Senate Republicans, led by Finance Committee Chair Orrin Hatch, unveiled major changes to their tax reform bill Wednesday night that transform the bill into a trade: Corporations get permanently lower taxes, paid for by tax increases and health care cuts for individuals.

Under the proposed changes, the bill’s tax cuts and benefits for individual Americans would almost all sunset by December 31, 2025. That includes the increased child tax credit, the doubled standard deduction, the estate tax cut, repeal of the alternative minimum tax, and even the tax break for pass-through business income. Some revenue raisers on the individual side, like abolition of deductions for state and local taxes and the elimination of personal exemptions, would expire at the end of that year too.

But other changes are permanent. The bill permanently eliminates the individual mandate that penalizes people for not having health insurance, raising $338 billion over 10 years by causing about 13 million fewer people, according to the Congressional Budget Office, to enroll in Medicaid or private insurance. The bill also adjusts tax bracket thresholds using a slower-growing inflation measure (known as chained CPI) than the one used currently. That amounts to an across-the-board tax increase for individuals, one that grows larger and larger over time.

And those changes enable the bill to pay for a permanent cut in the corporate tax rate, from 35 to 20 percent.

The changes were made to ensure the new plan complies with the “Byrd Rule” of Senate procedure. Senators can’t pass legislation that increases the long-run (traditionally defined as 10-plus years into the future) deficit through the budget reconciliation process, a process that enables senators to evade the filibuster and pass bills with only 51 votes (or 50 plus Vice President Mike Pence).

Since the Democratic Party is united in opposition to the tax bill, and there are only 52 Republican senators, the bill basically has to go through reconciliation and thus comply with the Byrd Rule.

So Senate Republicans decided to comply with the rule by simply having all the most expensive individual cuts in the bill expire, and paying for permanent corporate tax cuts by reducing access to subsidized health insurance and using chained CPI to raise individual taxes over time. It worked: By year 10, the bill doesn’t increase the deficit, according to the Joint Committee on Taxation, suggesting that it won’t raise the deficit over the long run.

MOST IMPORTANT NEWS: according to the JCT score, the latest version of the Senate bill appears to be Byrd-compliant pic.twitter.com/o9EefwlhTB — Scott Greenberg (@ScottElliotG) November 15, 2017

But the Hatch amendment changes pose some major problems down the road. Republicans are abandoning their mission of permanent tax relief to the individual Americans in order to give corporations a massive tax break in the short term. And they run the risk of being attacked, accurately, by Democrats for proposing to increase taxes on middle-class Americans come 2026. If passed, the bill would also set up a “fiscal cliff” in late 2026 akin to the one that occurred in late 2012, in which Washington had to scramble to prevent tax cuts.

This proposal would raise taxes on a huge fraction of Americans come 2026

Republicans will almost certainly argue that the bill is meant to be made permanent before the individual cuts expire in 2026, that they only expire to comply with Senate rules, and that it’s misleading to analyze the effects assuming the cuts expire.

But it’s worth considering what the bill they’ve actually written will do, if enacted and unaltered. Detailed distributional analysis from the Joint Committee on Taxation and the nonpartisan Tax Policy Center is still forthcoming, but Ernie Tedeschi, a private sector economist and veteran of the Obama Treasury Department, crunched some numbers using Tax Brain, an open source tax model from the right-leaning American Enterprise Institute’s Open Source Policy Center.

He finds that if you include the benefits of corporate tax cuts, and assume about 20 percent of the benefits go to workers (as the JCT does), about 38 percent of taxpayers would pay more in 2027. Likeliest to see a tax hike are families earning $10,000 to $75,000; in particular, more than half of households making $30,000 to 40,000 would see their taxes go up.

Even with the corporate tax cut effects added in, about 38% of filers face a tax hike in 2027 versus current law. Without the corporate cuts, that rises to 72%. /18 pic.twitter.com/vFnGyC8ZHn — Ernie Tedeschi (@ernietedeschi) November 15, 2017

What happens if you don't look at the corporate tax effects, and isolate the effects of the individual tax provisions? Basically everyone would get a tax hike or see no change, thanks to chained CPI; bracket thresholds would grow more slowly, pushing more and more people into higher brackets. And this analysis ignores the harm done to low- and middle-income households by the loss of health insurance and higher health insurance premiums caused by the individual mandate's repeal.

Here's the 72% of filers with non-corporate tax hikes in 2027 illustrated. /19 pic.twitter.com/aLzFdFMk8K — Ernie Tedeschi (@ernietedeschi) November 15, 2017

Parents are particularly likely to see a tax increase in 2027, as the increased child tax credit and boosted standard deduction will expire, and they appear less likely to benefit from corporate cuts:

As you might expect, it's even worse in 2027. 47% of parents get a hike versus current law, while for all filers it's 38%. 70% of parents between $10K-$50K get a tax hike in 2027 /23 pic.twitter.com/YFtsnOWK5z — Ernie Tedeschi (@ernietedeschi) November 15, 2017

The individual rate cuts from 2018 to 2025 have been tweaked somewhat from the Senate’s original bill, creating new winners and losers. The bracket thresholds for married couples filing jointly are now set at precisely double the thresholds for single people. That not only eliminates the marriage penalty (except for poor people on the earned income tax credit, where it remains) but creates a massive marriage bonus in many cases. A lot of couples would find themselves saving thousands of dollars annually by getting married.

The child tax credit is increased to $2,000 rather than $1,650 under the original Senate bill, and the benefit for millionaires is attenuated. The benefit starts phasing out at $500,000 for couples, compared to $110,000 under current law and $1 million under the original Senate bill. But the benefit is still denied to most low-income families, because refundability is barely increased.

Republicans believe in the corporate tax cut — but it’s politically dicey, and really expensive

Republicans really want to cut the corporate tax rate. It’s the centerpiece of every plan they have released, and they’ve spent weeks floating wildly unpopular ways to pay for it. And they have an interest in making the cut permanent. Most economists believe that temporary corporate cuts do little or nothing to boost economic growth, because corporations can’t count on the cuts in the future.

Now, the Senate appears to have settled on just gutting individual tax reforms to pay for a permanent corporate cut.

Lowering the corporate tax from its current 35 percent to 20 percent, as Republicans are proposing, is costly — in the context of the current bill, the Joint Committee on Taxation estimates that it would cost $1.33 trillion over 10 years.

Republicans argue that this cost will be partially offset through incredible economic growth — pushing corporations to invest more in their workers and bring more jobs back to the United States.

“It’s in all of our best interest to have these tax cuts for corporations so that they will have more money to invest in their business and pay their workers,” Rep. Mike Conaway (R-TX) told Vox before the House tax bill was released.

There’s some empirical evidence to support the claim that rate cuts promote investment. But other studies are less optimistic. Corporate taxes, most analysts agree, mostly tax capital (that is, shareholders), and studies on other capital tax cuts suggest that they don’t increase investment but instead just funnel money to rich shareholders. UC Berkeley’s Danny Yagan found that the 2003 Bush cut to taxes on dividends (money coming from corporations and sent to investors) didn’t spur investment at all; it just encouraged companies to pay out more of their profits to investors. A large study covering a tax break for savings in Denmark (which also served to reduce taxes on capital) found that it didn’t encourage more savings but instead just pushed savers to redirect their money into tax-free accounts.

Corporate rate cuts also have a lot of potential to be politically expensive.

Sixty percent of registered voters think corporations pay “too little” in taxes, according to a September poll from Morning Consult and Politico, surveying a little under 2,000 Americans. A more recent Morning Consult/Politico survey from October found only 39 percent of Americans think lowering the corporate tax rate should be part of the tax plan — with 59 percent of Republican voters supporting it. Another poll from Pew Research Center showed that 53 percent of Republicans think corporate tax rates should either be raised or stay the same.

As individual tax benefits are being sunset in order to pay for these corporate tax breaks, there’s no question that this will only deepen that line of attack.

Republicans can’t figure out their tax bill, so they’re punting it down the road

There’s no question that Republicans have been grappling with a major math problem with their tax bill, searching for budget gimmicks and rosy analyses to make the proposal add up and comply with the Byrd Rule.

Sunsetting the individual tax reforms appears to be the largest of those budget gimmicks.

This is the same strategy then-President George W. Bush used to pass his tax cuts under budget reconciliation in 2001, essentially getting around the Byrd deficit restriction by making the tax cuts temporary. The original 2017 House tax reform bill included some of this approach, creating a $300-per-adult “family credit” and sunsetting it after five years. The Senate is taking that approach even further.

And while the Senate appears to have addressed a major problem of its tax bill — in that it is now compliant with crucial budget rules — it hasn’t fixed the overarching deficit problem.

Rather, they have just punted it down the road, to 2026, when Congress will have to grapple with the effects of major changes to individual Americans taxes once more.

And if Congress punts then, the result will be a permanent trade, where individuals pay higher taxes and some forgo health insurance to pay for lower rates on corporations.