Welcome to tax policy by conflict-of-interest. The Republican tax scheme is a plan made for billionaires – exactly like the one in the White House.

– Rob Weissman, president, Public Citizen

Yesterday, the House Republicans released bill text for their tax giveaway plan—and the details are just as cruel and morally backward as we’d expected: it takes from the needy to give to the rich, it showers tax breaks on campaign donors, and it lets tax dodgers off the hook while kicking open the door to accounting trickery that will lead to the type of tax base erosion the rest of the world is working to combat.

As we continue to analyze the bill, here is an outline of some of the more troublesome provisions of this pernicious tax plan:

Gross Corporate Giveaway

American corporations are reporting record profits, yet the percentage of our nation’s taxes that come from corporations is half what it was during the 1950s. Though our current statutory rate is 35 percent, the amount that corporations actually pay (“effective rates”) is much lower, with many profitable companies like General Electric, PG&E and Netflix paying no taxes at all in recent years, or even worse, getting rebates from the government. Corporations utilize public services like our first responders, our roads, our courts, so it is only reasonable to have them cover their portion of the tax responsibility for paying for these essential services.

Despite the very low current contributions from corporations to our collective tax coffers, this GOP bill seeks to lower the tax for corporations to 20 percent, almost halving it from its current 35 percent level. Though a full two-thirds of the voting public believes that cutting the deficit should come before slashing taxes for the rich or corporations, that’s exactly what is proposed in this legislation which allows $1.5 trillion in deficit spending to finance these tax cuts. And, economists have outlined over and over exactly how false the arguments are that corporations would somehow be more competitive with lower tax rates in the U.S, or that regular Americans would somehow benefit from their reduced rates.

Rewarding Tax Dodgers

Though the L.A. Dodgers didn’t fare well in this week’s World Series conclusion, tax dodgers will richly profit from the House GOP tax bill. Some multinational corporations have used a tax provision called “deferral” to indefinitely avoid paying taxes on the profits from their subsidiary companies incorporated abroad, until the point that they are “repatriated” to the U.S., meaning the monies are reinvested in the parent company or paid out as dividends to its American shareholders.

This system incentivizes “profit shifting,” where multinational corporations use accounting gimmicks to make profits appear to be earned by their foreign subsidiaries. An example of this would be if a corporation created a shell company in the Cayman Islands (even it is nothing more than a post office box) and sold a valuable asset, say a patent or trademark, to that subsidiary and then paid fees from the U.S. company to the foreign company to use that trademark or patent. This would artificially reduce their U.S. profits and lower the amount of U.S. taxes owed. Right now, there is an estimated $2.6 trillion in profits “booked offshore” by American corporations, meaning corporations are avoiding an estimated $767 billion in taxes.

Instead of making these corporations that have hoarded profits on the books of foreign subsidiaries pay the 35 percent (less any taxes paid to foreign countries) they owe, this bill rewards the companies that have been shirking their tax duty by allowing the foreign-booked profits to be taxed at the bargain basement rate of either 5 or 12 percent.

When a similar scheme was tried in 2004, it was a failed experiment. Instead of using the money they had from their discounted tax rate to create jobs, firms paid shareholders dividends or bought back stock. Still worse, the majority of the top repatriating firms actually cut jobs after utilizing the holiday.

Opening the Floodgates for Outsourcing

Even though the bill is titled the “Tax Cuts and Jobs Act,” this bill instead will kill American jobs by creating a huge incentive to outsource jobs and investments to foreign subsidiaries. The bill creates a complicated multinational web where some foreign profits won’t be taxed at all, ever. Depending on how they are listed on the accounting books, some profits booked to foreign subsidiaries will be taxed, but only at half the rate that domestic U.S. corporations will be expected to pay. This scheme of either zero percent or 10 percent effective tax rates on international profits puts large multinational corporations at a tremendous advantage as compared to their U.S. counterparts, and will recreate that “giant sucking sound” of investment flowing to other countries. Provisions meant to address profit shifting schemes would still be too easy to get around and are unvetted policies, a product of the behind-closed-doors process that was used to draft the bill.

“Small Business” Scam

Many of the provisions in this bill will personally benefit President Trump, and the provisions related to “pass-through” companies are so clearly in his favor, it has been nicknamed the “Trump loophole.” Under existing tax law, some business owners can elect to pay their taxes on the individual side instead of as a corporation. Even though they might be in very lucrative lines of work, this bill would allow some of the owners or shareholders of these companies to pay a mere 25 percent, instead of the top rate of 39.6 percent. Provisions were included to attempt to keep extremely high-earning professionals from making use of this giveaway, but the complex income classification system in the bill is still ripe for gamesmanship by those rich enough to pay accounts and lawyers to work their tax gymnastics.

Rigged for the Rich

One of the clearest things from this GOP tax bill is that the rich will benefit… well, richly. The legislation will allow dynastic accumulation of wealth by repealing the estate tax after the year 2023, and in the interim making it apply only to estates worth more than $10 million for individuals and $20 million for couples, an absolute personal windfall for Trump’s family and those of his wealthy cabinet members. Recent Public Citizen research found that if repeal of the estate tax were to be enacted, using conservative estimates, the combined savings for Trump’s heirs plus those of 14 of the wealthiest Trump administration officials would be about $1.7 billion – equal to the combined net worth of 18,000 U.S. families of a median net worth.

In addition, the bill repeals a huge safeguard in the current tax code: the Alternative Minimum Tax. This provision has kept individuals and corporations from being able to pay nothing in taxes after maximizing their deductions and exclusions. Under the tax bill, that protection would no longer exist. And, despite public promises from President Trump, the carried interest loophole that currently allows investment fund managers to pay a lower tax rate than working Americans is not closed in the bill.

In addition, when it comes to the lowest earners in our society, the GOP House tax bill actually increases the tax rate on those Americans from the current 10 percent to 12 percent. Other provisions to help hard-working families have also been eliminated in this bill, such as a deduction for high medical expenses. Other controversial issues that are sure to continue to cause political headaches for tax writers are the limits on deductibility of state and local taxes and limits on mortgage deductions, since every tax break on the books has a dedicated constituency working to protect it. But, the fact that the bill is nothing but a bonanza of giveaways to corporations and wealthy individuals, who happen to be campaign donors, make it much less than a homerun that we will be able to effectively kill this bill, as public outcry did with attempts to repeal the Affordable Care Act.

There are a small handful of bright spots in the bill, but those are absolutely eclipsed by the unfair provisions that will further skew our tax code in favor of those who least need it. For example, after showering more than $1.4 trillion in corporate giveaways (by their own estimate) by slashing the basic tax rate to 20 percent, the Republican plan takes a miniscule step towards closing that gap by $9.3 billion with a compensation reform. A loophole in the current law allows corporations to deduct pay above $1 million if it is characterized as “performance” based, and this bill would close that and end these types of deductions for the five most senior executives if their pay exceeds $1 million each. However, the tax bill should have fully closed the loophole by banning deductions for all employees compensated more than $1 million since at the largest banks, for example, more than 1,000 employees receive more than $1 million in performance-based compensation.

Join the Fight to Stop This Tax Scam!

Earlier this week, Public Citizen president Rob Weissman spoke at a rally outside the Capitol warning of the dangers of “robber baron” taxation that takes our country back in time to when wealth was allowed to pile up in a repugnant manner, further fueling the corporate power grab. It’s time for YOU to speak up against this tax plan.

Step one: Call Congress! Here’s a handy toll-free number you can use: 877-795-7862.

Step two: Join or plan an event in your hometown to publicly call out your Representative and demand that they not enact this terrible tax plan into law.

Step three: Write a letter to the editor, attend an in-district lobby meeting, or tell us what else we should be doing in your community to convince your member of Congress to vote “no” on this bill.

Americans deserve better than this terrible, tilted tax plan, so let’s show Congress that the power of the We The People can never be stopped.

Cross posted from the blog of Public Citizen.