By State Representative, Leon D. Young
Desperate for a legislative victory, of any kind, Senate Republicans passed their tax bill in the wee hours of Saturday morning, marking a significant triumph for a body that failed last time around to repeal the Affordable Care Act.
There are several key differences between the House and Senate Tax Reform Bills, which include:
• The Senate bill sunsets tax breaks for individuals in 2025, something it did to save money, so their bill would meet reconciliation rules. The House bill makes its individual tax cuts permanent. The corporate rate, meanwhile, would be permanent in both bills.
• Speaking of the corporate tax rate. The Senate bill enacts its 20% corporate rate in 2019. The House bill enacts its 20% corporate rate right away in 2018.
• The Senate bill doubles the exemption on the estate tax so that you could pass down up to $11 million tax free, but the House bill entirely repeals the estate tax in 2024 so you could pass down any amount of money tax free. The Senate bill maintains the current mortgage interest deduction of $1 million. The House bill cut it in half to $500,000.
• The House bill repealed the alternative minimum tax. The Senate bill maintained it.
• The Senate bill has seven tax brackets and they lowered the top rate. The House has four and they maintained the top rate.
• There are major differences between how the Senate and House structure taxes for so-called pass-through businesses. It’s a bit complicated, but just know that it could be a major sticking point. It already was in both chambers.
(There are even more than that, but those are the biggies.)
Republicans continue to insist that their tax reform initiative is needed to simplify the tax code and to provide some tax relief to the middle class. But, in all honesty, the real focus of the Republican scheme was never meant to accomplish either of those objectives.
In truth, this tax reform plan is really for the wealthy and big corporations, while severely hurting the poor and middle class. It’s estimated that this initiative will add a staggering $1 trillion to the national debt. However, some experts strongly believe that the deficit will be increased closer to $1.5 trillion.
Here’s one last thing to consider. Donald Trump continues to insist that he will pay more in taxes under this new plan. This is a blatant lie. With the repeal of the estate tax, Trump will pay $1 billion less in taxes. Just another example of the fat cats getting fatter at our expense.