By Joe Farkus, NDG Contributing Writer
The U.S. House of Representatives passed its final version of the tax reform bill now heading to the President’s desk for signature Wednesday, Dec. 20. The House passed the bill by a vote of 224-201 with no Democratic support and little opposition from moderate Republicans. With the Senate having also approved this final version by a vote of 51-48, a rewritten tax code is no longer just a Republican campaign promise – it is a looming reality.
Both supporters and opponents acknowledge the final bill largely provides relief to businesses big and small, lowering the current corporate tax rate from 35 percent to 21 percent. Supporters of the bill claim lowering the corporate rate will help spur economic growth and job creation, while opponents view it as a giveaway to businesses that largely avoid paying taxes as it as.
“It is unacceptable that corporations continue to receive major tax breaks while they are simultaneously shipping jobs overseas and using loopholes in our tax code to avoid paying their fair share,” said Congressman Eddie Bernice Johnson in response to the House passing its version of the tax reform package.
Despite repeated claims of “simplifying the tax code” touted by many Republicans on Capitol Hill, the soon-to-be law maintains the current number of personal income tax brackets at seven. And although the vast majority of households will see their bracket’s tax rate cut, the largest breaks are targeted to higher income earners with many of the tax breaks going toward the middle class expiring by the end of 2025.
“It pretends to be a tax cut, but most working families will eventually see their taxes go up,” said Orson Aguilar, President of the Greenlining Institute – a multi-ethnic public policy, research and advocacy group. “It selectively targets Americans of color, who already sit on the losing end of a racial wealth gap that this bill will make worse.”
The bill awaiting the President’s signature also reduces the estate tax, allowing some of the wealthiest Americans to leave behind millions of dollars to their legatees without having to pay a cent in taxes. And while all taxpayers are likely to see a cut in the short-term, the Joint Committee on Taxation reports that by 2027, income earners making less than $75,000 a year will see a tax increase. The Congressional Budget Office also reports that by that very same year, the cuts included in the tax bill would add an estimated $1.41 trillion to the deficit – adding to the more than $20 trillion the U.S. is currently in debt.
Congressman Beto O’Rourke, who voted against the House version of the bill and is currently running for the U.S. Senate seat currently held by Ted Cruz, slammed the tax reform effort via Twitter, claiming it “hurts middle-class families, causes (the Texas) uninsured rate – already the highest in the country – to rise, (and) hurts our public schools”.
Visit here for a tax calculator that factors in the changes included in the new tax reform package.
