Republican leaders in Congress proposed a plan Wednesday to reform the U.S. tax code, The New York Times reports. According to the newspaper, the GOP tax reform plan calls for reduced taxes for the wealthy, the middle class and businesses and preserves tax deductions for buying homes and charitable donations.
The nine-page framework presented by President Donald Trump in Indianapolis is meant to serve as a starting point for tax reform negotiations, which Republicans hope to finalize before the end of the year, but reveals little about how the government plans to avoid adding increased debt under the proposed plan, the article states.
The plan calls to reduce the corporate tax rate from 35 percent to 20 percent. It also proposes a reduction of the number of income-tax brackets from seven to three. To help low-income families, the plan would allow more American families to qualify for the Child Tax Credit. The new plan would also eliminate the estate tax and the alternative minimum tax.
Democrats oppose the plan, saying the reform disproportionately benefits wealthy Americans and does not specify income level restrictions for the newly proposed income-tax brackets, making it difficult to know how many Americans would fare under the new tax system, according to The New York Times.
The proposed tax reform will need near-total support from Republicans to pass through Congress. To avoid the chance of a filibuster, Republicans will seek to use a process known as “reconciliation” which would allow the bill to move through the Senate with a 51-vote majority, the Times reports.
The article states that to offset the cost of tax cuts, “most itemized deductions, including those widely used for state and local tax expenses, would also be eliminated.”
Business groups had mixed reactions to the proposed tax reform.
The National Association of Realtors spoke out against the framework, claiming a proposal to double the standard deduction would “all but nullify the incentive to purchase a home.”
“This proposal recommends a backdoor elimination of the mortgage interest deduction for all but the top 5 percent who would still itemize their deductions,” William E. Brown, president of the National Association of Realtors, says.
The National Association of Home Builders’ chief lobbyist, Jim Tobin, said many of his organization’s top priorities are included in the proposed reforms.
“We also recognize we’re in the opening stages of what is going to be a long fight, a long journey, to realize tax reform—so as the opening play in this, we feel good about continuing to move forward,” Tobin says.
“I hope that people will have the intestinal fortitude it’s going to take to do it right,” Republican Sen. Bob Corker of Tennessee says. “People say the heath care was hard—you have no idea. You have no idea how this is going to be.”
Republicans have abandoned their latest attempt to repeal and replace the Affordable Care Act, The Washington Post reports.
The latest health care bill, known as the Graham-Cassidy bill, would have undone many of the major components of the Affordable Care Act, the article states. Among the changes would be dropping the requirement for Americans to carry health insurance or face penalties and enabling states to develop their own health care systems with fewer federal regulations.
“We haven’t given up on changing the American health care system,” House Majority Leader Mitch McConnell says. “We are not going to be able to do that this week, but it still lies ahead of us.”