Congressional Republicans Outline New Tax Plan For 2018

By Nimra Noor, National News Writer

Government budgets are political documents, but tax proposals are even more so: The House Republican tax bill, released on Thursday, November 2, frameworks a $1.5 trillion plan, promising to deliver a significant tax cut for the rich and the corporations, while simultaneously constraining the middle class financially, according to the New York Times and Politico.

The House approved the budget blueprint in the last week of October, allowing Congress to pass the bill without any Democratic votes. House Speaker Paul Ryan has said he wants his chamber to approve the measure by Thanksgiving, with the goal of having it signed into law by the end of the year.

As he told the reporters in the Oval Office that the Tax Reform bill would likely be completed before Christmas, President Trump called it a “one of the greatest Christmas presents.” However, the controversy concerns who will benefit from this present: big businesses and the rich, which are a largely Republican voting class, appearing the tax cuts to be an affront on taxpayers in Democratic-leaning states, who compose a large portion of the middle class of the American economy.

If implemented, the Tax Reform will affect the different strata in a distinct manner, with some reaping the benefits, while others being further pushed down under a load of debt, according to Chicago Tribune.

For individuals and couples who earn more than $418,400 and $470,000 respectively, the tax rate will drop to 35 percent from the current rate of 39.6 percent. Besides a direct change in the tax rates, other aspects of the tax plan will benefit the rich, including significant changes to the death tax, as its repeal has always been a priority for the GOP leadership over the years. According to the current death tax, if an individual with over $5.5 million worth of property value were to pass away, the inheritor is required to pay a federal tax of up to 40 percent of the property value. This threshold has now been doubled to over $11.2 million, however the tax will be phased out after six years, being elimated by 2024.

Considering the middle class, designated by the Pew Research Center as households earning between $48,000 and $145,000 for a family of four, the new tax plan would assign these households into a single tax bracket of 25 percent, eliminating the two 25 and 28 percent brackets currently in place. In effect, the taxpayers could see a tax cut of around $700 a year, according to the Urban-Brookings Tax Policy Center. Although this tax deduction appears to provide relief for the middle class initially, the plan would likely eliminate most cataloged deductions, such as those for student loans or medical expenses, which have been used in place of the standard deduction by some in order to lower their tax burden.

For both individuals making up to $9,325 and couples making up to $18,650, the lower class faces an increase in the tax rate, which was previously at a 10 percent rate. However, the new 12 percent tax rate, the result of combining the previous 10 and 15 percent rates, will seemingly offer a tax reduction for that bracket of individuals and couples who had been taxed at a 15 percent rate. Even the single most apparent benefit, proposed in the Tax Reforms, for low-income Americans is questionable. With regard to an expansion of the child care tax credit, the Center for American Progress said families who earn less than $3,000 during the tax year do not reap its benefits, while the refundable portion phases in so slowly that low-income families only end up receiving a portion of it.

According to several media outlets, among them the Huffington Post, the GOP tax plan is a simple political statement about who matters more in American democracy: the heirs to hedge fund fortunes or everyone else in the country. The tax reforms of 2018 show that Trump and the Republicans have chosen the tycoons.

 

A version of this article appeared in the Tuesday, November 7th print edition.

Contact Nimra at

nimra.noor@student.shu.edu

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s