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The House Republican tax bill unveiled today is like a just-completed airplane rolling out of its hangar. Soon lobbyists and lawyers will pick over its provisions and try to salvage parts seen as critical to its clients. For now, all we have is the current blueprint, which will likely grow more forgiving to powerful interests. And it’s already extremely generous on that front. Ad Policy

Here are some of the main features of the bill, known as the “Tax Cuts and Jobs Act,” which really isn’t that much better than the “Cut Cut Cut Act,” Donald Trump’s favored title. It reduces the number of income brackets from seven to four, keeping the top marginal tax rate at 39.6 percent but increasing the threshold for that to $500,000 for individuals and $1 million for couples. It cuts the corporate tax rate from 35 to 20 percent and, while some business deductions are eliminated to make up for that, others are expanded. It does away with the estate tax, doubling the threshold to start and then phasing it out over six years. And it repeals the Alternative Minimum Tax, which affects high-income households.

These are raw giveaways to the richest people in America, who see more favorable rates on much of their income, no restrictions on passing their money to heirs, and significant drops in the rates for the corporations they own and invest in. On the flip side, there’s almost nothing here for anyone in the lower tiers of income. Sure, the doubling of the standard deduction will shield up to $24,000 for a couple from taxation; but rates actually go up on the first $18,000 of income. Those who already don’t pay anything in federal tax still won’t, but there are no new refundable tax credits to increase their benefits. A $300-per-person family credit phases out after five years. The Child Tax Credit is enhanced, but new indexing for tax brackets that will make taxes marginally more expensive over time will offset that. Overall, the help the middle class will see in this bill pales in comparison to the gifts for the rich.

There are also two important pieces of the bill that could open up huge loopholes for the wealthy and corporations to shelter even more of their money. The bill reduces the tax rate for “pass-through” income, earned from businesses like partnerships, to 25 percent. This creates incentives for the rich to set up corporations and take advantage of that far lower rate. The bill also converts to a territorial tax system, which doesn’t tax corporations on income earned overseas. Presently the United States does tax foreign income, but only when it’s brought back to the United States, which many corporations fail to do. The incentives here run in the direction of claiming as much income as possible was earned overseas—for example, through patents or other intellectual property registered in a low-tax foreign country. Tech firms and pharmaceutical companies practice this consistently, and others will surely follow their lead if the law changes.

So the baseline of this bill is a slew of money going to the wealthy and corporate treasuries. But Republicans have a problem. Because they don’t want any Democratic input to this bill at all, they must use the budget-reconciliation process, which prevents any deficits from the bill outside the first 10 years of its effect. In addition, the budget resolution limits deficits in those first 10 years to $1.5 trillion. So, somehow, Republicans had to pay for these tax cuts, because what I just described would result in over $5 trillion in deficits in that budget window.

The associated problem here is that Republicans are fond of promising tax cuts for everyone, without anyone ever having to feel the pain. But when you actually put words to paper, that pain becomes apparent.

For instance, Republicans scaled back the state and local tax (SALT) deduction, which particularly affects the upper middle class in high-tax states like California, New York, and New Jersey (and some red states too). It happens that Republicans represent many of those districts; in particular, this bill is a killer for the seven House Republicans fighting to keep their jobs in California. While property taxes can still be deducted up to $10,000, state income or local sales taxes cannot. Because of Proposition 13, California’s property taxes are rather mild compared to state income tax. So Californians lose the biggest tax deduction of the bunch, while keeping a less lucrative one. Current Issue View our current issue

The bill also caps the mortgage-interest deduction at $500,000 instead of the current cap of $1 million. This theoretically hurts upper-middle-class folks in high-priced real-estate areas; in other words, the same Republican-led districts as the SALT repeal. If it reduces home prices, the effect is salutary, but I’m not sure it will. One work-around is to have people seeking mortgages for between $500,000 and $1 million in property get two loans, one for $500,000 and one for the rest, and take the interest deduction on each. I saw this kind of split mortgage repeatedly during the housing bubble, usually to get around down-payment requirements. This enriches real-estate brokers (and nickel-and-dimes those GOP districts) but does nothing much for the US Treasury.

Where the money scramble really hits home is in things like the elimination of the deductions for student-loan interest, or moving expenses, or medical expenses. Elderly people in nursing homes and struggling students lose benefits so the rich can get a tax cut. This could be really consequential for people with 24-hour care or in nursing homes, who spend the majority of their income on medical expenses.

Other nips and tucks actually sound good in isolation. Businesses lose some deductions for interest payments. (Real-estate companies—like the one of a certain 45th president of the United States—are exempt from that restriction). There’s a 10 percent tax on high-profit foreign subsidiaries, a stab at preventing the shifting of business income abroad. Businesses would no longer be able to deduct “performance-based” executive compensation over $1 million, a loophole which has led to runaway stock options and short-term CEO thinking. Big banks lose a tax perk on FDIC payments. The tax-exempt status of bonds that build sports arenas would be repealed. Large university endowments would pay an assessment on investment income.

These sound great, until you realize that the savings will just be shoveled to the tax cut for the rich and corporations. We’ll have to wait for detailed assessments, but if the end result is that one way the wealthy benefit is just replaced by another, I wouldn’t exactly call that progress.

Another loophole, designed to bring aboard religious conservatives, would repeal the Johnson Amendment, which prevents churches from engaging in political activity. But because this also affects all “C3” organizations, it could provide another dark-money funnel, giving donors not only a secret channel to donate but a tax-deduction present.

Will this pass? Republicans are obviously unified in wanting to help out wealthy contributors. Where it might fall down is on a maddeningly complicated issue: pass-through income. Sensitive to the charge that accountants will game the rules to make anyone with high earnings a pass-through corporation, reducing their marginal rate from 39.6 percent to 25 percent, the bill put in “guardrails” that raise the final amount of tax paid. Expect a huge fight over that, as partnership corporations argue they’re losing out. With all the talk of jobs and perks for the middle class, the fate of the tax bill might come down to whether Republicans made a loophole too tight.