Is there enough of it to allow America to adjust to the changes since several provisions in the bill one step away from President Donald Trump’s desk are slated to take effect January 1–weeks away?
According to experts, if signed into law, bugs, loopholes, and myriad other potential problems could plague lawmakers–and the nation–for decades.
It is now in conference for reconciliation.
The potentially most problematic part is the provision to cut taxes on “pass through” entities–businesses not registered as corporations–such as law firms and doctors’ offices.
This alone could make it easier for companies to avoid taxes since it will invite people to recharacterize their income to take advantage of a 23 percent deduction.
Someone making $500,000, for example, would save $30,000.
The alternative minimum tax, originally eliminated, is returned–but with a catch. Designed to prevent the wealthy and corporations from avoiding taxes entirely, it nullifies a popular break for research and development expenses.
Some language in the bill is just plain confusing.
For example, there’s the proposal to begin taxing investment earnings on wealthy private universities’ endowments.
Some universities have more than 1,000 accounts, though, and the bill fails to explain what constitutes an endowment.
Greg Jenner, former top tax official in George W. Bush’s Treasury Department, said:
“The more you read, the more you go, ‘Holy crap, what’s this?’. We will be dealing with unintended consequences for months to come because the bill is moving too fast.”
House Ways and Means Chairman Kevin Brady (R-Texas) defends the bill:
“We’ve gotten really good feedback on how best to fine-tune it. It’s really showing us where we need to land, and the issues we need to improve in conference.”
Some are attempting to draw parallels between the celerity with which this legislation is advancing and the Democrats’ supposed hasty Affordable Care Act (Obamacare) passage in 2010.
The difference is, the House of Representative passed its draft of this bill in two weeks, from introduction to final vote; the Senate, barely three weeks. It took Democrats more than six months to pass the Affordable Care Act.
The pace is troubling.
Greg Jenner said:
“You can never catch all the implications. That problem is magnified exponentially when you’re rushing through like this.”
Trump wants negotiators to reconcile the House and Senate drafts before Dec. 22.
But some corrections are potentially expensive since they may require additional legislation to fix. That might foil Republicans’ plan to avoid Democratic filibusters.
The Treasury department may also have to handle some inherent regulations, abating the process even more.
Even though one of the legislation’s purposes is to improve business, an apparent attempt to address tax-avoidance for business losses would dissuade people in certain circumstances from starting companies.
Don Susswein, a principal at the tax and accounting firm RSM, said:
“That’s a good example of a provision that was undoubtedly well-intentioned, trying to solve a very narrow problem, but maybe they didn’t have the time to really get it right. Hopefully, it will be closely examined in conference.”
House Republicans actually admitted mistaking details on how a one-time tax on multinational companies’ offshore profits would operate.
A report accompanying their legislation to the Senate for consideration states:
“The committee is aware that certain aspects of this section require additional attention.”
Experts are still trying to understand the new way of taxing multinational corporations included in the House bill, which was barely debated.
Hours before Saturday’s vote, senators were handed the 479-page bill filled with changes different from the original version that cleared two Senate panels a few weeks ago.
Some of those changes were handwritten and illegible.
Democrats criticized the secretive process and the last-minute revisions since they had were expected to vote on a sweeping piece of legislation affecting the entire country mere hours after seeing the bill for the first time.
Sen. Jon Tester (D-Montana) tweeted:
“I was just handed a 479-page tax bill a few hours before the vote. One page literally has hand scribbled policy changes on it that can’t be read. This is Washington, D.C. at its worst. Montanans deserve so much better.”
Senate Minority Whip, Dick Durbin (D-Ill.), tweeted:
“UPDATE: Senate Republicans are so desperate to pass their tax bill tonight that they’re now making handwritten changes to their already handwritten changes… Seriously.”
Durbin held up the hand-scrawled pages on the Senate floor, and said:
“I defy any member of the Senate to stand here, take an oath that they have read this and understand what in the world it means to businesses and families and individuals.”
Republicans’ haste may be our harm.
There is still a chance the bill will die in conference.
Image credit: alternet.org