UPDATE: Congress passes 2018 budget, paving the way for massive tax reform

UPDATE 3 — 10/31, 11:38 a.m. EDT: House Ways and Means Committee Committee Chairman Kevin Brady (R-Texas) announced Saturday that the GOP’s tax reform legislation has been changed to preserve the property tax deduction on federal income returns.

The move comes in conjunction with an announcement by the National Association of Home Builders that it was pulling its support for the bill. Without the deduction’s cancellation, tax breaks slated for implementation are expected to increase the federal deficit by nearly $3 trillion over the next 10 years.

In a Tuesday interview with radio talk show host Hugh Hewitt, Rep. Brady said state and local tax deductions will not be included. 

“Our lawmakers in those high-tax states really believe their families are being punished most by property taxes,” he said.

 

UPDATE 2 — 10/26, 11:24 a.m. EDT: The House of Representatives narrowly passed a $4 trillion budget plan on Thursday, which will allow congressional Republicans to start finalizing White House-supported tax reform legislation.

The outline passed by a vote of 216–212 and calls for a $5 trillion reduction in federal outlays over the next 10 years, including mandatory healthcare benefits.

 

UPDATE — 3:43 p.m. EDT: A new Reuters/Ipsos poll shows that an overwhelming majority of registered voters in America oppose the GOP tax cut plan which would balloon the federal deficit by $1.5 trillion over the next 10 years.

Approximately 70 percent of respondents said closing the annual federal budget gap should be a higher priority than reducing the tax burden of large corporations and the well-to-do.

Among registered Republicans, three-quarters indicated reducing the federal debt is more important than corporate tax cuts, while slightly less than two-thirds said it’s more important than reducing taxes for the richest Americans.

 

Following weeks of tense negotiations and a late-night debate on the Senate floor, Congress’ upper chamber approved a White House supported fiscal year 2018 budget plan on Thursday.

Estimates place overall budget cuts at roughly $5 trillion.  The proposal also will add $1.5 trillion to the deficit over the next decade.

Following the budget’s passage in the Senate, the White House released a statement which read:

“This resolution creates a pathway to unleash the potential of the American economy through tax reform and tax cuts, simplifying the overcomplicated tax code, providing financial relief for families across the country, and making American businesses globally competitive. President Trump looks forward to final enactment of the Fiscal Year 2018 budget resolution so we can bring jobs back to our country.”

The measure passed 51–49, with Sen. Rand Paul (R-Ky.) voting against the plan.

“Passing this budget is critical to getting tax reform done, so we can strengthen our economy after years of stagnation under the previous administration,” said Senate Majority Leader Mitch McConnell.

Under the outline passed by the Senate, spending will remain at 2017 levels except for non-defense spending; Medicare’s baseline spending will be cut $473 billion; and Medicaid will be cut approximately $1 trillion.  The proposed cuts to Medicare and Medicaid require further legislation.

The budget proposal demands the White House and Congress broker a deal prior to Dec. 8 on discretionary spending.  Failure to come to terms without a stopgap measure would result in a government shutdown.

Also included in the measure is language which protects the GOP’s coveted $1.5 trillion tax cut from Democratic filibustering.

The House of Representatives is expected to vote on the Senate budget proposal on Thursday, Oct. 26.  In a Sunday conference call with House Republicans, President Trump urged GOP members to support the Senate bill, joining Speaker Paul Ryan in arguing the measure gives tax reform its best chance of passing by the end of December.

The lower chamber’s 2018 budget includes more estimated federal revenue that does not add to the deficit through 2028.

On Monday, Trump signaled disagreement with Republicans on Capitol Hill who are proposing changes to the tax code as it relates to the 401(k) retirement program, in order to pay for other tax cuts.

“(The 401(k) system) has always been a great and popular middle class tax break that works, and it stays!” Trump tweeted.

 

[The Hill] [Washington Post] [Roll Call] [Reuters] [AP] [Bloomberg]

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