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Legislative Updates

Senate hastily passes major tax overhaul legislation

In the early hours of Saturday morning, the Senate voted approved a sweeping tax code overhaul on their version of the House-passed “Tax Cuts and Jobs Act” (HR 1) in a narrow 51-49 vote. Senator Bob Corker (R-TN) joined the entire Democratic caucus in opposition to the legislation.

In an effort to pass tax reform before the end of the calendar year, Majority Leader Mitch McConnell (R-KY) resorted to spending much of the week drumming up votes for a bill that was still being negotiated. As a result, amendments were still being modified during debate the night-of. From those alterations came a 479-page, partially-handwritten bill offered hours before the vote took place. The final legislation was voted through without a single hearing and without any expert assessment of the impacts such an overhaul would have on healthcare, higher education, housing, outsourcing, or tax evasion, among others.

In their haste, Senate Republicans made a series of high-profile mistakes with the tax-rewrite including reducing the corporate tax rate from 35 to 20 percent, but failing to lower the alternative minimum tax (set at 20 percent), thereby nullifying popular deductions such as research and development. More surprisingly, the writers inadvertently omitted the pass-through tax from the bill itself, angering corporations in the process.

This reincarnation of “trickle-down” economics will now go to conference committee where House and Senate Republican leadership will hash out differences between the two versions before an identical version appears on the floor of each chamber, likely without Democratic or general public input. After that, it will go to the White House for an expected “rubber stamp” (signature).

There are key differences between the bills, but each impose heavy costs on letter carriers, federal employees, and working people across the country in favor of the wealthiest one percent and major corporations. The Senate version would result in:

  • Higher taxes for 93 million Americans who earn less than $75,000 by 2027—after short-term cuts expire. Meanwhile, the richest Americans (the top 0.1 percent) would receive a $208,000 average annual tax cut and mostly permanent relief.
  • Permanent and massive tax cuts for corporations and other special-interest provisions that would incentivize companies to outsource American jobs overseas and develop other tax-avoidance schemes.
  • A repeal of the Affordable Care Act’s (ACA) individual mandate, raising health insurance premiums for a majority of Americans and resulting in 13 million losing insurance by 2027.
  • A repeal of the deductions for large medical expenses, state and local taxes (SALT), and other tax provisions important to lower- and middle-class working families.
  • Taxing waived tuition for college students, ending deductions for student loan payments, and even disallowing teachers from deducting what they spend on school supplies for their students.
  • Adding $1.45 trillion to the federal deficit over a decade, which would inevitably be paid for with future cuts to vital programs such as Medicare, Medicaid and Social Security, and with spending offsets, which would put federal employee health and retirement benefit cuts on the table. Sen. Marco Rubio (R-FL) recently noted Republicans plan to do just that after tax reform concludes.

Bipartisan efforts are already underway to lessen the impact on working middle-class families of whatever final bill comes out of the conference committee. Reps. Leonard Lance (R-NJ) and Josh Gottheimer (D-NJ) announced they’re putting forward a proposal to the House conference committee to save the SALT deduction in its entirety. Lance and Gottheimer are members of the House Problem Solvers Caucus, which is made up of an even split of 48 moderate Republicans and Democrats. Whether this plan is sufficient to sway Congressional Republican leaders will have to be seen.

The small sampling above of the sweeping changes that were just agreed to by Senate Republicans will hurt letter carriers. As the bill enters conference committee, NALC will continue to monitor its progression.

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