web
stats

The Facts —

  • Republican congressional leaders unveiled on Wednesday a nine-page document that outlined the “framework” for their tax reform plan. The proposal focuses in part on reducing corporate taxes in an effort to create new jobs — a position that the Democratic leadership says is ill-conceived and one they intend to try and block and to push instead more tax benefits for working families.
    • The document is titled “The Unified Framework For Fixing Our Broken Tax Code.”
  • Speaker of the House Paul Ryan (Wisconsin) released a one-page summary of the framework, which highlighted the following:
    • Shifting the existing seven tax brackets into three;
    • “Roughly” doubling the standard deduction and increasing the Child Tax Credit;
    • Eliminating many itemized deductions while retaining tax incentives for “home mortgage interest and charitable contributions,”as well as “work, higher education, and retirement security;”
    • Repealing the Death Tax and the Alternative Minimum Tax (AMT);
      • The Death Tax is called “the estate tax” by the IRS and is a tax that must be paid on estates worth more than $5.49 million when they are transferred to individuals after someone dies, according to Fox Business.
      • According to TurboTax:
        • The AMT “was designed to keep wealthy taxpayers from using loopholes to avoid paying taxes. But because it was not automatically updated for inflation, more middle-class taxpayers were getting hit with the AMT each year.”
    • Lowering the maximum tax rate for small businesses;
    • Lowering the corporate tax rate from 35% to 20%;
    • Allowing, “for at least five years, businesses to immediately write off (or ‘expense’) the cost of new investments;”
    • and “imposing a one-time, low tax rate on wealth that has already accumulated overseas.”
  • Democratic leadership has come out in strong opposition of the tax reform plan, including Senate Minority Leader Chuck Schumer (New York), ranking member of the Senate Finance Committee Sen. Ron Wyden (Oregon), and House Minority Leader Nancy Pelosi (California).
    • Their general arguments include lack of detail on how this will save money for working class families and disbelief that cutting corporate taxes will translate into creation of new jobs.
    • Speaker Ryan, however, described the plan as “simple, fair… pro-growth and pro-family.”

The “Framework” for the Republican Tax Reform Plan —

  • The “framework” document is nine pages long, but any resulting proposed legislation will be much longer, leaving major details to be developed by Congress.
  • The main take-away points from the “framework” are as follows:
    • The top tax bracket will decrease from 39.6% to 35%;
      • The document qualifies this by adding:

“An additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers.”

    • The lowest tax bracket will increase from 10% to 12%;
    • The intermediate tax brackets are largely eliminated, with only one other tax bracket to fill in the gap at 25%;
    • Roughly doubling the standard deduction to:
      • $24,000 for married taxpayers filing jointly;
      • and $12,000 for individuals filing independently;
    • Repealing personal exemptions for dependents in favor of a $500 credit for non-child dependents, while raising the Child Tax Credit and also raising the level of income allowed to be earned and still claim the Child Tax Credit;
    • Repealing many itemized deductions while retaining tax incentives for “home mortgage interest and charitable contributions;
    • Repeal of the Death Tax and the generation-skipping transfer (GST) tax;
      • Investopedia explains the GST tax as follows:
        • “A generation skipping transfer (GST) refers to the shift of property by gift or at death to a person who is two or more generations below that of the person granting the gift. The person giving the gift is referred to as the transferor and the recipient is known as the skip person.”
        • “Many people use a grandchild as a skip person, but a skip person does not have to be a family member. Any individual other than a spouse or ex-spouse is eligible to receive a generation skipping transfer as long as they are at least 37.5 years younger than the transferor.”
        • “The GST tax is a federal tax imposed on gifts given to skip-persons to make certain that taxes are paid at each generational level and cannot be escaped through the use of a trust.”
        • “The tax is only due when a skip person receives amounts in excess of the GST estate tax credit. Fortunately, most people will never encounter the GST tax because the tax credit levels are relatively high. Since 2006, the GST estate tax credit has been $2 million per person, meaning that every taxpayer is entitled to a $2 million exemption.”
    • Limiting the maximum tax rate for small businesses to 25%;
    • Lowering the corporate tax rate from 35% to 20%;
    • and a plan called “the American model for global competitiveness” which included the following sub-points and statements:
      • TERRITORIAL TAXATION OF GLOBAL AMERICAN COMPANIES
        • “The framework transforms our existing ‘offshoring’ model to an American model. It ends the perverse incentive to keep foreign profits offshore by exempting them when they are repatriated to the United States. It will replace the existing, outdated worldwide tax system with a 100% exemption for dividends from foreign subsidiaries (in which the US parent owns at least a 10% stake).
        • “To transition to this new system, the framework treats foreign earnings that have accumulated overseas under the old system as repatriated. Accumulated foreign earnings held in illiquid assets will be subject to a lower tax rate than foreign earnings held in cash or cash equivalents. Payment of the tax liability will be spread out over several years.”
      • STOPPING CORPORATIONS FROM SHIPPING JOBS AND CAPITAL OVERSEAS
        • “ To prevent companies from shifting profits to tax havens, the framework includes rules to protect the U.S. tax base by taxing at a reduced rate and on a global basis the foreign profits of U.S. multinational corporations. The committees will incorporate rules to level the playing field between U.S.-headquartered parent companies and foreign-headquartered parent companies.”
  • This “framework” document does not amount to proposed legislation, but is instead a proposed roadmap for Congress to develop legislation to be introduced and voted on in the House and the Senate.

Supporters of the Republican Tax Reform Plan —

  • President Donald Trump described the Republicans’ outline for tax reform as the vehicle for “historic tax relief for the American people” in a live stream from Indiana, shared on the White House’s Facebook page on 27 September. Trump added:

“Under our framework, we will dramatically cut the business tax rate so that American companies and American workers can beat our foreign competitors and start winning again. We will reduce the corporate tax rate to no higher than 20%… below the average of industrialized nations. This is a revolutionary change and the biggest winners will be the everyday American workers as jobs start pouring into our country, as companies start competing for American labor and as wages start going up…

This will be the lowest top marginal income tax rate for small and mid-size businesses in more than 80 years…

Tax reform has not historically been a partisan issue – and it does not have to be a partisan issue today… there is no reason Democrats and Republicans in Congress should not come together to deliver this giant win for the American people and begin the Middle Class Miracle once again.”

  • Senate Majority Leader Mitch McConnell (Kentucky) tweeted on 27 September:

  • Speaker of the House Paul Ryan (Wisconsin) said on 27 September:

“This unified framework delivers a new tax code that is simple, that is fair, that is pro-growth and pro-family, cutting taxes on hard working Americans so that you can keep more of your hard-earned paychecks, simplifying the tax code so that you can file your taxes on a form the size of a post card, reforming our tax system so that businesses, particularly small businesses, can gain a competitive edge on our foreign competitors and taking bold steps to bring jobs and profits from overseas back home to the United States of America…

This is vital American’s future, and it is urgent. We want the American people to wake up in the new year with a new system, so our tax writers on the Hosue Ways an Means Committee will work with the members of the Senate Finance Committee to turn this framework into legislation.”

  • Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (Utah), and House Ways and Means Committee Chairman Kevin Brady (Texas), along with Ryan and McConnell, said the following in a joint statement on tax reform on 27 September:

“Given our shared sense of purpose, the time has arrived for the two tax-writing committees to develop and draft legislation that will result in the first comprehensive tax reform in a generation. It will be the responsibility of the members of those committees to produce legislation that achieves the goals shared broadly within Congress, the Administration, and by citizens who have been burdened for too long by an outdated tax system. Our expectation is for this legislation to move through the committees this fall, under regular order, followed by consideration on the House and Senate floors. As the committees work toward this end, our hope is that our friends on the other side of the aisle will participate in this effort. The President fully supports these principles and is committed to this approach. American families are counting on us to deliver historic tax reform. And we will.”

Critics of the Republican Tax Reform Plan —

  • Senate Minority Leader Chuck Schumer (New York) joined Sen. Ron Wyden (Oregon), who is the ranking member of the Senate Finance Committee, in speaking out against the GOP tax reforms in a press conference streamed live on Facebook on 27 September.
    • Schumer said:
      • “When Donald Trump was talking about this plan over the past few days he talked about focusing on the middle class and not helping the wealthy. The plan is a major disappointment because it so deviates from everything the President said.”
      • “There’s no proof, no real belief, no real argument, that [corporations are] going to take this new money [from a tax rate cut from 35% to 20%] and put it into creating jobs.”
      • “There is no indication, none at all, that under this framework the corporate tax cut will be upset by corporate loophole closures.”
      • “By repealing the estate tax, which goes only for the very wealthy Republicans are giving $269 billion dollars to the richest two-tenths of one percent.”
      • “[This plan] gives huge tax cuts to the wealthiest and the biggest corporations and socks it to the middle class.”
      • “They raised the bottom rate from 10 to 12%, the lowest rate on the poorest and working class Americans. … The top rate on the wealthiest comes down and the bottom rate on working class families goes up.”
  • Schumer added via Twitter on 27 September:

  • Wyden released the following statement on 27 September:

“If this framework is all about the middle class, then Trump Tower is middle-class housing. It violates Trump’s tax pledge that the rich would not gain at all under his plan by offering sweetheart deals for powerful CEOs, giveaways for campaign coffers and a new way to cheat taxes for Mar-a-Lago’s loyal members. This continued lack of detail for the middle class guarantees that average Americans will be the ones hit with shrinking paychecks and higher tax bills…

Meanwhile, Senate Republicans have shaken hands on a deal that pays for tax cuts for the ultra-wealthy and multinational corporations by gutting Social Security and Medicare. Just yesterday Republicans were proposing to slash Americans’ health care because the country couldn’t afford it. Now they’re proposing to give trillions of dollars in tax breaks to the fortunate few at the expense of the vulnerable many…

Senate Democrats remain steadfast in calling on Republicans to drop their failed partisan process and work together on a tax bill that puts hundreds of dollars into each middle-class paycheck, brings red, white and blue jobs back to America and is fiscally responsible. This will give more families the opportunity to save for retirement, and pay for college, housing and health care.”

  • Wyden also tweeted about the proposed tax reform plan on 27 September:

  • Wyden’s office shared the following tweet, from the Senate Finance Committee’s page, on 27 September, depicting middle class families left with their hands empty while the wealthy and corporations and depicted with confetti, happy faces and champagne bottles:

  • House Minorty Leader Nancy Pelosi issued the following statement on 27 September:

“Democrats have always been willing to engage in bipartisan tax reform. Republicans’ tax framework is not tax reform, it is a framework that gives away the store to the wealthiest, while sticking the middle class with the bill. Cutting the top tax bracket for the richest and the $270 billion giveaway of repealing the estate tax reveal a GOP tax framework built for billionaires. Meanwhile, the token provisions for hard-working middle class families are likely swallowed by Republicans raising the base rate and forcing them to pay more for their state and local tax burden…

Make no mistake: after Republicans’ tax plan blows a multi-trillion dollar hole in the deficit, they will sharpen their knives for Social Security, Medicare, Medicaid and vital job-creating investments for middle class families across America. Behind Republicans’ vague framework and deceitful math, the American people find a billionaires-first tax plan that treats the middle class as an afterthought…

The American people want tax reform for hard-working middle class families, and not one penny more in deficit-exploding tax breaks for the wealthiest one percent. The GOP tax framework today shows Republicans are still mired in the tired, trickle-down agenda that ballooned our deficit and weakened middle class America. Democrats will continue to demand job-creating, wage-raising tax reform with not one penny in tax breaks for the wealthiest one percent.”

  • Pelosi, the House Democratic Caucus and Democratic members of the House Ways and Means Committee held a forum discussing tax reform streamed live on Facebook on 27 September, which can be watched in full here.

Stephanie Haney contributed to this report.

The Whim News Team
AUTHOR

The Whim News Desk

We'd rather be second and accurate than be first and wrong. The Whim News Desk is a dedicated team of researchers and investigators committed to presenting the news without bias. Follow us @TheWhimOnline for daily news coverage without the spin!

Related News

Read More Justice Department Investigating Fetal Tissue Practices by Planned Parenthood, Others

The Whim News Desk , in News

Read More Senate to Vote on GOP Tax Bill By Week’s End

The Whim News Desk , in Politics

Read More Chinese Billionaire Buys Stake in Brooklyn Nets, Creates Record $2.3B Valuation

The Whim News Desk , in News

Send this to a friend