Although the president and some members of Congress would like to get a new tax bill passed soon, I think it would be wise for citizens to take a good look at this bill before it is fast-tracked.
The Tax Cuts and Jobs Act of 2017, as it is called, is touted as saving taxpayers money and helping the country produce more jobs. However, there are concerns about whether both of those goals will be met in this bill.
Bishops comment on bill
In a November 9 letter to U.S. House of Representatives members, three bishops who are chairmen of three committees of the U.S. Conference of Catholic Bishops (USCCB) called the House version of the bill “unacceptable” as written because it “contains many fundamental structural flaws that must be corrected,” reported a Catholic News Service article.
The three bishops called for amendments to the current draft of the bill “for the sake of families” and “for those struggling on the peripheries of society who have a claim on our national conscience.”
They quoted St. John XXIII’s 1961 social encyclical, Mater et Magistra, saying that “decisions about taxation involve fundamental concerns of ‘justice and equity,’ with the goal of taxes and public spending ‘becoming an instrument of development and solidarity.’”
They urged Congress to provide ample time for Americans to discuss the complexities of these reforms and fully understand their effects.
Signing the three-page letter were Bishop Frank J. Dewane of Venice, Fla., chairman, Committee on Domestic Justice and Human Development; Bishop Oscar Cantu of Las Cruces, N.M., chairman, Committee on International Justice and Peace; and Bishop George V. Murry of Youngstown, Ohio, chairman, Committee on Education.
Proposed tax changes
The bishops pointed out that doubling the standard deduction will help some in poverty, but as written, the proposal seems to be the first federal income tax modification in American history that will raise income taxes on the working poor while providing a large tax cut to the wealthy. “This is simply unconscionable,” the bishops said.
They like the proposed expansion of access to schools of choice, but they criticized the elimination of the adoption tax credit; the personal exemption, which will harm larger families; and the out-of-pocket medical expenses deduction.
‘Trickle-down’ economics
Decreasing taxes for major corporations and the wealthy is apparently supposed to help produce more jobs and raise wages as the economy grows.
However, “trickle-down” economics doesn’t always work, James H. Carr points out in a recent Forbes article. He notes that roughly 80 percent of the benefits of the proposed tax plan flow to the top one percent of wealthy households at a cost of $2.4 trillion over 10 years.
Carr said that companies today already have an estimated $1.9 trillion in cash and liquid investments. They have “more than enough cash to meet any increased production needs in America while also paying their fair share of taxes.”
Congress has experience with attempting to boost the economy by cutting taxes. “In 2004, Congress approved a rollback on the tax rate for repatriated income from 35 percent to 5.25 percent. That rollback brought in $312 billion in overseas profits. Most of that money went to corporate shareholders in the form of stock buybacks and dividend payments. The benefits of that tax cut were also heavily concentrated in a handful of the largest corporations,” Carr pointed out.
How did this tax relief bonanza trickle down? In the year following the tax holiday, “Pfizer, which repatriated $37 billion, slashed 10,000 jobs. Merck, which brought back $15.9 billion, cut 7,000 jobs, and HP pared its employment rolls by 14,500 after repatriating $14.5 billion.”
As the Catholic bishops say, we need more time to take a good look at this proposed tax bill and see how it would affect citizens of our country of all income levels. Then we should let our members of Congress know how we feel about the tax bill.