UPDATE — 6:08 p.m. EDT: A report released Wednesday by the non-partisan Urban-Brookings Tax Policy Center shows tax cuts introduced by House Republicans earlier this week would add $3.8 trillion to the national debt over the next 20 years.
According to the analysis led by a former Obama administration official, approximately 67 percent of taxpayers would pay less to the federal government under the proposals, while only nine percent would see a tax increase.
Conversely, a joint congressional committee found only $631 billion in federal revenue will be lost by 2028 if the GOP plan is adopted.
House Republicans unveiled three new tax bills Monday, aiming to strengthen the sweeping 2017 Tax Cuts and Jobs Act by making permanent individual tax rates originally set to end in 2025.
Addressing reporters on Capitol Hill, House Ways and Means chairman, Rep. Kevin Brady (R-Texas), assured taxpayers the new legislative proposals would help keep U.S. tax code competitive with the rest of the world, and said:
“Under our new system, we’re seeing incredible job growth, bigger paychecks, and a tax code that works on behalf of families and American businesses. Now it’s the time to ensure we never let our tax code become so outdated again.”
Under the new legislation, individual tax rates lowered in the 2017 law would become permanent and the new standard deduction rates, now set at $12,000 for individuals and $24,000 for married couples, would abide beyond 2025.
Similarly, the bills would lock into place the pass-through provision for individually owned small businesses paying taxes on commercial income declared on their personal IRS tax returns.
To lower retirement-account fees, the bill would allow employers to offer employees the right to join multiple-employer plans with fellow employees. Employees with annuities in 401(k) plans would also be free to transfer contract tax to an IRA account without penalty.
Additionally for employees with retirement plans, the bill would remove the minimum distribution requirement that those over the age of 70 and-a-half must draw from their IRA and 401(k) accounts.
Moreover, for non-retirement purposes, the bill would allow earners the right to contribute up to $2,500 yearly of after-tax income into a tax-free universal savings account.
The bill would also allow parents to remove up to $7,500 from retirement plans free of penalty within a year of the arrival of a child and allow parents to use money in a 529 college savings account for academic purposes. Furthermore, the bill would permit parents to withdraw up to $10,000 from a 529 to manage student debt.
Immediately after the plan was unfurled, it drew swift condemnation from Democrats. Blasting the plan as a tax giveaway to the wealthy in preparation for cuts to welfare and healthcare programs, Rep. Richard Neal (D-Mass.), the ranking Democrat on the Ways and Means Committee, said:
“This tax legislation won’t help workers or families, but it will further enrich GOP donors and provide Republicans with more ammunition to attack programs like Medicare and Social Security.”
While Republicans and some economists have credited the 2017 tax reform bill for the resurgent economy, no Democrat in either chamber of Congress voted in favor.
[Washington Post] [The Hill] [Photo courtesy Roll Call/Getty Images/CNBC]