Photo via Instagram, realDonaldTrump

The Political Situation —

  • The Senate Budget Committee voted 12-11 along party lines to pass a tax reform bill out of committee — a key victory for the president given that it was uncertain as to whether two of its members would vote to approve it: Sens. Bob Corker (Tennessee) and Ron Johnson (Wisconsin). Both senators noted, however, that they could change their votes if the bill goes to the floor; Corker is concerned about the effects on the budget deficit while Johnson has questions about its effect on “pass through businesses.”
    • President Trump traveled to Capitol Hill on Tuesday to meet with Republican senators.
    • Trump has said he wants a tax bill on his desk before Christmas.
  • Republican leadership hopes to send the bill to the floor later this week for a vote by the full Senate, Sen. John Barrasso (Wyoming) — chairman of the Senate Republican Policy Committee — told Fox News on Tuesday.
  • Republicans hold a two-vote majority in the Senate and thus, it cannot afford to lose support among more than two of its members (assuming no Democrats vote in favor of the bill).
    • Some Republican senators have expressed concerns over various provisions of the bill — ranging from its repeal of the individual mandate for Obamacare to generally speaking, that it would create greater budget deficits compared to past years.

The Facts —

  • The Congressional Budget Office (CBO) reported that those making less than $40,000 a year would end up paying more in 2025 while those Americans with substantially higher incomes would get the biggest tax breaks.
  • The US House passed on 16 November its tax overhaul plan, which includes reducing the top corporate rate from 35% to 20%.
  • The final tally was 227 to 205. No Democrat voted for the measure and 13 Republicans voted against it.
  • Republicans who opposed the measure said that they objected to state and local tax deduction partial elimination — ones that impact heavily such states as California, New York and New Jersey that have high tax rates.
  • The bill would also eliminate the mortgage tax deduction.
  • Under the House bill, the standard deduction for individuals would double to $12,000 while that deduction for married couples would also double to $24,000.
  • There would be four different tax brackets for individuals and families.
  • The Senate bill would eliminate entirely the state and local tax deduction but it would preserve the mortgage tax deduction.
  • Some Republican members of Congress are concerned that the bill would lead to bigger deficits that Republicans have long opposed — something that Trump rebuts by saying it would lead to a growing a economy that would close deficits.
  • The Senate bill would also get rid of the individual mandate for Obamacare — one that is a sticking point for those Republicans who opposed outright repeal of the health care law.
  • The Senate measure has seven different tax brackets for individuals and families.
  • The Democrats, collectively, call the plan a giveaway to the wealthy, noting that it would eliminate the estate tax; the estate tax is as high as 40% and applies to estates valued at more than $10 million, or the cumulative net worth of a taxpayer.
  • The House and Senate will have to reconcile their two bills, with each chamber voting again, before it could be sent to President Trump’s desk.

The Context —

  • The Tax Policy Center said that most Americans would initially see their taxes fall as a result of the House plan. However, a quarter of filers would see them go up by 2027.

“We find the legislation would reduce taxes on average for all income groups in 2018 and 2027. The largest cuts, in dollars and as a percentage of after-tax income, would accrue to higher-income households. However, not all taxpayers would receive a tax cut under this proposal—at least 7 percent of taxpayers would pay higher taxes under the proposal in 2018, and at least 24 percent of taxpayers would pay more in 2027.”

  • The last time a comprehensive tax package passed the Congress was in 1986, during the Reagan administration.
  • The goal then had been to simplify the tax code by, in essence, reducing taxes and eliminating the tax favors that various industries had received — all to pay for the immediate loss tax revenues.
  • Over time, the industry lobbyist generally succeeded in getting their tax favors returned — and the code returned to being a complex set of rules, according to the Brookings Institution.
  • The House bill would add $1.4 trillion to the budget deficit over the next decade, if passed, according to the Joint Committee on Taxation.

Supporters of the Tax Bill —

  • President Trump tweeted:

“President Trump is taking the case for tax reform straight to Main Street. Here in the House, we’ve made it clear that our top priority this fall is reforming the tax code and cutting people’s taxes. Right now, our tax code is burdensome, incomprehensible, and puts American businesses at a severe disadvantage on the world stage. We want American companies to hire here and make things here. We want Americans to be able to keep more of their hard-earned money. That’s why we are committed to reforming the tax code and why President Trump reiterated his commitment today in Missouri. We are united in our determination to get this done.”

  • Senate Majority Leader Mitch McConnell tweeted:

  • Sen. Rand Paul (Kentucky) wrote in an op-ed appearing on FoxNews.com:

“This bill is not perfect. I would prefer a larger cut. I would prefer that the Senate bill match the House bill and keep some form of state and local deductions so that no one gets caught in the trap of losing too many deductions at once and failing to benefit from the tax cuts. Lastly, I’d like to see more permanence on the individual side.”

Opponents of the Tax Bill —

“So if you’re a middle class family, how do you judge this? If you own a home or want to one day, you lose. If you have a sick child or a family with long-term medical care needs, they take away the medical deduction, you lose. If you have student loans or want to have student loans or use the credit for lifetime learning – there’s a credit for lifetime learning – you lose. If your corporation wants to pay for learning for employees, that deduction is gone, you lose. If your family lives in a state, any state, and don’t want your income taxed twice, you lose. And if you plan to live past 65 and need Medicare, you lose.”

“Make no mistake: Middle-class homeowners will see their home values fall if this proposal moves forward, while large corporations walk away with the bulk of the tax cuts.

“American homeowners shouldn’t have to pay for corporate tax cuts with their home equity. It’s a matter of basic fairness; 1.3 million Realtors® have known since the beginning, and America’s 75 million homeowners are just beginning to learn, that homeowners will be the ones paying the tab. Realtors® will do our part to spread the word as we work with the Senate to address this impending assault on homeownership.”

  • Senate Minority Leader Chuck Schumer wrote on Twitter:

Full Text of the Tax Bill —

Read legislative text of Senate GOP’s tax overhaul legislation by kballuck1 on Scribd

Ken Silverstein contributed to this report.

The Whim News Team

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!

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