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I'm not the target audience for the Republican tax bill.
My general take on what's wrong with the American tax code is that income taxes should be filed automatically by the IRS, that the government doesn't tax harmful activities (like spewing carbon, drinking alcohol, and smoking tobacco) enough, that it doesn't take enough of rich people's earnings, and that the earned income tax credit and child tax credit don't do enough for poor families. The Republican Party is actively opposed to most of the changes I want.
But all the same, I was hopeful that a Republican tax bill would still contain some useful reforms that could endure even after Republicans lose power in Congress and the presidency. Leaks and hints about the bill's contents leading up to its release left considerable room for optimism.
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Most exciting was the possibility that the legislation could actually help poor families with kids (not a typical GOP tax bill priority). First Sens. Marco Rubio (R-FL) and Mike Lee (R-UT), and then Ivanka Trump, pushed to double the child tax credit to $2,000 per person. That on its own isn't too exciting; the tax plan already eliminates personal exemptions, so you have to increase the child tax credit significantly just to compensate for that.
But what was exciting was Rubio and Lee's proposal to lower the refundability threshold to $0. That sounds like a technical change, but it means that a single mom earning $8,000 a year while working part time and raising her two children would get $1,224, rather than the $750 she'd get under current law. That's a big raise, one that could make poor families' lives significantly better.
That proposal didn't make it in. Instead, the main change to the child tax credit for poor families is a provision barring US citizen kids with unauthorized immigrant parents from claiming it.
And that's part of a pattern: Again and again, the plan offers half-measures that suggests compromises from more ambitious, better changes.
Take the change on expensing and interest deduction. Originally, the 2016 House Republican tax plan committed to letting businesses immediately expense the full cost of their investments (in things like factories, research, etc.). In exchange, companies would give up the ability to deduct interest paid on loans.
This would fix a major problem in the way the tax works now, where debt-financed investments are barely taxed or go tax-free (because interest can be deducted) but other investments financed by selling shares in the company or from corporate profits are taxed and have to be deducted gradually over time. That creates a huge bias toward debt, a bias that's very, very good news for banks and other companies that love to get leveraged up and take out massive loans, but bad for anyone who worries about the financial sector taking over the economy, the increased power and profitability of Wall Street, and the risks of letting people bet massively with other people's money.
Getting rid of debt deductibility to pay for full expensing, from that perspective, seems like a clear win. There'd no longer be a preference for debt, but investments would still be encouraged. The Tax Foundation and other conservatives love full expensing. It would boost long-run GDP by 5.4 percent, the foundation estimates, far more than just cutting the corporate tax rate. Even a number of Democrats and liberals are on board. President Obama's former chief economic Jason Furman has endorsed the idea as part of a corporate tax reform package. And while the idea has smart critics, most notably NYU Law's Lily Batchelder, I'm generally persuaded it's worth trying at a time when corporate investment is near record lows.
So does the House Republican tax plan do this? Sort of — in a bad, half-assed way. Expensing is only allowed for five years. That all but eliminates whatever economic benefit the policy might theoretically have, because businesses can't make investments while counting on being able to deduct them. They would instead likely time their investments to maximize their tax benefit, but beyond that invest just like they otherwise would. It costs money for no real gain to the economy.
Meanwhile, interest deductibility is only partially limited, and not limited at all for partnerships and other "pass-through" companies (including some banks) or for real estate companies. That effectively exempts many of the biggest users of the deduction, and negates much of the point of limiting it.
And so it goes, down the line. The mortgage interest deduction is a terrible driver of inequality that screws over renters to help wealthy people with houses. So the tax framework limits it — but only for quite rich people with houses worth $500,000 or more. The state and local tax deduction is a pretty suboptimal way of subsidizing state budgets — but the tax framework gets rid of most of it, and uses the money not to pay for another way to share revenue with states, but to eliminate the estate tax.
This was never going to be a tax reform bill I liked. But it could've been a tax reform bill with real silver linings. It could have been a tax reform bill that encouraged companies to invest and innovate, and that helped working families escape poverty. It could have been a tax reform bill that disrupted the irresponsible, socially costly business model of Wall Street.
It's none of those things. Instead, it's a pretty blatant cash grab for corporations and wealthy individuals, without much positive to show for that.
Commentary by Dylan Matthews, a writer for Vox. Follow him on Twitter @dylanmatt.
For more insight from CNBC contributors, follow @CNBCopinion on Twitter