The tax bill to be finally adopted by Congress before the end of the year has produced of a series of myths, mainly the result of its rushed legislative process.
These myths result from ignorance of its content and its economic and political effects. They are separate from the purely partisan debate about who gets what and how much.
Myth 1. We know what the impact of the tax bill will be.
It is designed to give major cuts to the wealthy and corporations to make more job-creating investments. The middle class will supposedly gain. And it will the biggest tax cut in history.
We have no way of knowing what the recipients of the largest tax cuts will do. If they invest, reflecting the most favorable view of the bill, tax revenues from a booming economy might cover the cost of the cuts. If they keep the money, the tax cuts will boost the deficit.
It is impossible to measure tax cuts comparatively, and they vary by income. And we will never know if this really is the biggest reduction. As for the middle class, many will gain a little and some will pay more. Nobody now knows where he or she stands.
Our inability to understand the impact of the tax cuts is partly because we don’t know what all the tax cuts are. The bill is a Christmas tree, decorated with special tax gifts for limited groups.
Some of the tax cuts were added out of sight of the members of the Senate just before they voted on the bill. Looking at the bill, you will see handwritten notes adding and changing provisions. Senators had no way of knowing what they voted on.
Myth 2. The tax bill will simplify taxation.
Its advocates claimed it would simplify paying taxes. The tax code was only simplified by eliminating benefits for average taxpayers. For example, the code drops personal exemptions. And people in high income tax states, like Maine, will suffer from the deletion of a tax deduction for state taxes.
The bill is criticized for being over 400 pages, as if that is an indication of how bad it is. But that’s just another myth. When Congress changes any law, the language required to do something simple may take a lot of words. It’s the content that counts.
Myth 3. The tax bill was given careful consideration.
In fact, the bill was passed in the House and Senate in a hurry, though there was no need to rush. But the GOP wants at least one big legislative win in 2017 to show it was worth turning the entire federal government over to them.
If merely having a bill was more important than what it contained, they will have succeeded. That approach opened the way to all the special interest deals in the middle of the night.
The Republicans wanted to make sure they could pass the bill without any Democratic votes. They know that now they have just barely enough of a Senate majority to pull that off. They avoided the risk of achieving fewer cuts if they proceeded more carefully.
Myth 4. This tax bill makes permanent changes in the tax code.
Republicans eliminated the ability of a Senate minority to block action. When the Democrats regain a congressional majority, they can amend and repeal the Republican cuts and add some of their own.
The chances of laws swinging wildly back and forth with the change of parties should encourage cooperation and moderation. Not this time. Candidates may claim they can work with the other side, which is what voters want. But once they are in office, they follow the party line.
The last major tax bill in 1986 came during the administration of Ronald Reagan, the model of a conservative Republican president, and it had strong Democratic support. That was real, revenue-neutral tax reform. This year’s bill isn’t; it’s a revenue-losing tax cut.
Myth 5. This is a tax bill.
Not exactly. The Senate version would eliminate the Affordable Care Act mandate, which will mean millions lose their coverage and many will face higher insurance premiums. And it would allow oil drilling in the Alaska National Wildlife Refuge.
This bill is supposedly about cutting taxes for middle-income people. Whether it succeeds in cutting taxes or in creating jobs won’t be known for at least a year.
But the bill is really meant to score political points for its supporters in the 2018 elections. Watch for these myths in that political campaign.