[Vision2020] Richard L. Kaplan, University of Illinois School of Law: Tax “Reform”: An Attack on Work

[Ted Moffett]

Tax “Reform”: An Attack on Work
December 4, 2017

http://www.accuracy.org/release/tax-reform-an-attack-on-work/

RICHARD L. KAPLAN, rkaplan at illinois.edu
Kaplan holds a chair at the University of Illinois School of Law and is a
leading expert on taxation. Kaplan’s books include *Advanced Taxation*
and *Elder
Law*.

He said today: “A leading principle of these tax ‘reform’ bills — both the
House and Senate versions — is clearly to reward donors to the Republican
party. It lessens taxes on businesses, especially capital intensive rather
than labor intensive business.

“The corporate income tax cut from 35 to 20 percent is steep, but through a
series of mechanisms — some call them loopholes — corporations are now
paying about 19 percent. Those leakages are mostly staying in place, so the
effective rate after this act will be much lower.

“Significantly — and this is too rarely discussed — this keeps in place the
system of taxing capital gains at substantially lower rate than labor.
Warren Buffett and Mitt Romney get taxed at a lower rate on their
investments than people do for their actual work. This legislation is
effectively doubling down on a war on work.

“The one major innovation is creating a new tax-favored category of income
called ‘pass-through’ income received from partnerships and personal
businesses. This change will set up very serious compliance challenges for
the IRS to demarcate wage-like income from profits received as
business-owners.

“The cuts to the estate and gift taxes are huge, as is the complete
write-off for depreciation.

“In contrast, people who work for a living are not seeing much benefit, in
some cases, they may see increases, especially because of the end of state
and local taxes write-offs.

“Medicare and Medicaid could get cut down the line as a result of this
proposed law because of the resulting federal deficits and might trigger
existing provisions that require reductions of Medicare’s expenditures.

“Workers are also hurt by how medical expenses are treated in the House
version and how educational assistance is handled. There’s been some
attention to how graduate school assistants would have a dramatic rise in
taxes, but it’s more widespread than that. The legislation effectively
disincentivizes educating workers generally.”
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