Rep. Chris Collins (R-NY) told reporters on Tuesday that he has been pressured by donors to vote in favor of his party's tax reform bill. "My donors are basically saying, 'Get it done or don't ever call me again',” said Collins. The Tax Cuts and Jobs Act is now at the House Ways and Means Committee in markup sessions. GOP leaders expect that the bill will be passed on November 17, but want the bill on President Donald Trump’s desk for a signature before Christmas. The bill has divided not only Republicans and Democrats, but also some conservatives.

Pressure is on Republicans to pass the bill, having failed to repeal and replace the Affordable Care Act, which is the signal legacy of Barack Obama’s presidency.

In an email response, Steve Hayes of Americans for Fair Taxation (FairTax) told Spero News, “This proposal has not been even totally fleshed out.  It is mostly general proposals.  The devil is in the details. As to the winners, many of the proposed changes are better but the real winners are the inhabitants of the Swamp—the Lobbyists and the Elite.” 

Hayes went on to criticize the GOP bill, saying “This is an early Christmas present to them.  Every special interest will be motivated to spend enormous amounts of money to protect their ‘benefit.’  It is every man or woman for themselves.” Haye said, “The losers here are the American people.  They are saddled with  a broken system.  One of the symptoms of how bad the system is—evasion.  It is estimated to be $9 trillion over ten years.  The only way to even stem this evasion is to greatly increase the power and reach of the IRS and this means more suppression on the people.”

FairTax advocates the so-called Fair Tax: a “national sales tax that treats every person equally” by which “every person living in the United States pays a sales tax on purchases of new goods and services, excluding necessities due to the prebate.” Hayes, the president of FAIRtax, explained earlier to Spero News that the “prebate” is a progressive program that would provide every legal resident household an “advance refund” at the beginning of every month so that purchases made up to the poverty level are tax-free. Under the program suggested by Hayes’ group, the IRS would be abolished.

Democrats have also condemned the bill. “The middle class will pay more,” House Minority Leader Nancy Pelosi (D-Calif.) told reporters this week after a tour at the Community College of Rhode Island in Warwick, Rhode Island. “Under this bill, future generations will pay more because the deficit will explode.” Pelosi said that Republicans’ proposal to double the standard deduction is a “farce” that will not cover specialized deductions including medical costs, mortgage interest and student loan interest. 

Some pro-business groups have taken Republicans to task for the bill. For example, the Club for Growth declared this week that it will not support the current version of the Republican tax bill. In a statement, David McIntosh of the Club for Growth said that the bill attacks wealthy Americans unfairly. "While the corporate tax cut will lead to some increase in our nation's GDP, the rest of the provisions on individual taxpayers fails the pro-growth test," McIntosh said.

Here follows four issues that trouble the Club for Growth:

McIntosh, referring to the top tax bracket of 39.6 percent for married couples making over $1 million, said, "House Republicans are engaging in class warfare the likes of which would make Democrats green with envy." 

According to the group’s statement, the “bubble tax" on wealthier American would put a tax on individuals' earnings between $1 million and $1.2 million to claw back benefits from the 12 percent marginal tax rate. "That's a real tax increase on successful people who invest and create jobs," the statement said.

The GOP bill includes a provision designed to ensure that owners of pass-through businesses can count only a certain percentage of business profits toward the lower pass-through rate of 25 percent. The rest would be taxed at the individual income rate. McIntosh said, "The blended, real effective marginal rate is at least 35% and can even be higher." His statement added, "That means no tax cut at all for most small business and family-owned companies."

The Club for Growth wants an immediate repeal of the estate tax, rather than the six-year phase-out specified by the Republicans. “Why wait?” asked McIntosh.

McIntosh did applaud the cuts to the federal corporate rate specified in the bill, but wants further changes in order for the Club to Growth to offer any support. "All in all, this bill must be changed if Republicans intend to keep their promise of real pro-growth, job-creating tax cuts," his statement concluded.

Despite criticisms made by the Club for Growth, twenty-five other conservative groups have praised the Republicans’ “Tax Cuts and Jobs Act.” Among the groups that signed a joint letter last week to Rep. Kevin Brady, who chairs the tax-writing House Committee on Ways and Means, were Grover Norquist of Americans for Tax Reform, Pete Sepp of the National Taxpayers Union, and Lisa B. Nelson of the American Legislative Exchange Council Action.



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Martin Barillas is a former US diplomat and the editor of Spero News.

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