Republicans promised a postcard. They delivered a love letter to tax attorneys.

Addy Baird

Addy Baird Reporter, Think Progress

Republicans have consistently promised that their tax plan will be so simple that any person will be able to file their taxes on a postcard, but a new report Monday from 13 law professors and tax experts reveals that’s simply not true.

The latest version of the bill allows for a number of complicated tax planning opportunities, including using corporations as tax shelters and creating pass-through games for wealthy taxpayers with clever accountants. It also incentivizes outsourcing, punishes wage-earners, complicates the process of filing taxes, and almost exclusively benefits the ultra-wealthy.

Despite all of that, Sen. Susan Collins (R-ME) announced Monday afternoon that she would vote for the bill, making it likelier than ever that the legislation — which will overhaul the American economic system and nearly every aspect of American life — will become law.

“The most serious structural problems with the bill are unavoidable outcomes of Congress’s choice to preference certain taxpayers and activities while disfavoring others — and for no discernible policy rationale,” the report’s authors write.

The only explanation, one of the study’s authors, University of Michigan Law School professor Reuven Avi-Yonah, told ThinkProgress Monday is that the way the bill is currently structured will personally benefit members of Congress and their donors.

“This is a classic trickle-down economic story, and it’s never happened,” Avi-Yonah said Monday. But Avi-Yonah said he doesn’t think Republicans in Congress really believe trickle-down economics — the idea that cutting taxes for wealthy corporations and individuals will create jobs and spur economic growth — will actually work this time around.

Rather, he said, “I think they know the economics, and they’re just interested in helping themselves and their donors.”

Overhauling the tax code in this way is not only going to benefit the most well-off, David Kamin, an NYU law professor and one of the lead authors of the study, told ThinkProgress Monday, but it’s also been constructed in a haphazard way that arbitrarily benefits some people over others (owners over employees, for example) and ultimately undermines the basic integrity of the income tax.

“They’ve managed to come up with a bill that even as it does that” — benefits the rich and undermines the middle class — “draws haphazard lines that pick winners and losers,” Kamin said. “I can say confidently that this will be the best thing that ever happened to the billable hours of tax attorneys in modern history.”

One way the conference committee bill does exactly that is by expanding pass-through eligibility. Pass-through entities don’t pay income taxes at the corporate level, but rather allocate income across owners, who then pay income taxes, but the Republican tax bill would give the owners in pass-through entities their own tax rate. In earlier versions of the plan, firms needed to have wage-earning employees in order to take full advantage of the lower rate and other deductions. But now, firms with no wage-earning employees — firms that own only certain kinds of property and have no wage-earning employees — could take advantage of the lower tax rate put forth in the conference committee bill.

“This change,” the study’s authors write, “encourages firms to game the rule by increasing their ownership of qualifying property… and possibly even by replacing workers in the process.”

Additionally, the pass-through subsidiary can be used to deduct compensation of highly-paid executives at public corporations.

The bill also creates an opportunity for taxpayers to use corporations as tax shelters in an effort to pay at a lower rate. This incentive is marginally reduced in the new version of the bill compared to the Senate version thanks to a slightly higher corporate rate and lower individual rate, but the tax savings when using a corporation as a shelter would still be considerable, Monday’s study’s authors write.

The conference committee bill also creates a number of tax avoidance opportunities for taxpayers with international operations, including the opportunity to claim a lower export rate when they sell products abroad, even if those products are sold right back into the U.S.

Basically, Avi-Yonah said Monday, the bill means that the more of their business corporations and wealthy individuals shift away from the United States, the less taxes they’ll pay — a far cry from Trump’s promises to bring jobs back to the country and punish corporations who try to outsource labor. All of this means that corporate accountants — and the personal accountants of the ultra-rich — will be busy making sure their patrons pay as little taxes as possible, but, as Avi-Yonah put it Monday, “This next tax season is going to be a mess for regular people.”

“I think any tax reform would fail to get taxes on a post card, but there are things we can do to make it simpler,” Kamin, the NYU professor, said Monday. “So maybe they were never gonna get on a postcard, did they at least simplify the system? No.”

The Senate passed its version of the tax plan earlier this month, and Republicans are now rushing to get the bill on the president’s desk before the new year. The most recent version of the bill — clocking in at 503 pages — was released on Friday evening, and Republicans want to vote on the bill early this week.

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Reposted from Think Progress

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work