporations and the wealthiest Americans while offering smaller cuts for middle- and low-income families that are set to expire over the next decade. Under the plan approved today, the $1,000-per-child federal tax credit doubles to $2,000, with up to $1,400 available in I.R.S. refunds for families that owe little or no taxes.
Bishop Frank J. Dewane of Venice, Florida, chair of the U.S. Conference of Catholic Bishops’ Committee on Domestic Justice and Human Development, reiterated the conference’s concerns about the tax plan as the measure made it through a second House vote on Dec. 20. “As the president considers the tax bill before him,” he said, “we ask that he take into account the full consequences of its provisions and work with Congress to remedy them before signing a tax bill into law.”
The president, however, showed little reluctance to celebrate the plan as it now stands, turning to Twitter to hail the outcome of the House vote, his own efforts and the work of G.O.P. allies—including Senate Majority Leader Mitch McConnell of Kentucky, who had drawn the president’s wrath for the Senate’s inability this past summer to dismantle the health care law.
“Our team will go onto many more VICTORIES!” the president tweeted.
The vote was 224-201 and came hours after the Senate’s early-morning passage along party lines. It is the first major overhaul of the nation’s tax laws since 1986.
“We ask that [the president] take into account the full consequences of its provisions and work with Congress to remedy them before signing a tax bill into law.”
In his criticism, Bishop Dewane said the legislation “achieves some laudable things, like doubling the standard deduction, which will help many struggling families avoid tax liability, expanding the use of 529 education plans, and increasing the child tax credit.” But in the end he called the legislation “problematic,” concerned that it will have “dramatic negative consequences, particularly for those most in need.”
Bishop Dewane notes that the plan will eventually raise taxes on those with lower incomes “while simultaneously cutting taxes for the wealthy.” He adds, “The repeal of the personal exemption will cause larger families, including many in the middle class, to be financially worse off.”
The likelihood that the new tax code will quickly contribute to the nation’s ongoing, annual fiscal deficit has also concerned U.S. bishops. They worry that any revenue shortfall created by the tax revision “will be used as a basis to cut programs that help the poor and vulnerable toward stability.”
Bishop Dewane also charged that the plan may produce up to a $13 billion drop in annual charitable giving to nonprofits “that are relied upon to help those struggling on the margins,” diminishing the role of civil society in promoting the common good.
Simone Campbell, S.S.S., executive director of Network Lobby for Catholic Social Justice, did not mince words in deploring the tax overhaul in a statement issued today: “Congress rushed this bill through quickly to reward their wealthy friends and donors claiming it is a Christmas gift for working Americans. This is a lie.
“We know what will happen now that this tax plan is law: the budget shortfall created by outrageous tax cuts for the wealthiest will pressure Republicans in Congress to, once again, balance the budget on the backs of people in poverty. President Trump and Speaker Ryan have already called for cuts to vital life-saving programs like Medicaid, Medicare, Social Security, and food programs.”
Sister Campbell added, “As people of faith, we advocate for reasonable revenue for responsible programs. Responsible programs are lifelines for families and individuals struggling to make ends meet…. Instead of securing the reasonable revenue our nation needs, this bill was written by and for corporate lobbyists and donors full of self-interest with no regard for the common good.”
“This bill was written by and for corporate lobbyists and donors full of self-interest with no regard for the common good,” Sister Simone Campbell said.
In a letter to Congress, Dominican Sister Donna Markham, president and CEO of Catholic Charities USA, wrote: "As you move forward, we urge you to reject efforts to use the deficit created by this bill as a pretext for even greater cuts to programs for low-income communities" and called on Congress to "address the shortcomings in this bill and recommit yourselves to the bipartisan solutions needed to lift people out of poverty."
The leadership of the anti-hunger advocates Bread for the World also expressed displeasure with the House vote this morning. “This tax bill is part of a one-two punch,” said the Rev. David Beckmann, president of Bread for the World. “President Trump and congressional leaders have already announced plans to follow this tax cut, mainly for high-income people, with a big push to cut more than $2 trillion from social programs for low- and middle-income people.”
Mr. Beckmann agreed with the U.S. bishops that the proposal’s additional projected federal deficit of $1.5 trillion to $2.2 trillion will likely be used by Congress as a future rationalization for deep cuts to Medicaid, nutrition assistance “and other crucial programs that keep people out of hunger and poverty.”
“Tax cuts for corporations and high-income people are not the best way to expand job opportunities for low- and middle-income people,” Mr. Beckmann added, alluding to the president’s frequent justification of the tax plan as an assistance to working and middle-class families.
An analysis by the Tax Policy Center of the Brookings and Urban Institutes found that the T.C.J.A. would reduce taxes by about $1,600 per family on average in 2018, with the biggest benefit going to households making between $308,000 and $733,000. The center reports that middle-income taxpayers would pay about $900 less than under current law, about 1.6 percent of after-tax income, while the lowest income households would get an even more modest tax cut compared to current law.
By contrast, the highest-income one percent of households, who earn $733,000 and up, would get an average tax cut of roughly $50,000, or 3.4 percent of their after-tax income. Those in the top 0.1 percent, who make $3.4 million or more next year, would get an average tax cut of about $190,000, or 2.7 percent of their after-tax income.
In his summary of the effects of the bill, Tax Policy Center senior fellow Howard Gleckman wrote: “While the details of the T.C.J.A. have changed throughout the congressional debate, the basic story of the bill has remained the same since it was first introduced in early November. Most households would get a tax cut at first, with the biggest benefits going to those with the highest incomes. After 2025, when nearly all of the bill’s individual income tax provisions are due to expire, only high-income people would get a meaningful tax cut.”
After failing repeatedly to take down the 2010 Affordable Care Act over the summer, Senate Republicans added a measure to the plan approved today that could prove fatal to Obamacare, repealing the requirement that all Americans carry health insurance or face an annual tax penalty. The provision will save the federal government $300 billion in subsidies over the next decade, but could leave as many as 13 million people without health insurance.
The plan also includes an amendment that allows oil drilling in the Arctic National Wildlife Refuge. Other last-minute additions were roundly criticized as barely concealed sops to members of Congress themselves.
The legislation passed largely along party lines in both chambers, with Democrats in both the Senate and House unanimously lining up against it. Eleven of the 12 House Republicans voting against the bill were from the high tax states of California, New Jersey and New York. They cited concerns that constituents would see their overall tax liability rise because of limits on the state and local tax, or SALT, deductions contained in the bill.
The bill caps the SALT deduction at $10,000 and eliminates it altogether in eight years.
“Capping this deduction, which has been part of the U.S. tax code since 1913, will increase taxes and harm the already unaffordable housing market in my district,” Rep. Dan Donovan, a Republican from New York , said in a statement after the Dec. 19 vote.
Making the rounds of morning television news shows today, House Speaker Paul Ryan, a Republican from Wisconsin acknowledged that “nobody knows” if the sweeping tax cuts Congress is enacting will produce enough economic growth to fend off soaring federal deficits. Previously considered a deficit hawk, he suggested it was a risk that Republicans are willing to take. He tells NBC's "Today" show the United States has not had a 3 percent annual growth rate since the Great Recession of 2008.
“What we’re trying to do here is give relief to hard-working families,” Mr. Ryan said. “We need fast economic growth. We need help for people living paycheck to paycheck.”
Before the first House vote, Rep. Nancy Pelosi, the Democratic leader from California, spent several minutes criticizing the tax package, citing Pope Benedict XVI and the U.S. Conference of Catholic Bishops. Standing in front of a poster quoting a letter to Congress from the bishops, Pelosi charged that the bill was an example of “moral obscenity and unrepentant greed.”
“As the U.S. Conference of Catholic Bishops said early on, here it is, ‘This proposal appears to be the first federal income tax modification in American history that will raise income taxes on the working poor while simultaneously providing a large tax cut to the wealthy.’”
The article includes reporting from AP and CNS.