On Thursday October 26, 2017,  the House passed the Senate’s proposed budget resolution that would pave the way for tax reform legislation. The narrow vote, 216-212 in favor of the budget, gives Congress the ability to pass its tax reform bill as early as November 1st, according to the chairman of the tax-writing House Ways and Means Committee. 

The passage of the bill could not have come at a better time for the Republican majority because the current congressional session ends in less than thirty days. The Ways and Means committee is scheduled to review the legislation on November 6. If the legislation passes, it would be the first tax reform bill passed since Reagan’s administrations.  

The bill proposes three income brackets for federal taxes: 12 percent, 25 percent, and 35 percent. However, there have been no reports that specify which percentage will go for each level of income.  Corporations will no longer have to pay “double taxation”: a concept where companies pay an income tax twice since their executives pay individually as well. In addition, there are speculations that the federal income tax will go down from 35 percent to 20 percent. The purpose of these tax deductions are to try and convince corporations to not move money overseas, but to try and invest more money in the United States. 

Although the bill would benefit corporations and working families, it  would hurt the middle class. If the bill is passed, it can raise the standard deduction for filers, but will eliminate personal exemptions, which may result in a tax increase for many middle income families. So, states such as California, New Jersey, and New York are against the proposal.  In addition,  top republicans such as Representative Tom Reed, R-(District 23) New York, Representative Peter King, R- (District 2) New York, and Leonard Lance, R-(District 7) New Jersey, have called on Republicans to alter the bill in a way that would eliminate this issue. 

The policy would also be another blow to the national debt. The bill would have limited ways to make back the money that comes from the current tax rates. Senator Paul was the only republican senator to vote against the Senate budget, fearing that the plan would only add additional costs of $1.5 trillion dollars to the national debt, but he has said he is “all in” on the tax reform package.

With the policy now likely to pass the Senate within weeks, we asked some members of the Pine Crest Student body on how they feel about the policy.  Junior Mason Berger believes “Tax reform is necessary.  Doing taxes has a whole industry that preys on it.  Trump’s, however, is bad.  It is reminiscent of trickle down economics which failed for everyone who was not a billionaire.”  Junior Jared Orenstein disagreed saying “The Tax Reform Bill would benefit families.  Congress ought to think about families when voting.” Junior Julian Daskal has a similar view on tax reform. He says that “Sure, there are some problems with it (tax reform). There would be less money going into the government, meaning less money to remain operational. However, many pros come with it. Less tax cuts for business can mean more incentive to remain operational. Industries like aerospace and biopharma would not want to take loopholes and would be more focused on operating properly.”

Sources:  Business Insider, CBS News, CNN, Washington Post,  LA Times, Fox News, NPR, CNBC, POLITICO, Washington Times

Photo Source: Air Force Special Operations Command