by Michael Snyder, End Of The American Dream:
Republican members of Congress are racing to pass the tax reform bill so that they can get home in time for Christmas, and it looks like it is actually going to happen. The key is the Senate, and at this point it looks like there will be enough votes, but we have seen surprises before. As I have stated previously, I would have voted for this bill, but nobody should pretend that this fixes our tax system. The tax code is still going to be more than two million words long, the regulations are still going to be more than seven million words long, and Americans are still going to spend billions of hours and tens of billions of dollars complying with the most complicated tax system on the entire planet.
The House of Representatives passed the tax reform bill on Tuesday, but because of a couple minor snags they are going to have to vote again on Wednesday. The following summary of where we are currently at in the process comes from USA Today…
House Republicans on Tuesday passed the most significant overhaul of the tax code in three decades, but the bill hit a late-afternoon glitch when the Senate parliamentarian ruled that three minor provisions in the bill did not comply with strict budget rules and would have to be stripped out.
That means the Senate will likely vote on a revised bill Tuesday night, forcing the House to vote again Wednesday on the tweaked tax package before Republicans can claim their first major legislative win and deliver the $1.5 trillion package to President Trump before Christmas, as he requested.
Even though there is still so much work to be done, at least this is a step in the right direction. Any time we can lower tax rates we should do so, and this bill also includes many other desperately needed fixes. The following list of 16 major things that this bill accomplishes comes from CNN…
1. Lowers (many) individual rates
2. Nearly doubles the standard deduction
3. Eliminates personal exemptions
4. Caps state and local tax deduction
5. Expands child tax credit
6. Creates temporary credit for non-child dependents
7. Lowers cap on mortgage interest deduction
8. Curbs who’s hit by AMT
9. Preserves smaller but popular tax breaks
10. Exempts almost everybody from the estate tax
11. Slows inflation adjustments in tax code
12. Eliminates mandate to buy health insurance
13. Lowers tax burden on pass-through businesses
14. Includes rule to prevent abuse of pass-through tax break
15. Slashes corporate rate
16. Change how U.S. multinationals are taxed
Sadly, none of these changes apply for the 2017 tax year. So when you are preparing your tax return next spring all of the old rules will still apply. For much more on the details of this tax bill, please see my previous article entitled “Do You Know What Is In The Tax Bill That Congress Is About To Pass?”
As I discussed in that article, the most important change that this tax reform bill makes is a dramatic reduction in the corporate tax rate.
You may be thinking that the big corporations don’t need more money, and you wouldn’t be wrong. But that is not the point of this change.
Right now, the U.S. corporate tax rate is much, much higher than almost everywhere else in the world. This gives corporations an incentive to locate operations elsewhere, and that means fewer good jobs for American workers.
We want corporations to locate operations inside the United States, and so it is imperative that our corporate tax rate is competitive with other industrialized nations.
Unfortunately, the Republicans have done an extremely poor job of selling this tax plan to the American people, and as a result support for this tax reform bill is extremely low…
The plan includes a steep tax cut for businesses and temporary tax cuts for individuals. Middle-income households would see an average tax cut of $900 next year, while the wealthiest 1 percent would see an average cut of $51,000, according to the nonpartisan Tax Policy Center.
Some 52 percent of adults oppose the tax plan, while 27 percent support it, according to Reuters/Ipsos polling.
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