Breaking Down The Tax Bill
Breaking Down The Tax Bill
House Republicans rolled out their plan for overhauling the tax code. President Trump says he wants to sign the legislation by Christmas. Scott Simon talks with Jim Tankersley of The New York Times.
SCOTT SIMON, HOST:
Congressional Republicans have rolled out their plan to remake the nation's tax code. On Monday, they begin the markup of the bill. President Trump says he wants to sign the legislation by Christmas, which is just a little more than seven weeks away. And that's quick work for a Congress that's not known for that.
Jim Tankersley is the economics and tax reporter for The New York Times. He joins us from the Washington, D.C., bureau of the Times. Mr. Tankersley, thanks so much for being with us.
JIM TANKERSLEY: Thank you so much for having me.
SIMON: Let's try and understand this item by item, if we can. What portion of the tax cut goes to corporations?
TANKERSLEY: About two thirds. So let's back up for a second. The net tax cut here is about $1.5 trillion over 10 years. And corporations get two thirds of that, corporations and business. Individuals get one third of that.
SIMON: And what about the argument that this corporate tax cut will benefit middle-class families in terms of higher wages and creating more jobs?
TANKERSLEY: That's going to be, I think, the central fight of this bill, the question of will big tax cuts - and it's a very big tax cut for corporations - turn into higher wages for middle-class families? The argument on the Republican side of that is that if you give companies more money and higher profits, they will invest it. They'll invest it in their workers, and their workers will see wage gains. The argument against that is that, no, corporations will pass most of that money on to their shareholders in terms of dividends, or they'll just pocket the money - sit on the profits. And that, I think, will be one of the big debate points as we move forward here.
SIMON: What are the changes proposed to the tax code you see that could most affect individuals and families?
TANKERSLEY: Well, there's a lot. It's a big, sweeping change. This is not a simple tax cut like we saw in the previous decade. So on the one hand, it collapses the number of brackets on the income tax side. And so most people would see lower tax rates on their income. Exception there is millionaires. But most everyone would see lower tax rates.
On the other hand, it changes a lot of tax deductions - gets rid of some popular deductions like capping the state and local tax deduction and restricting it to property taxes not income taxes anymore. It gets rid of the medical expense deduction for high out-of-pocket medical costs. And perhaps most importantly for a lot of families, it changes the way in which you can deduct your kids, yourself. And so a lot of families - it replaces that with a child tax credit. And for a lot of families in the middle class, that could end up with a tax hike, several million families per our calculations.
SIMON: A lot of that sounds potentially quite unpopular.
TANKERSLEY: Well, it's always unpopular to go after deductions. This is the thing about the tax code. Everyone wants it to be more efficient and simpler, but you don't want to lose the things that benefit you personally. The argument Republicans are going to make to try to counter that is that it's much simpler - that 90 percent of families now will be able to file their taxes on a postcard because it doubles the standard deduction and they're not going to take itemized deductions anymore. It's going to be easy and hopefully - and for the bulk of American families, I should say, a tax cut. The argument on the Democratic side is going to be, yes, these are very popular things. There's all sorts of stuff getting rid of that people really like. Student loan interest deductions, for example, also are gone here.
SIMON: Mr. Tankersley, with all of the getting rid of so many proposed deductions which have been popular for decades, how likely is this legislation to pass as it's been proposed? Or is this just a negotiating point to start with?
TANKERSLEY: I think it's very unlikely that this particular package exactly as it's proposed will pass. We know it's going to change to some degree. But will it change dramatically where a lot of the popular deductions end up staying? Will it change and scale back the rate cuts because Republicans, particularly in the Senate, are worried about adding $1.5 trillion to deficits? We don't know. This is a first discussion point and that there will be a lot of negotiations between Republicans with each other and with business lobbyists in particular over the next few weeks as they try to speed this through Congress.
SIMON: Jim Tankersley of The New York Times, thanks so much for being with us.
TANKERSLEY: Thank you.
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