One of my favorite comic book characters in my youth was Bizarro Superman (and others in the supporting Bizarro cast: Lois Lane, Jimmy Olsen, Krypto the superdog and even Batzarro, the World’s Worst Detective).
In Bizarro World, bad is good, ugly is beautiful, dumb is smart… Sen. Steve Daines (R-MT) would fit right in.
Daines’ ‘yes’ vote on the Senate tax bill is a prime example. Waffling in the late stages of the bill, he posed as an advocate for small business, got his name in the media as a potential ‘no’ vote, and then voted for the bill.
We all knew he would.
Posturing for Main Street businesses, Daines advanced what’s called “pass-through” tax breaks. It’s for businesses that get taxed at individual instead of corporate rates and it would allow a 23 percent deduction. This has some merit but is also quite beneficial to Daines and associates:
While those entities include small businesses, most pass-through income goes to the top 1 percent of American earners, according to research cited by The New York Times.
MTN’s Mike Dennison did some analysis on the effects of the tax bill on Montanans, and found that most would get a small tax cut, the bottom third seeing little change and the top three percent — those earning over $196,000 — getting about half the total cuts projected for Montana.
There are other aspects of the federal tax bill that could impact the state, Dennison reports:
“We have big concerns about the overall effects of what they’re doing,” (Montana Revenue Director) Mike Kadas told MTN News in an interview Wednesday. “They’re essentially financing tax breaks with deficit spending.”
Bizarro Daines has now gone from being a deficit hawk to adding another $1 trillion to the burgeoning deficit.
The Billings Gazette did a good job of explaining who in Montana benefits from the additional pass-through deductions:
The entities earning the majority of pass-through income tend not to be Main Street startups. Hedge funds, law firms, accounting firms and real estate brokerages are just some of the not-so-Main-Street groups that also operate as large pass-through businesses. In Montana, there are oil pipeline companies operating as pass-through businesses. When Plum Creek Timber was a wood products industry giant in Montana, it operated as a pass-through business. Plum Creek, which sold to Weyerhaeuser for $8.4 billion in 2015, was not a Main street business in the mom-and-pop shop sense.
The details are still being worked out between the Senate bill and the House bill but most of us lose out, especially as the years go by. While the corporate tax cuts are permanent, the individual cuts change over time. For example:
By 2027, people making $40,000 to $50,000 would pay a combined $5.3 billion more in taxes, while the group earning $1 million or more would get a $5.8 billion cut, according to the Joint Committee on Taxation and the Congressional Budget Office.
Some other nifty changes:
It will be even harder to afford a college education as interest on student loans will no longer be deductible and graduate students won’t be able to deduct tuition waivers.
It prohibits employers from rewarding employees with gift cards, fearing that a $25 Target card, for example, might escape being taxed.
Your health care insurance premiums will cost more due to the repeal of the individual mandate that was slipped into the tax bill. The pool will be smaller as an expected 13 million people — many being the young and healthy — opt out of “Obamacare.”
The House version gets rid of the deduction for medical expenses.
And what tax reform bill isn’t complete without a “life begins at conception” provision tacked onto it — otherwise known as “fetal personhood.”
Fortunately, just like Bizarro World, lower and middle-class families will get deductions on the upkeep and maintenance of their private jets. Thanks, Senator Daines.