UPDATE 3 — 11/9, 7:37 p.m. EST: A CBO analysis released Wednesday shows the House’s tax reform bill would add $1.7 trillion to the federal deficit over the next decade, including additional debt service costs.
UPDATE 2 — 11/5, 5:00 p.m. EST: On Friday, House Republicans released a revised version of the “Tax Cuts and Jobs Act”, which immediately enacts higher tax rates as wages rise instead of in 2023 as was called for in the original bill.
The updated income bracket parameters, specifically a “chained CPI”, mean more Americans that now make up to $90,000 per year will be taxed at 25 percent, instead of 12 percent, saving the federal government an estimated $89 billion over the next decade.
House and Senate Democratic leaders Nancy Pelosi and Chuck Schumer have both vowed to oppose tax reform legislation as currently constituted.
UPDATE — 5:45 p.m. EDT: House Ways and Means Committee Chairman Kevin Brady (R-Texas) said Friday President Trump is lobbying for an Obamacare repeal provision supported by congressional conservatives to be included in tax reform legislation.
Rep. Brady, however, told reporters that including such an amendment could endanger the bill’s passage in the Senate.
“Importing health care into the tax reform debate has consequences, especially one where the Senate has yet to produce 50 votes on anything related to health care,” he said.
Amid much secrecy, the House GOP unfurled its long-awaited tax reform bill on Thursday.
In what President Trump has promised to be the largest overhaul of the U.S. tax code in decades, both the White House and congressional Republicans put forth a plan which conservatives argue would energize economic growth, create jobs and provide tax relief to the middle class.
Long-time budget hawk and tax-reform advocate, House Speaker Paul Ryan (R-Wis.), told reporters the plan, if adopted, would save the American family around $1,824 annually.
Describing the bill as a “massive tax cut for American families” and “rocket fuel” for the economy, President Trump said:
“We’re working to give the American people a giant tax cut for Christmas.”
Dubbed the “Tax Cuts and Jobs Act,” the 429-page bill would immediately reduce the corporate tax rate from 35 percent to 20 percent and converge individual tax rates from seven brackets to four. The plan would reset rates at 12, 25 and 35 percent, with the top rate remaining at 39.6 percent.
Inside the margins of the new tax brackets, married couples earning up to $90,000 annually would be taxed at 12 percent, income between $90,000 to $260,000 are taxed at 25 percent, income above $260,000 to $1 million at 35 percent, and married earners exceeding $1 million would pay 39.6 percent.
Similarly, individual income earners making up to $45,000 would pay 12 percent, between $45,000 to $200,000 are taxed at 25 percent, from $200,000 to $500,000 pay 35 percent, and income earners above $500,000 would pay out 39.6 percent of their annual income.
The bill also increases the child tax credit $600 to $1,600; adds a new family tax credit of $300 for dependents who are not children; and doubles the standard deduction for individual and married filers.
In the middle of fear retirement plans would face change, 401(k) plans remained untouched; however, the bill allows annual contributions to $18,500 from $18,000. For those beyond age 50, a one-time provision allows an additional $6,000 contribution to individual retirement accounts (IRAs).
In addition to dramatically altering the current tax code, the bill targets loopholes and eliminates deductions elsewhere. The bill would cap state and local tax write offs at $10,000, limit mortgage deductions on new loans up to $500,000 from the previous level of $1 million, as well as eliminate deductions for second homes and the personal exemption.
An ABC News/Washington Post poll released Friday showed that half of all U.S. adults oppose the tax cut proposal, with 60 percent saying that it favors the wealthiest Americans, including 61 percent of those who make $100,000 per year or more.
The Senate Finance Committee is expected to release its version of a tax reform bill next week.
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