The Differences Between the Tax Reform Bills in Congress

Christopher Tremoglie, Editor

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After the Trump and GOP legislative victory last week, tax reform in the United States is under way. The Senate squeaked out a successful vote late last week that will reshape our country’s tax code. This bill, is different than the bill that left the United States House of Representatives previously.

This has prompted the question, what is the difference between the two bills?

 

The Heritage Foundation recently did some research that can answer these questions for you.

 

First and foremost, each version of the bill cut taxes. While slightly different, both bills drastically change the archaic and antiquated system our country currently follows. each version of the bill offers tax cuts for businesses as well as individuals. Additionally, each version of the bill offers tax cuts for businesses as well as individuals. Also, they largely repeal the state and local tax deduction. Of significant importance, as well as one of the main hopes for each bill, is that it will allow businesses to devote a higher amount into our country’s economy through provisional expensing.

 

Tax Brackets

 

The Senate Bill contains seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 38.5%. The House Bill contains only four brackets: 12%, 25%, 35%, and 39.6%. Additionally, the House Bill has a “bubble rate” of 45.6%. In case you were wondering (or if you just want to be able to recite it for use in debates against liberals), currently, the law has seven tax brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

 

Based on these brackets, The Heritage Foundation provided the recommendation of “lower marginal tax rates for all Americans, including the top marginal tax bracket.”

 

Another section to note is that regarding Obamacare taxes. The current law calls for 3.8% net investment income tax. Additionally, there is an individual mandate penalty and a 0.9% Medicare payroll tax. The House Bill makes no changes to this however, the Senate version repeals the individual mandate. This would save millions of Americans, lots of money.

 

The “Child Tax Credit” is another part of the bill that drew lots of attention. With the GOP version of each, if you have a tax-deductible child, you will be getting more money in your pocket than you do on the current bill. The current bill provides a $1000 credit for each child (and is phased out at $110,000 if you are married). With the GOP versions, the tax credits are higher, albeit different in each version. The House Bill version allocates a $1600 credit; $300 credit for each parent and non-child dependent. This credit is phased out at over double the current rate – $230,000 if you are married. The Senate Bill goes even higher! A $2,000 tax credit for each child as well as a $500 credit for non-minor child dependents. These credits would be phased out at $500,000 if you are married.

 

Additionally, the new bill(s) introduce an increase in standard deduction. Currently, the sum is $6,350 if you are single and $12,700 if you are married. Each version of the new proposed bill raises those totals to $12,000 if you are single and $24,000 if you are married.

 

Ultimately, the best section is to not believe the mainstream media or any politicians but to do the bill yourself. If you rely on the media and opponents of the bill such as liberal Democrats, they will scare you into thinking you are going to lose all your money, be completely broke and the tax cuts will only benefit the wealthy. As you can see from the data I provided above, those benefits would not apply to the alleged “wealthy.” They are geared to help the every-day American.

 

This is not to suggest the bill is perfect. It is not. However, there have been numerous errors, omissions, and revisionist politics at play regarding this bill. One can be critical of a bill without using a Marxist inspired tactic of attempted socio-economic class warfare.

 

After all, it is hard to say this bill is geared for the wealthy when the child tax credit increase would apply to those making $230,000 or less. Additionally, the same logic applies for the increase in the standard deductions.

 

And while there are tax cuts given to the wealthy too, it is important to remember that it is this socio-economic group that does pay the majority of taxes in this country. The top 50% of all Americans rated based on their income, pay over 97% of all the taxes in this country. When opponents deride the wealthy as “not paying their fair share,” that is complete and utter hogwash and political theater.

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