The Republican tax plan will soon enter American law. The bill passed the Senate in the early hours of Saturday, and will now be reconciled to the not-too-different House version, readying it for the presidential pen. The vote fell strictly on party lines amid an ugly frenzy of last-second amendments scribbled in the margins. Even the senators did not know precisely what they were voting on. So it is worth taking a step back to consider, in broad outline, the changes that the plan will bring.
These fall into three categories: big tax cuts for business, which will significantly increase the budget deficit; a reshuffling of individual tax rates, which will have a much more limited net effect; and several halfhearted efforts at genuine reform.
Economically, the most important question is the effect on growth and investment of cutting the headline corporate tax rate from 35 per cent to 20 per cent. There are few certainties here. One is that the cut will increase the deficit by a large amount — at least $1tn — over a decade. The idea that the cut would pay for itself has modest support in theory and none in history. It is also certain that the cut will produce some growth: it is if nothing else an injection of cash into the economy. The question is whether the growth will be worth the cost. The battle lines on this issue are drawn. Only experience will resolve the debate conclusively.
It must be noted, however, that the additional money will land in corporate coffers at a time when profits are already near all-time highs and many companies are flush with cash. Fixed investment is low despite this. Still higher profits may not change this pattern. It does not help that executive pay packages have changed in the recent decades, encouraging distribution rather than investment of profit.
On the individual side, average rates on wages will fall one percentage point, according to the Joint Committee on Taxation. Marginal rates — the amount paid on an additional dollar of wages — will fall by 2.4 points. The plusses and minuses are complex. The child tax credit increases, for example, but some important deductions disappear. In any case the long-term impact will be muted: all the changes to individual rates disappear after a decade. Because of the massive expense of the corporate rate cuts, the sunset of the individual changes was necessary to satisfy Senate deficit rules.
对个人而言，据美国国会税收联合委员会(Joint Committee on Taxation)表示，工资的平均税率将降低1个百分点。边际税率（工资每额外增加1美元需要支付的税款）将减少2.4个百分点。具体税率增减项情况非常复杂。比如，儿童税收抵免提高，但一些重要的应税收益额抵免被取消了。无论如何，从长期来看影响都会消失：个人所得税的所有变化都会在十年后消失。由于削减企业税的巨大支出，个人所得税的税率变化设置废止时间对于满足参议院的赤字规定来说必不可少。
It is dispiriting but not surprising that the bill does as much as it does for the most fortunate. The carried-interest tax break remains, the estate tax falls, and the top marginal rates will apply to less taxpayers (and will probably fall). More beneficial to the rich than any of these, most likely, is the reduction in taxes on income from “pass-through” business structures, which pay no corporate taxes. The nominal justification for this is to help small business, most of which is structured in this way. In all likelihood, however, the great majority of the benefit will go to wealthy investors and professionals. Efforts to write rules to distinguish the two groups will add complexity and may prove ineffective. There is room for the lavish treatment of the rich to be restrained as the Senate and House versions are reconciled. Centrist Republicans should press hard for this.
There are various elements in the bill that gesture towards real reform. Deductions for mortgage interest, corporate debt costs, and state and local taxes will be curtailed. There is also a partial move from a global to a territorial system. None of these go far enough. But they do serve as reminders of what a visionary tax-reform bill — as opposed to what is in effect a big tax cut for business — might have looked like.