Congress will continue working on tax reform early this week before recess occurs later in the week for the holiday break with competing Republican House and Republican Senate tax reform plans on the table and details still needing to be ironed out before it can be signed by President Trump.
Both the House and Senate have approved their own versions of the Tax Cuts and Jobs Act that includes deficit spending over $1 trillion over 10 years through an extensive overhaul of taxes that consists of a doubling of the standard deduction for individuals, lowering the corporate tax rate to 20 percent, and reducing the amount of real estate tax deductions of up to $ 10,o00, among other measures.
The Tax Policy Center (TPC) released a distributional estimate of the Tax Cuts and Jobs Act, based on the Senate version that was passed on December 2nd and includes a repeal of the individual mandate from the Affordable Care Act or Obamacare, requiring all Americans to have health insurance.
Based on their estimate, taxes would fall for all income groups on average in 2019, increasing the overall average after-tax income by 1.6 percent.
However, tax cuts as a percentage of after tax income would be larger for higher income groups, with the largest cuts as a share of income going to taxpayers in the 95th and 99th percentiles of the income distribution.
The pattern of tax cuts across income groups would be similar in 2025, the final year before nearly all of the individual tax cut provisions sunset, although the amount of average of average tax decreases would be slightly smaller for most income groups.
By 2027 the overall tax reduction would just be 0.3 percent of after tax income.
Low and middle income tax payers would see a slight change while taxpayers in the 1 percent would receive an average tax cut of 1.1 percent of after-tax income.
When applying an analysis that evaluates the macro economic effects and interest costs of the Tax Cuts and Jobs Act passed by the Senate Finance Committee on November 16th, the legislation is projected to increase debt as a share of GDP by over 5 percent in 2027 and by over 4 percent in 2037 while it just lifts GDP by 0.7 percent in 2018 and has a little effect on GDP in 2027.
President Trump tweeted an optimistic tweet on Sunday about the upcoming tax cut bill and claimed the end result will be “SPECIAL!”
“Getting closer and closer on the Tax Cut Bill. Shaping up even better than projected. House and Senate working very hard and smart. End result will be not only important, but SPECIAL!”
Getting closer and closer on the Tax Cut Bill. Shaping up even better than projected. House and Senate working very hard and smart. End result will be not only important, but SPECIAL!
— Donald J. Trump (@realDonaldTrump) December 10, 2017
Sen. Bernie Sanders (I- Vermont) remains a critic of the Tax Cuts and Jobs Act and said on NBC’s Meet the Press that one of the absurdities of the Republican inspired tax cut plan is the fact that Republicans moved forward with the tax overhaul legislation with no input by Democrats and also no public hearings.
Sen. Sanders also expressed disapproval with Republican Tax Cuts and Jobs Act for the imbalance of the tax cuts that are weighted more towards helping the wealthiest 1 percent of Americans and corporations.
“What this tax bill is about is nothing more than a gift to billionaire campaign contributors to the Republican Party. You have 62 percent of all of the tax benefits going to the top 1 percent, 40 percent going to the top one-tenth of 1 percent.” Sen. Sanders said.
“At the end of 10 years, 83 million American middle class taxpayers will be paying even more in taxes. Thirteen million people will lose their health insurance. And they’re going to run up a deficit of $1.4 trillion” Sen. Sanders added.
Sen. Sanders said that he hopes the American people would say that at a time of massive income and wealth inequality, where the top one-tenth of one percent owns more wealth than the bottom 90 percent, why should we give massive tax breaks to people who don’t need it and then cut back on programs that middle class people do need.
According to an Economist/ YouGov poll taken from December 3-5th a majority of Americans, 29 percent strongly oppose the Republican tax plan that is being debated in Congress.
Twenty-seven percent of polled Americans have no opinion while 19 percent somewhat support the new tax plan, 13 percent somewhat oppose, and just 12 percent strongly support the tax plan.
Concerning the mortgage interest deduction, a majority of Americans, 36 percent, prefer the Senate version which makes no changes to the current deduction and allows a married couple to deduct the interest paid on a home mortgage with a loan value up to $ 1,000,000.
Thirty-two percent of Americans prefer the House version of the mortgage interest deduction which lowers the interest deduction amount to $500,000 or less.
Another thirty-two percent of polled American were not sure.
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