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Senate Republicans passed an extensive overhaul of the U.S. tax code early Saturday morning, just hours after the final copy of the bill was released with handwritten amendments still scribbled in the margins.
The Senate approved the Tax Cuts and Jobs Act 51-49, with just one Republican and all Democrats voting against the bill. Like the House tax bill passed in mid-November, the Senate bill lowers the corporate tax rate from 35 to 20 percent and provides tax cuts primarily benefitting the wealthiest Americans—including President Trump and the Trump family. Republicans are working this week to reconcile differences between the two bills with hopes of getting legislation signed by year’s end.
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While the Senate bill gives temporary tax cuts to low and middle-income taxpayers, it actually raises taxes for many of these earners after 10 years, when cuts for individual taxpayers expire, according to the nonpartisan Institute on Taxation and Economic Policy (ITEP). In Colorado, on average, the bottom 60 percent of taxpayers (those earning up to $90,000) face a tax hike in 2027 while the top 40 percent receive a tax cut, reports ITEP.
Overall, the Senate tax bill cuts $1.5 trillion over 10 years, reports the Congressional Budget Office (CBO), which could significantly increase the national debt. Republicans say the bill will “pay for itself” by creating enough economic growth to offset its cuts.
Multiple economists disagree. According to the Joint Committee on Taxation (JCT)—the official Congressional scorekeeper—the Senate tax bill will cost about $1 trillion in the first decade, even after accounting for economic growth. The nonpartisan Tax Policy Center (TPC) similarly estimates that the bill would cost $1.2 trillion over 10 years after adjusting for growth.
Colorado U.S. Senator Michael Bennet, a Democrat, gave a fiery speech on the Senate floor denouncing the GOP claim that the bill will pay for itself. Republican tax cuts passed in 2001 and 2003 under that same premise, “resulted in the worst recession since the great depression,” Bennet said. “It is the sons and daughters of Colorado’s teachers, firefighters, and police officers who will have to pay back that bill,” he added.
Colorado Republican U.S. Senator Cory Gardner disagreed. “These pro-growth reforms will not just lead to thousands of dollars in lower taxes for middle class families, but also grow wages by thousands. Americans in every income group will have lower taxes,” he said in a statement.
House and Senate Republicans still need to resolve important differences in the two tax bills before moving forward. The Senate bill, for example, repeals Obamacare’s individual mandate, which would increase uninsured Americans by 13 million in 2027 and raise average premiums 10 percent according to the CBO. The increase in uninsured includes some 235,000 Coloradans, according to an analysis of CBO data by the liberal Center for American Progress.
The House and Senate plans also have disparate tax rates for individuals and small businesses and treat many tax deductions differently. In a double whammy for lower-income taxpayers, Democrats fear Republicans will use the tax bill’s deficits to justify spending cuts for Social Security and Medicare, which House Speaker Paul Ryan prioritized for 2018.
If it becomes law, the tax bill would be Republicans’ biggest legislative win since Trump took office. But the bill is so unpopular with voters—only 16 percent believe they’ll see a tax cut—it could ultimately lead to even bigger GOP losses in 2018.