Tax Reform

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J. Scott Applewhite

Speaker of the House Paul Ryan, R-Wis., and Senate Majority Leader Mitch McConnell, R-Ky., meet with reporters to announce the Republicans' proposed rewrite of the tax code for individuals and corporations, at the Capitol in Washington, Wednesday, Sept. 27, 2017. President Donald Trump and congressional Republicans are writing a far-reaching, $5-trillion plan they say would simplify the tax system and nearly double the standard deduction used by most Americans. (AP Photo/J. Scott Applewhite)

The last two weeks of October were a key leap in the Republicans’ goal of getting tax reform put into place. Both the Senate and the House passed a 4 trillion dollar budget that paves way for tax reform. Almost anyone can agree the American people deserve tax breaks, as the last major one was in 1986 under President Reagan. But not everyone can agree on what these tax breaks should include.

 

Back on September 27th the White House released a basic outline of Trump’s vision on what the tax reform plan should include. The major points made from the outline were reducing the corporate tax rate from 35 percent to 20 percent, lowering the rate on pass-through business profits to 25 percent, and providing middle class tax relief.  Many Democrats were quick to give their opinion on the plan. Senator Bernie sanders in an interview with Jake Tapper said, “Of course it benefits large multinational corporations… Trump is taking from the middle class and working families in order to give huge tax breaks for the people on top, it is unacceptable and we are going to fight it.” Opinion kept pouring in from all directions, even some Republicans like John McCain and Lisa Murkowski were denouncing Trump’s proposed plan. 

 

Over the course of October, GOP lawmakers delayed tax reform and went behind closed doors to discuss this critical topic. Much speculation went in as Senators came out criticizing the work being put in. This was the ultimate deficit that was faced by the Senate back in the summer when they were attempting to repeal Obamacare. It is essential that all Republicans are on board if tax reform is to be passed.

Now a month later, the House GOP has unveiled their new tax plan that has been heavily criticized by top Democrats. Nancy Pelosi and Chuck Schumer said the plan is a “ponzi scheme” and “shell game” to hurt the middle class. As of now the proposed plan is targeting corporate and individual taxes, including deep tax cuts, limits to mortgage family interest rate deduction, and bigger family tax cuts. The main things to take away from it are the provisions directed at  limiting the deduction of mortgage interest rate for newly purchased homes up to $500,000, the goal to retain the 401(k) savings plan, as well as slashing the corporate tax rate to 20 percent as well as creating three new individual tax brackets of 12%, 25%, and 35%, and the continuing of a 39.6% tax rate on top earners and the boosting of the child tax credit to $1,600 from $1,000. Additionally, it will double the exemption for the estate tax and repeal it after six years. Republicans are hoping to move the plan through the House next week and are aiming for it to hit the Senate in around a month.

 

Senate Republicans are currently making their own tax plan in the hopes to compete with the House’s plan. More information is to going to be released to the public about what the plan includes over the next few days because there are sure to be changes. Now the anticipation grows as voting is projected to take place next week.