U.S. Rep. Jared Polis (D-CO) introduced a bill that would repeal the Tax Cuts and Jobs Act and cancel student loan debt 43 million individuals owe to the U.S. Department of Education.
House Resolution 5928, the Students Over Special Interests Act, would return all individual and business tax provisions and rates to what they were before January 1, 2018, when the Tax Cuts and Jobs Act (TCJA) took effect. The bill would also cancel all existing student loan debt owed to the federal government.
H.R. 5928 was referred to the House Committee on Ways and Means on May 23, where it awaits consideration.
TCJA, signed into law by President Donald Trump on December 22, 2017, reduced most individual income tax rates, permanently cut the corporate income tax from 35 percent to 21 percent, ended the practice of double-taxing American businesses’ profits earned in other countries, and cut overall taxes by an estimated $1.5 trillion.
Calls Idea Counterproductive
Gary Wolfram, a professor of economics at Hillsdale College and a policy advisor for The Heartland Institute, which publishes Budget & Tax News, says undoing the Tax Cuts and Jobs Act and bailing out individuals’ education loans would actually make college less affordable.
“Government subsidies actually increase the cost of tuition and create all sorts of distortion,” Wolfram said. “The fact that you’re subsidizing demand for higher education drives the price up, so you would be doing just the opposite of what you wanted.
“You would dampen economic growth, reduce employment, and at the same time, increase the price of education for the middle class,” Wolfram said.
Says Tax Reform Is Working
Abigail Marone, a communications associate with Americans for Tax Reform, says Polis’ bill is not rooted in reality.
“The entirety of this legislation is based on false premises,” Marone said. “It says, first of all, that the Tax Cuts and Jobs Act was a gift to corporations, but if you really look at any of the outcomes, it’s not just the corporations who are benefitting. They are passing those benefits on to their employees, and to consumers as well. Utility companies are lowering rates, because of the corporate tax cuts that they have received.”
Wolfram says the tax reform is promoting economic prosperity and spurring investment, just as predicted.
“As a result of the tax cuts, our economy is growing at a rate of 3 percent [per year], a rate of growth not seen in decades. The people who are being hired benefit from that. Unemployment is the lowest it’s been since 2000.
“The corporate tax cut was permanent, created certainty of what tax liabilities would be, and led to increased gross private investment,” Wolfram said. “Tax cuts have done what they were supposed to do, and will continue to do so.”
‘Millions of Americans’ Affected
Marone says Polis’ bill would take away benefits from everyone, not just big corporations.
“This legislation is not just repealing corporate tax cuts, it’s repealing the entire law, which means all of the individual benefits like the increased standard deduction and 529 education savings accounts will all go away, all to bail out students who unfortunately took out loans they can’t repay,” Marone said. “It would be awful for the millions of Americans who have already seen benefits from the tax cuts to have those benefits taken away.”
Fallout Predicted
Marone says the costs of undoing tax reform would include more unemployment and smaller paychecks for workers.
“Right off the bat, you would see the standard deduction cut in half,” Marone said. “You would see all of these companies who were banking on the new corporate tax rate as a way to hire new employees and increase wages, having to once again account for tax increases, so I think you would see all of these benefit packages rolled out be removed.
“Most of the positive benefits—even the new jobs that companies are now creating because of tax reform—would no longer be a priority for these companies, because now they would have to pay more in taxes,” Marone said.
