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Monday, December 4, 2017

Congress Must Change Fundamentally Flawed Tax Policies in Final Bill, Says U.S. Bishops Chairman

Congress Must Change Fundamentally Flawed Tax Policies in Final Bill, Says U.S. Bishops Chairman

December 2, 2017
WASHINGTON— As the U.S. Senate passed its tax reform bill, Bishop Frank J. Dewane of Venice, Florida, chairman of the U.S. Conference of Catholic Bishops' Committee on Domestic Justice and Human Development, called for Congress to fix fundamentally flawed tax policies as the House of Representatives and Senate attempt to reach agreement on a final bill. 
The full statement follows:
"Today, the U.S. Senate passed its tax reform legislation, and it will now be reconciled with the House of Representatives' passed bill in an effort to reach agreement on the details of a final piece of legislation. Congress must act now to fix the fundamental flaws found in both bills, and choose the policy approaches that help individuals and families struggling within our society.
We are reviewing the final Senate bill and will soon provide analysis about key improvements that are necessary before a final agreement should be reached and moved forward. For the sake of all people—but especially those we ought, in justice, to prioritize—Congress should advance a final tax reform bill only if it meets the key moral considerations outlined in our previous letters."
The November 9 USCCB letter analyzing the House of Representatives tax reform bill can be found at:  http://www.usccb.org/issues-and-action/human-life-and-dignity/federal-budget/upload/Tax-Cuts-and-Jobs-Act-Letter-11-9-2017.pdf
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Keywords: U.S. Conference of Catholic Bishops, USCCB, Bishop Frank J. Dewane, Committee on Domestic Justice and Human Development, Tax Cuts and Jobs Act, U.S. House of Representatives, tax reform proposal, comprehensive revision, tax code, moral principles, tax policy
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My Thoughts:
If you consider the drastic corporate tax rate reduction from 35% to 20% without a corresponding reduction in tax deductions, corporations will end up paying little if any taxes.  The reason the corporate tax rate is at 35% is that there are so many tax deductions.  Most corporations already have an effective tax rate of around 15% after deductions.  In fact, in 2012 GE legally paid "zero" taxes due to clever accounting and tax write-offs. There's NO corporation in America that pays 35% in taxes!  When this new bill becomes law, corporations will likely have an effective tax rate of around 5%.  Moreover, most experts seriously doubt corporations will reinvest in their companies by hiring more workers; rather, they'll take their tax savings and use it to pay greater dividends to shareholders or to buyback stocks thus increasing the value of the remaining shares.  Further, the corporate tax reductions are permanent while the individual tax reductions are only temporary and will expire in a few years.  This tax bill is a boom for Wall Street but a bust for Main Street.  Only time will tell if the new tax law will accomplish its intended objectives of growing the economy, but I seriously doubt it will succeed in the long-run.

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