House Passes Major Tax-Cut Plan
It's the biggest tax reform bill since 1986. Can Senate Republicans follow suit?
On Thursday, the Republican House passed its nearly $1.5 trillion tax-cut bill. House Speaker Paul Ryan (R-WI) stated, “This country has not rewritten its tax code since 1986. The powers of the status quo in this town are so strong. Yet 227 men and women of this Congress broke through that today.” While Ryan’s sentiment is indeed understandable, it may prove to be moot if Republicans in the Senate are unable to pass their own comprehensive tax reform. However, this should at least be an encouragement to Senate Republicans, as the Senate Finance Committee voted 14-12 on Thursday to send the GOP’s tax bill to the Senate floor for a full vote, which Senate Majority Leader Mitch McConnell (R-KY) plans to hold after Thanksgiving.
The House bill aims at several main goals that include streamlining and simplifying the tax code, cutting taxes on businesses, creating jobs and increasing wages for American workers, and providing relief for middle class families. The legislation drops the corporate tax rate down from its current 35% to 20%, lowers the estate tax and would eventually phase it out entirely, and reduces the number of tax brackets from seven to four. Republicans estimate that a typical middle class family of four would see their taxes drop by an average of $1,182.
Rep. Kevin McCarthy (R-CA), highlighting the tax plan’s benefit to small business, said, “Everybody starts getting a tax cut as you move forward. Small business will have the lowest rate since before World War II. And think of this: We lowered it even further after it came through committee. They will only pay 9% on the first $75,000. So for everyone who has ever dreamed of being an entrepreneur — here’s your chance; here’s your opportunity.”
The Tax Foundation scored the tax plan and estimated that it would create 975,000 new full-time jobs and grow GDP by 3.9%. The Council of Economic Advisers estimated that the legislation would increase GDP by 3% to 5% and that Americans could expect to see their incomes increase by an average of $4,000.
Now Americans will wait to see if Senate Republicans are able to maintain the positive momentum their House colleagues have created.