In their rush to pass a late-night partially handwritten tax bill to slash taxes for the wealthy, Senate Republicans accidentally sabotaged their own effort to help their corporate donors.
Senate Majority Leader Mitch McConnell never allowed a single hearing on the bill and didn’t invite a single expert to advise the Senate on the bill’s effect on healthcare, education, housing, or tax evasion.
Instead, the Senate Republicans rushed the bill with hugely unpopular changes to the US tax code before their own constituents could learn about what is in the bill.
But in their rush to scam the American public, the speed at which they passed it meant they themselves did not have time to read it.
“While Republicans were manically outlining their plans to take from the poor to give to the Trumps, they also, accidentally, nullified all of their corporate donors’ favorite deductions,” writes NY Mag’s Eric Levitz.
The problem started when McConnell set out to buy the votes of holdout senators. Maine Sen. Susan Collins wanted a $10,000 property tax deduction for Americans in high-tax states. Wisconsin Sen. Ron Johnson wanted a 23 percent business-income deduction for a company that his own family owns.
McConnell, whose party could only add $1.5 trillion to the deficit using an arcane rule to allow them to get around the 60-vote threshold to avoid a filibuster for a regular bill, tinkered with the bill to the end to make sure the bribes for holdouts didn’t blow up the bill.
That’s when he began to look at the alternative minimum tax (AMT). Most corporations see a 35 percent tax rate on their income but a plethora of tax credits allows most companies to pay far less. To limit how much companies can deduct, the AMT prevents companies from paying less than a 20 percent tax.
The GOP had originally intended to abolish the AMT. But on Friday, with the clock running out — and money running short — Senate Republicans put the AMT back into their bill. Unfortunately for McConnell, they forgot to lower the AMT after doing so.
This is a big problem. The Senate bill brings the normal corporate rate down to 20 percent — while leaving the alternative minimum rate at … 20 percent. The legislation would still allow corporations to claim a wide variety of tax credits and deductions — it just renders all them completely worthless. Companies can either take no deductions, and pay a 20 percent rate — or take lots of deductions … and pay a 20 percent rate.
“With this blunder, Senate Republicans have achieved the unthinkable: They’ve written a giant corporate tax cut that many of their corporate donors do not like,” Levitz writes.
Robert Murray, a huge Trump supporter who runs Murray Energy, the largest private coal-mining company in the country, stood to benefit a ton from the bill, but instead said the AMT decision “mockery out of so-called tax reform.”
“What the Senate did, in their befuddled mess, is drove me out of business and then bragged about the fact that they got some tax reform passed,” Murray told The Wall Street Journal. “This is not job creation. This is not stimulating income. This is driving a whole sector of our community into nonexistence.”
With the Republicans’ corporate overlords angry, McConnell may have to have yet another vote on the bill with the AMT cut well below 20 percent. But that also means finding new revenue to avoid blowing up the deficit by more than $1.5 trillion. Back to the drawing board.