News Brief: Senate Passes Tax Plan, Puerto Rico Update

Dec 20, 2017
Originally published on December 20, 2017 8:17 am
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RACHEL MARTIN, HOST:

Really early this morning, the Senate passed a sweeping overhaul of the nation's tax laws.

DAVID GREENE, HOST:

Yeah. The vote count was 51-48. All Republicans voted for this. All Democrats voted against it. Afterwards, Majority Leader Mitch McConnell and several other Republican lawmakers praised the vote.

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MITCH MCCONNELL: After eight straight years of slow growth and underperformance, America is ready to take off. Coupled with the regulatory reforms that have already been implemented by the administration, we now add comprehensive tax reform, major middle-class tax relief and making our businesses both large and small more competitive.

GREENE: Now Republicans are almost there, but not quite there yet. This still needs to head back to the House for a vote today.

MARTIN: All right, so to talk about the politics of how this came together and what this means for our near term and long term, we are joined by NPR White House reporter Scott Horsley - also, business editor for NPR Uri Berliner.

Hey, guys.

SCOTT HORSLEY, BYLINE: Good morning.

MARTIN: All right, Scott, I'm going to start with you. Just walk us through why this procedural thing has happened, why the vote has to go back to the House now.

HORSLEY: Well, Rachel, the House and Senate are required to pass identical language. And after the House voted for the tax bill yesterday, the Senate parliamentarian ruled some of the provisions of the bill are out of order. They don't comply with the special Senate rules that Republicans are using to muscle this through with a simple majority and avoid a Democratic filibuster. So those provisions were stripped out of the bill that the Senate passed overnight. And now that stripped-down version has to go back to the House for a final vote. The - delays the final passage, but it's not expected to change the outcome.

MARTIN: So this was just a procedural thing, these provisions that were found to be in violation. This is not going to derail this.

HORSLEY: Correct. There were a number of provisions involved. One was championed by Texas Senator Ted Cruz, and it would've allowed parents to use tax-free college savings accounts to pay for K-12 educational expenses at private schools, parochial schools, even home schooling. I should say advocates for public schools really hated this provision.

They note that Republicans were limiting the deduction for state and local taxes that support the public schools while giving wealthy parents a chance to use tax-free money to pay for private schools. That provision's now gone. Another provision would've exempted one school in Kentucky from a new tax on college endowments. And Rachel, my favorite is that the name of the bill - Republicans have been calling this the Tax Cut and Jobs Act (ph). That was a little too sexy for the Senate parliamentarian.

MARTIN: Really?

HORSLEY: So henceforth, this will be known as an act to provide for reconciliation pursuant to titles II and V of the concurrent resolution of the budget for fiscal year 2018 - not...

MARTIN: Are you kidding? That can't even fit on a piece of paper.

HORSLEY: Or a bumper sticker.

MARTIN: Yeah (laughter). Oh, those parliamentarians. OK, so lastly, though, this was a party-line vote in the Senate, right? Although some Republicans voted no in the House.

HORSLEY: Yeah, there's still a beef about the state and local tax deduction. Republicans initially was going to make state and local taxes - take away that deduction altogether. In the end, they put in a deduction for $10,000 for a combination of property and income or sales taxes. But that doesn't go far enough for some Republicans who represent places with either high property values or relatively high state taxes.

MARTIN: All right, NPR's Scott Horsley breaking down the latest votes on the tax overhaul bill - the House to vote on it one more time, then it heads to the president's desk. Hey, Scott, thanks so much.

HORSLEY: You bet.

MARTIN: We're going to dig into the details of the legislation itself now with business editor Uri Berliner. So Uri, one of the ways that the Republicans sold this plan was to say that it was going to simplify a monstrously complicated tax code. We remember Paul Ryan holding up that, like, postcard. It was all going to fit on a postcard. Is that going to happen?

URI BERLINER, BYLINE: Well, the name isn't simple. We know that. Is this true simplification? No, it's not. Under current law, there are seven individual tax brackets. In the GOP plan, guess what? We still have seven tax brackets. That hasn't changed. And in some ways, the tax system is about to get way more complicated. You know, accountants and the IRS - they're going to have their hands full, especially dealing with changes in how businesses are taxed. There is at least one way filing taxes will get simpler. Fewer people are going to itemize. You know, that's where people take deductions for things like charitable contributions and mortgage interest.

MARTIN: Yeah.

BERLINER: About 30 percent of households do that now. That's expected to go down to 10 percent or even lower.

MARTIN: So those people could use, like, a smaller tax form, postcard style.

BERLINER: Yeah, they're going to use shorter forms. But we're not going to live in this - suddenly live in this world where doing your taxes is like filling out a postcard or where people suddenly understand this tax system that they pay into. That's not going to happen.

MARTIN: So when this bill becomes law, as it is going to do, what are the biggest changes? What are the main changes in store for us, for taxpayers?

BERLINER: For taxpayers, well, tax rates will go down, at least for the time being. There's going to be a larger standard deduction. That's the amount you can automatically take off your tax bill. But many people won't be able to pare down their tax bills by taking these significant deductions for state, local and property taxes.

MARTIN: Is it fair to say the big changes in the tax system are designed to help big businesses?

BERLINER: Well, the benefits are going to companies. The cuts for - the biggest benefits are for companies. The cuts for individuals are slated to end after 2025. The business tax cuts are meant to be permanent. And beyond that, the biggest share of these cuts go to corporations and other businesses.

MARTIN: So some Republicans, like Treasury Secretary Steve Mnuchin, say that these tax cuts are basically going to pay for themselves, more or less. So which is it, more or less? Is that true that these things are going to pay for themselves?

BERLINER: Well, the evidence for that is very thin. Virtually all independent analysts say these tax cuts will increase the deficit, even if the economy grows a bit more strongly than predicted. So right now, you have this situation where Republicans - you know, they're supposed to be the party of fiscal responsibility. Mostly, they've gone silent about the deficit, and Democrats are talking it up. They are bringing up the deficit all the time, which they haven't really done much in the past.

MARTIN: All right, NPR's Uri Berliner. He's NPR's business editor breaking down the meat and bones of the tax bill that is now very close to heading to the president's desk. The House of Representatives needs to vote on it one more time - one more procedural issue. Hey, Uri, thanks so much for waking up early and talking with us.

BERLINER: Sure thing. Thanks, Rachel.

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MARTIN: It has been exactly three months since Hurricane Maria ravaged the island of Puerto Rico.

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UNIDENTIFIED MAN: The winds are ferocious right now, gusting above 120 miles per hour, severing the tops of the palm trees and ripping off the board...

GREENE: Yeah, in the three months since we heard that, the island has struggled to recover, and even now, many Puerto Ricans are still without power. Yesterday, some top federal officials visited, promising to speed up these recovery efforts.

MARTIN: We are joined now by Luis Trelles. He is an editor and producer for the program Radio Ambulante in San Juan.

Thanks so much for being with us.

LUIS TRELLES, BYLINE: Thank you.

MARTIN: The Department of Housing and Urban Development - the secretary for HUD, Ben Carson, was in Puerto Rico - also, the new secretary for Homeland Security, Kirstjen Nielsen. So they were there on the ground trying to survey the recovery effort. How did they characterize what's going on?

TRELLES: Well, Secretary Nielsen acknowledged yesterday that the recovery effort wasn't going as fast as they would like. And what - the message she took back to Washington from Puerto Rican officials and from residents here is that the bureaucracy needs to be more flexible in order to get aid and help to people that still need it. Ben - Secretary Carson spoke about how impressed he was with the recovery because he was expecting an island where the sings of disaster were more visible and would be able to take that in.

MARTIN: Are they not visible anymore? I mean, just based on your own reporting, can you give us an idea of what - what is the situation right now?

TRELLES: Yes, the situation right now is of a recovery that seems to be progressing in two speeds. Most Puerto Ricans are extremely frustrated with the lack of progress, especially in getting power back to most homes and for most residential areas. Several people I spoke to told me that they still don't have electricity and that they don't expect it any time soon. And there are still a lot of people living in shelters, shelters that still don't have electricity. And for people like that, the recovery - there are still no signs of recovery.

MARTIN: The governor of Puerto Rico, I understand, has now requested an audit of the death toll from hurricane-related injuries. Is that something that had not been tallied before? What can you tell us about that?

TRELLES: Yes. The official death toll still stands at 64. This has been an issue that has been investigated by the Puerto Rico Center for Investigative Journalism. And most recently, the Demographic Registry here, which is the office for vital statistics, sent out a report that was picked up by several outlets in the national media, stating that the death toll could actually be more around a thousand. That's a thousand - well, more people died in the two months after Hurricane Maria than in the two years in that same time period in the two years before 2016, in 2015.

MARTIN: Because presumably, there are the direct deaths caused by the hurricane, but then indirectly, many people died, as well. Radio Ambulante's Luis Trelles reporting on the recovery efforts in Puerto Rico since Hurricane Maria hit. Thanks so much.

TRELLES: Thank you. Transcript provided by NPR, Copyright NPR.