Winner: corporations. Loser: charities.
The tax bill the Senate passed Friday is a sweeping piece of legislation, transforming the US health care sector, higher education, philanthropy, and, of course, the federal tax code. It’s a major policy change that creates big winners and big losers across the country, and even internationally — and fulfills a goal for Republicans who have struggled to pass their legislative agenda all year.
Here’s who winds up ahead, and who winds up behind.
Winner: Corporations of every shape and size
The cornerstone of the tax bill, the change that’s permanent and enduring and that even a future Democratic administration is unlikely to fully reverse, is its reduction of the corporate income tax rate from 35 percent to 20 percent.
This fulfills a longstanding demand of corporate executives and lobbyists, who complain that the statutory corporate tax rate charged in the US is higher than in peer countries; indeed, it’s the highest in the OECD grouping of rich developed nations. Our high rate, however, is offset by copious tax breaks and the ease with which the US allows companies to move profits to tax havens overseas, which means that the effective rate US corporations pay isn’t much different from that companies in other rich countries pay. The effective tax rate paid on profits from new investments in the US was about 24 percent in 2014.
A longstanding goal of both Democratic and Republican politicians has been to bring the statutory rate down from 35 percent by closing tax breaks in the corporate code. In theory, it should be possible to get the statutory rate closer to the 24 percent effective rate that way. The Obama administration had a plan for revenue-raising corporate tax reform with a tax rate of 28 percent, though it didn’t specify many tax breaks Read More Here