As the House and Senate seem to have worked out their differences, the GOP races to pass their tax reform bill before newly-elected Alabama Senator Democrat Doug Jones can take his seat… knowing that not a single Democrat will vote for this roiling legislative disaster. This hastily drafted bill will reward the richest in the land with the biggest tax cut in history (a permanent 21% federal corporate tax rate that will begin in 2018), provide only temporary tax relief for a select group of individual taxpayers who will get some modest tax relief, while generating a trillion plus dollar deficit for future generations to figure out how to pay back.
A sizeable portion of medical and many work-related deductions will disappear for individuals. State income tax and mortgage deductions will be severely curtailed (creating a combined annual cap of $10,000). Additionally, Republicans have announced that to pay for this bill, we can expect future reductions in Social Security, Medicare, Medicaid and other social programs that are essential for the middle and bottom rungs of our economic ladder. It also appears that the Children’s Health Insurance Program (CHIP), which offers coverage for uninsured children whose family have too much to qualify for Medicaid but not enough to pay for coverage, could be on the chopping block… to be phased out entirely or severely reduced.
“For two decades, the Children’s Health Insurance Program, or CHIP, has provided prescription medicines, checkups and hospital care to low- to moderate-income children with broad bipartisan support. But the program has been in limbo since Oct. 1, and House action will not end the logjam — a testament to the level of partisan rancor that grips Washington.” New York Times, November 2nd. Utah Republican Orin Hatch noted on November 30th, “[The] reason CHIP’s having trouble is because we don’t have money anymore, and to just add more and more spending and more and more spending, and you can look at the rest of the bill for the more and more spending.”
The groundswell of popular outrage may save this cherished program, but funding for that program is still stalled. In addition, without the healthcare insurance mandate under the Affordable Care Act (which this tax bill will vitiate), we can expect premiums under the ACA to skyrocket. Greed-driven corporations have advised Congress that there are so many other ways to cut deeply-needed programs to make sure those tax cuts get implemented. Hurt people? So what! Show me the money!
By way of example, there are many Americans for whom hope to survive depends on government research or tax deductions to help fund research organizations focused on life-threatening ailments that only impact a limited number of people (and hence are not economic to pursue without those tax deductions). But it seems that giving rich people a tax break is more important than the lives of those imperiled with such diseases.
“[The] final tax bill will end up killing or drastically cutting a three-decade-old tax credit for companies developing therapies for so-called orphan, or rare, diseases such as cystic fibrosis, muscular dystrophy and Angelman syndrome…
“The Senate version of the $1.5-trillion tax-cut plan would slice by about half the current 50% tax credit for such drug development. The House measure would do away with it entirely, generating an estimated $54 billion in federal revenue over 10 years to help pay for other tax reductions, mostly to corporations…
“Patient advocacy groups are hopeful that, at the very least, a tax credit as generous as the Senate version will come out of the GOP conference committee now reconciling differences between the two bills [which appears to be what happened]. Sen. Orrin Hatch (R-Utah), a key figure in the tax discussions, has long championed the growth of the U.S. pharmaceutical industry, including orphan drugs. But Republican lawmakers also are desperately trying to boost tax revenues to make the numbers work… And despite their lobbying clout, big pharmaceutical firms have not been very vocal on this issue because they also have an interest in getting corporate taxes cut to about 20% from 35%...
“Without the tax credit, the National Organization for Rare Disorders, or NORD, concluded in its 2015 study that there would be one-third fewer orphan drugs in the marketplace… There are more than 7,000 known orphan diseases, which are disorders that afflict fewer than 200,000 people in any given year. Currently, government-approved treatments exist for about 350 of these diseases.
“Simply put, the current tax code encourages drug companies to favor orphan-drug development, said Paul Melmeyer, NORD’s director of federal policy in Washington… “‘What we’re worried about is when a company is discussing internally what direction they want to go with their drug development, whether it would be rare diseases or therapy for common diseases. Currently it’s less expensive to develop that rare disease,’ Melmeyer said. ‘Without the tax credits, they might redo these calculations.’
“The tax credits are nonrefundable. A young drug-development firm that spends $10 million for orphan-drug development in a given year, but does not have any sales, would not be getting a $5-million check from the U.S. Treasury. But when the company has sales later and makes a profit, it can then apply those credits to offset taxes.
“That prospect is not lost on a biopharmaceutical firm such as Ovid. Since its founding in spring 2014, the New York-based company has plowed millions of dollars into developing medicines for Angelman syndrome and epilepsy… Dr. Jeremy Levin, the former chief executive of Teva Pharmaceutical Industries who joined Ovid as its head to work on neurological diseases, said the company would not walk away from its drug-development efforts, with or without the tax break. Ovid’s work on a treatment for Angelman syndrome is now in Phase II clinical trials, so it could be a few years before a drug is marketed to the public.
“‘Of course, we’re utterly committed to the patients and development of the drug,’ Levin said in an interview Tuesday [12/12]. ‘But the impact will be much broader,’ he said of a possible loss or big cut in the tax credit. ‘It will be on the ability of other companies coming into this area’ of orphan drug development, he said. ‘And this is very important, to have many companies coming.’” Los Angeles Times, December 13th.
A. Death for ordinary Americans or B. a nice deduction for a corporate jet plus lower corporate taxes under bill that creates a massive deficit and one that so many economists project will generate another horrible recession. Republicans picked B. without a whole lot of concern for A. Oh, and one more thing, it’s not about taxes for most Americans… it’s about real income and quality of life (what we mean when we say, “It’s the economy, stupid!”). The GOP plan will have ordinary Americans with lower buying power and a higher cost of living… plus the magic of a GOP-induced recession.
I’m Peter Dekom, and this tax bill could be that sinking tide that lowers all boats… once the corporate euphoria from lower taxes dissipates and economic reality kicks in.
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