Republicans Could Be Disappointed

There’s a lively debate going on about whether, and how much, the tax cut bill will hurt Republicans in the midterms. Some people are pointing to the current unpopularity of the bill; the most recent CNN poll shows that 55 percent of Americans oppose it. But Republicans think this opposition will melt away when people see reductions in taxes withheld from their paychecks, starting a few weeks from now. Maybe. I’ll get back to that.

There are a couple of wild cards out there that could change the game. One, a big one, is health insurance. Companies providing employee benefit health insurance had already announced big increases in premiums (thanks in part to Trump), a portion of which are deducted from paychecks. From what I have read this could wipe out at least half of the tax cuts for middle income people and all of the tax cuts for low income people, none of which were all that generous to begin with.  Republicans appear to be blissfully unaware of this.

The other wild card is chaos. Because of the speed and carelessness with which this bill was put together, it’s going to take months to work the kinks out. The IRS has to issue rules for employers for how much to deduct. The IRS may have to design new W-4 forms that everyone will have to fill out and return. The IRS may not be able to process all this in a timely manner.

The chaos is likely to take months — and perhaps longer — to sort out as the IRS begins writing the rules governing the law’s implementation. The agency has already said it doesn’t expect the tax tables helping employers decide how much in federal taxes should be withheld from workers’ paychecks to be ready until mid-January, allowing them to be implemented in February.

“The IRS will be working closely with the nation’s payroll and tax professional community during this process,” the agency said in a statement.

But some tax experts are also concerned about the IRS’s ability to quickly address the mounting concerns. The agency has been attacked by Republicans for years and has seen its budget cut repeatedly, leading some to question whether it will be up to the task. When the IRS’s former commissioner, John Koskinen, stepped down last month, he blamed Congress for underfunding the agency.

“I don’t know how the IRS is going to enforce this stuff. They have to write regulations, give guidance to taxpayers. They are probably going to feel the brunt of this more than anyone,” said Willens, the tax attorney.

The bottom line is that people who expect to see a big change in their deductions in January will be disappointed. And there will likely be many news stories about all the uncertainty and chaos being created by the tax law.

And then there’s Obamacare. Trump actually bragged about killing the individual mandate. That’s going to create another level of chaos, as insurers are likely put their feet down and refuse to insure people with pre-existing conditions.

Amber Phillips wrote in WaPo:

In the throes of his superlative-filled praise of the Republicans’ tax bill, President Trump said this Wednesday: “We essentially repealed Obamacare.”

It is not true — and it could also have been a major political blunder for Trump and Republicans.

Republicans did pass a tax bill Wednesday that undoes one of the central components of Obamacare: the mandate that people have health insurance, or pay a fine.

Health-care experts say that does not mean Obamacare is dead. It is just in trouble — and by extension, so are the health-insurance markets that have framed their business model around the law. That means Trump may have opened up his party — and himself — for taking responsibility for whatever trouble lies ahead for the markets.

We don’t know how extensive the damage is going to be and how widely it will be felt, but it’s going to be felt.  And there will be many, many news stories about the millions of people who are losing their health insurance.

Still, Republicans think they’ve got a winner:

“We will run on tax reform and win on tax reform in 2018,” said Matt Gorman, the NRCC’s communications director. “This bill will help ease the cost of living for millions of Americans who feel left behind.”

On the other hand, it’s equally remarkable that not a single Democrat in either chamber voted for this, including all 10 of the senators up for reelection next year in states Trump won. “Democratic obstruction of middle-class tax reform will be our No. 1 issue going into next year’s elections,” said Senate Leadership Fund President and CEO Steven Law, a former chief of staff to Mitch McConnell….

However, if the middle class doesn’t actually see this tax reform in any tangible way, will they still believe in it?