Countering the flood of misinformation

By Phil Neal

To be fair, some Mainers will see temporary benefit to their tax burden with the recently passed tax bill. The major benefits, however, fall to the already wealthy with some to the rest of us who don’t itemize our tax return … if you itemize and you are not rich, you’ll be hard-pressed to find much to be happy about.

Sen. Collins recently justified her vote for the tax bill. Let’s look at a few of her claims.

She points out the law nearly doubles the standard deduction to $12,000 for single filers and $24,000 for joint filers.

She forgets to note that the law also eliminates the personal exemption. That means under prior law, in 2018 the first $25,450 of income earned by a married couple with one child would have been excluded from tax. So for many families, the $24,000 excluded from taxes under the new law is less than the total exempt under the old law.

She notes the child tax credit will also be doubled from $1,000 to $2,000, and up to $1,400 of that tax credit will now be refundable.

This is complicated, but the essence is that the poorer you are and the more children you have your “refundable” amount will be less … that’s why she uses the qualifier “up to $1,400.” Again, the well-off couple or single parent with kids are the major beneficiaries here.

She uses the example of a Maine couple with no children, earning $60,000, will see their taxes fall by more than $900. That is correct, but only if they don’t itemize deductions. She ignores that a significant number of Mainers who earn $60,000 a year pay property taxes and do itemize deductions. Assuming a modest home and average itemized deductions, that $900 tax cut drops to around $300.

She also touts getting the $10,000 state and local tax deduction into the bill. Left unsaid is this is a deduction that many middle-class homeowners in Maine won’t take because the law now favors those who don’t itemize. The majority of this deduction is expected to benefit those making in excess of $300,000 per year who do itemize.

Sen. Collins feels she saved the deduction for high medical bills and that it will help seniors. The problem here is that most seniors do not have enough income to take this or any other deduction. If she’s really concerned for seniors she would work to put a cap on out-of-pocket expenses into Medicare, something Republicans have fought against for many years.

She takes credit for waiving the PAYGO regulation that, because of the tremendous amount that the tax bill adds to the deficit, would have cut Medicare by $25 billion. The waiver is for one year. I believe this could be a cynical ploy to help Republicans facing elections in 2018 from having to defend their action to cut Medicare. Sen. Collins has done nothing to stop the PAYGO regulation from taking effect next year.

She claims the tax bill doesn’t take away anybody’s insurance. Literally true, but it’s widely accepted that doing away with the mandate will, over time, leave only those desperate for insurance in the pool which will drive premiums through the roof. Republicans couldn’t muster the votes to outright kill the ACA so now are counting on a deceptive way to kill it without any plan that works better.

Sen. Collins finishes by rolling out the tried and failed (several times) concept of trickle-down economics and points to the United States having the highest statutory corporate tax (35 percent) in the world. What she forgets to mention is that precious few corporations pay the top rate. She then goes on to mention several corporations that do business in Maine. Guess what? All those she mentions that are public pay an effective tax rate of around 24 percent. One of those she mentions is General Electric, which pays one of the smallest rates at just .99 percent. The tax bill just lowered the statutory corporate tax to 20 percent so we can expect the corporations to pay even less than that in the future.

Who are among the top U.S. corporations that pay in excess of the statutory corporate tax? Aetna, Anthem and Humana, some of the largest insurance companies in the ACA market; could that be the reason Republicans are working so hard to destroy the ACA?

Sen. Collins points out our loss of jobs to foreign countries. Yes, we are losing jobs because large businesses find it better for their bottom lines to export jobs. They do this because of the regulations (implementation of a territorial tax system) Sen. Collins voted for.

It’s generally accepted by economists that a “real tax cut” is only possible if a bill is revenue-neutral. With this tax bill expected to add somewhere north of $1 trillion to our deficit means that Americans are getting a loan, which will be paid by our children and grandchildren. Sen. Collins is basically ignoring the deficit by claiming trickle-down (voodoo) economics will pay for it. Not hardly.

Let’s not forget that Rep. Poliquin was ecstatic with the passage of this tax bill. Why wouldn’t he be since he is a major beneficiary? I think that all this claim/counterclaim is maddening and would not be necessary if one politician (obviously not Collins or Poliquin) would tell the whole truth rather than what serves their interests and donor class.

Phil Neal of Harborside is a former senior programmer/analyst at Boeing working on the shuttle program at the Kennedy Space Center. He has taught at the high school and college levels and concluded his career working at The Jackson Laboratory.

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