Donald Trump's tax overhaul was passed early on Saturday 2 December in the US Senate. Although the bill will now need to be reconciled with the House-passed version, it is likely to include tax cuts which will make the rich and US corporations much richer, while also punishing the working class and the poor.
The legislation proposes to cut taxes collected by the federal treasury by around $6 trillion over 10 years. A $1.4 trillion addition to the federal debt is forecast. To get to that figure, the Republicans have also implemented $4.5 trillion in tax increases over the same period.
The massive transfer of wealth upward includes a cut in corporation tax, from 35% to 20% and a cut in “death duty” taxes on the very rich. The Senate tax plan also copper-fastens the repeal of the individual mandate in Affordable Care (Obamacare) which required all Americans to have health insurance or face a penalty. This will has projected to mean 13 million more uninsured people and a 10% increase in premiums. In addition, individual income tax rates will drop temporarily but then rise in a few years — for many households outside of the richest 10 per cent.
There have been a number of last-minute amendments to the tax bill which also benefit the better off, for example, more tax advantages to college savings accounts. The likely consequences of the bill will be cuts in Social Security and Medicare and a further crisis of the health care system caused by the repeal of the Obamacare mandate requiring individuals to buy insurance.
Senate and House Republicans will establish a conference committee to negotiate over the differences between the House and Senate versions of the tax bill. It is likely, but not a foregone conclusion, that the measures will eventually pass.
Meanwhile inequality in the United States is at record levels. As of last year, the richest 1 per cent of households controlled 38.6 per cent of all wealth in the US, while the bottom 90 per cent of the population combined was worth barely half as much. The US is more unequal than at any time in a century and a half.
The measures may bolster some of Republican's electoral base, but only a minority — one-third of the electorate supports the Republican proposals, according to opinion polls. That is why the Democrats, while failing to mount an opposition to the measures, are hoping for an electoral swing back to them. Unrest However, the tax reform will pacify Republican unrest.
It has ended the year-long hiatus when the Party failed to get through any legislative initiative, despite having a majority in both the House and Senate. Immediately after the passing of the reforms Trump declared (on Twitter) that this would stimulate huge economic growth. That seems highly unlikely.
The Joint Committee on Taxation estimated that the tax cuts would add less than 0.1 per cent annually to US economic growth over ten years. Republicans who had previously voted against smashing up Obamacare voted for these measures, which will make the health crisis worse. They seem to have been bought off by a range of tax incentives, some of which will directly affect those of them who are multimillionaires.
That happy circumstance, for millionaires, may also part explain the lack of Democratic opposition. And, judging by past performances it is unlikely that Democrats will repeal these tax cuts. There have been protests against the tax cut legislation, particularly among graduate student employees. Many graduate and PhD students currently receive free tuition – and stipends – in exchange for teaching or conducting research. Currently, students are only taxed on the stipends they receive. They will now be taxed on the amount of their waived tuition fees as well. Expect the drop-out rates to increase.
In case you needed more reasons to protest against Trump when he visits the UK in February, here is another one. The US Supreme court has ruled that Trump's ban on travellers from six Muslim-majority plus two other countries will be immediately imposed while the court cases challenging the ban are resolved, something that is likely to take months. The United States can now categorically refuse entry visas to prospective travelers from Chad, Iran, Libya, Somalia, Syria and Yemen, plus North Korea and Venezuela, apart from some some exceptions.
This version of the Muslim ban has evolved from Trump's original electoral pledge to implement a “total shutdown” on all Muslims entering the US. It is still imflamatory and racist. Its temporary acceptance by the Supreme Court comes after Trump tweeted anti-Muslim videos from the far-right Britain First.