After many months of deliberation, internal conflict, and discussion, the GOP has finally passed its much awaited tax reform. One of the controversial aspects of this new tax reform is that it favors businesses, and while conservatives argue that this increases competitiveness of the market, liberals cry corruption.
CNBC calls this new tax reform, passed by the GOP after much consideration, “the biggest step yet” in their “once-in-a-generation effort to overhaul the American tax system.” For decades now, taxes have squashed businesses into submission, but hopefully with this new corporate tax rate, America’s economy will be booming once again.
The bill cuts the corporate tax rate down to 20% from an incredibly high 35%, and has made other tweaks aiming to make businesses far more competitive in today’s global economy. We saw some of the most crushing tax rates under the Obama administration, but with President Trump in office it seems that there’s a new tune to be sung.
It’s a tune that champions the working class, and reduces taxes for everyone—something that liberals have widely attacked as favoring the rich. Yet even though the upper 1% will be saving money, so will the bottom 99% in this country. It’s estimated that:
- Those earning between $20,000 and $30,000 a year would see a 10.4% decrease in taxes
- Those earning between $50,000 and $70,000 a year would see a 7.1% decrease in taxes
- Those earning over $1,000,000 a year would see a 5.3% tax cut
In contrast however, many middle class households will see a tax increase due to loss of deductions. While President Trump has published his official tax plan on his website, it’s still uncertain as to what the exact details are of this new and bold tax reform. Fox News reports:
The House on Thursday passed a sweeping tax bill largely along party lines that makes good on a Republican campaign promise to reform the country’s tax code.
The bill passed 227-205. Thirteen Republicans voted against it.
House Speaker Paul Ryan celebrated the passage, calling it “nothing short of extraordinary.”
“This country has not rewritten its tax code since 1986,” Ryan said on Capitol Hill, surrounded by Republican lawmakers. “The powers of status quo in this town are so strong, yet 227 men and women of this Congress broke through that today.”
The White House in a statement called the bill’s passage a “big step toward fulfilling our promise to deliver historic tax cuts for the American people by the end of the year.”
But the future of the Senate version, which includes a repeal of ObamaCare’s individual mandate, is still very much up in the air. Several senators have wavered on support for the legislation, which the chamber is still negotiating in committee.
The House “Tax Cut and Jobs Act” was pitched as a plan to help middle-income Americans, by raising the standard deduction and simplifying the code, including collapsing tax brackets to four from seven. Republicans aggressively marketed their plan as something that would benefit everyone but critics said much of the financial gains would go to the wealthiest Americans and big corporations.
The final version scaled back some popular deductions while cutting the corporate tax rate to 20 percent from 35 percent.
New York Rep. Peter King, one of the most ardent opponents of the proposal, called the House bill “an unforced error,” and suggested it could come back to bite Republicans in next year’s midterm elections.
King was part of a small group of House Republicans from New York and New Jersey who rebelled because the House plan would erase tax deductions for state and local income and sales taxes and limit property tax deductions to $10,000.
Ahead of the vote, House Minority Leader Nancy Pelosi slammed it as “a tax hike on 36 million middle class familiar that is dead on arrival in the Senate.”
The Senate version, which is working its way through the Finance Committee this week, is facing a lot of obstacles, including pushback from GOP senators.
Sen. Ron Johnson, R-Wis., announced his opposition Wednesday to the GOP’s tax bill. GOP Sens. Susan Collins of Maine, Jeff Flake of Arizona and Bob Corker of Tennessee have expressed concerns about the bill but have not signaled which way they would vote.
“Through regular order and an open and transparent amendment process, the members of the Senate’s tax writing committee are also making real progress on a bill that’s been years in the making to fulfil our promise to the American people,” Senate Majority Leader Mitch McConnell said after the House vote.
Earlier Thursday, President Trump visited Capitol Hill to meet with House Republicans ahead of the vote.
“He told us that we have this once-in-a lifetime opportunity to do something really bold, and he reminded us that is why we seek these offices,” Rep. Steve Womack, R-Ark., said of Trump’s closed-door pep rally. “And here we are on the cusp of getting something really important done.”
Some House Republicans spoke warily of what might happen to the tax bill in the Senate.
“Political survival depends on us doing this,” said Rep. Kevin Cramer, R-N.D. “Frankly, one of the things that scares me a little bit is that they’re going to screw up the bill to the point we can’t pass it.”
The House measure would collapse today’s seven personal income-tax rates into four: 12, 25, 35 and 39.6 percent. The Senate would have seven rates: 10, 12, 23, 24, 32, 35 and 38.5 percent.
Both bills would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples and dramatically boost the current $1,000 per-child tax credit.
Each plan would erase the current $4,050 personal exemption and annul or reduce other tax breaks. The House would limit interest deductions to $500,000 in the value of future home mortgages, down from today’s $1 million, while the Senate would end deductions for moving expenses and tax preparation.
Each measure would repeal the alternative minimum tax paid by higher-earning people. The House measure would reduce and ultimately repeal the tax paid on the largest inheritances, while the Senate would limit that levy to fewer estates.
While many have attacked the plan as favoring the rich and attacking the middle class, others disagree. The bill also notably increased the deficit, by $1.5 trillion dollars, but it’s argued that the increase in corporate success due to lower tax rates will offset this cost.
Congratulations to the House of Representatives for passing the #TaxCutsandJobsAct — a big step toward fulfilling our promise to deliver historic TAX CUTS for the American people by the end of the year! https://t.co/8FjefMj6hh
— Donald J. Trump (@realDonaldTrump) November 16, 2017
President Trump continues to make landmark change after landmark change, and although he’s received more criticism than any President in recent history, he also has one of the most loyal voting bases. What do you think? Will he win a second term in 2020? What are your thoughts on his tax plan? Let us know in the comments section down below.