INDIANAPOLIS – A slew of inadvertent problems and new tax loopholes, many of which may be creating even larger tax breaks for corporations and wealthy individuals, have emerged during the implementation of the McConnell tax plan after Republicans rammed the bill through in a partisan, closed door process late last year.
New reporting in Politico highlights dozens of glitches found in the Republican tax bill that impact a host of industries, from real estate to multinational corporations to agriculture.
One such glitch would “allow wealthy money managers to sidestep a crackdown” on the carried interest tax break for some corporations “that allows them to pay lower taxes on some of their income than ordinary wage earners.” Another issue muddies the rules behind the alternative minimum tax for multinational corporations and their foreign earnings, forcing the rules of what is counted to be fought out in academic journals, rather than Congress or the courts.
The list goes on well beyond those two, and experts have expressed concern. The number of errors are “not normal,” said Marty Sullivan, chief economist at the non-partisan Tax Analysts, pointing to the “breakneck pace” at which Republicans passed the bill that prevented lawmakers and experts from having a chance to identify and address these problems. The 1986 tax reform bill, the most recent bipartisan tax reform success, took over a year and a half from start to finish; the process for the McConnell bill took under three months.
“Desperate to pass deficit-busting tax breaks for the wealthy and corporations who ship jobs to foreign countries, Mitch McConnell used a rushed, partisan, closed-door process to create a bill so shoddy that its glitches are worth tens if not hundreds of billions of dollars. Issues like the latest carried interest loophole are a reminder that for the McConnell tax bill, breaks for the one percent are both a feature and a bug,” said Michael Feldman, spokesman for the Indiana Democratic Party. “Republican attempts to fix these embarrassing problems will do nothing to change what the bill actually is: a budget-buster that ultimately raises taxes on the middle class to give tax breaks to the wealthy and large corporations who ship jobs to foreign countries.”