The tax reform bill presented in the House of Representatives last week by the Republican majority could be useful to America, but will go back and forth through the mill at length before it becomes law, determining what Americans ultimately put on their tax returns.
President Donald Trump has asked for the bill to be ready for his signature by Christmas.
There are two major points to recall about what was put forward Thursday in the House. The first is the tax cut on American corporations’ earnings, from 35 percent to 20 percent, is absolutely essential. That figure has not been changed in decades, a time when the structure and pattern of business across the world has gone from national-based to runaway globalization, leaving American corporations at a gross disadvantage to companies based in Ireland, Luxembourg and elsewhere, not to mention China.
Their predictable reaction has been to keep their profits stashed overseas, not bringing them home to pay out or invest. The lowest figure cited for those profits held in other countries, not repatriated, is $2.5 trillion and the figure surely is much higher than that. The question will become, of course, whether the new 20 percent rate would bring the money home, and, if it comes home, whether it will go to shareholders or to a company’s employees or investments.
The other main point to bear in mind as the tax reform bill wends its merry way through the system is that every lobbyist in Washington will be grabbing every member of Congress in sight to seek to influence the new law in favor of his employer’s interests. This is normal in Washington. There will be a lot of money on the table, up for grabs.
It is too simple to put the battle in terms of business and high earners vs. the middle class. Matters to be determined include interest on student loans, limits on mortgage interest deductions, restrictions on deductions of various state and local taxes and the future of the estate tax and the alternate minimum tax, all matters potentially touching closely on the well-being of many Americans.
The final bill must retain the tax cut for American companies to save our competitiveness, and, second, it must actually be passed, ideally on time.
It will be a ghastly failure of the American governmental process if the impending scrap among competing lobbyist elements in Washington, with which we are sickeningly familiar, dooms us to inaction in this vital matter.