Less than a month ago President Donald Trump’s administration celebrated the anniversary of his election victory. On November 2nd, the Republican Party introduced for the first time a new GOP bill, which if put in place, will lower the corporate tax rate by 20-35%.
“We’re working to give the American people a giant tax cut for Christmas. We are giving them a big, beautiful Christmas present in the form of a tremendous tax cut.” said Donald Trump.
The plan would lead to the elimination of the majority of business deductions and credits. A few additional changes to the previous plan are the lowering of deductibility of corporate interest expenses, implementation of a one-time repatriation tax on profits overseas, and will allow temporary immediate expensing of assets.
In regards to how this tax plan will affect the insurance mandate, it is quite possible that it will push for its repeal. A major ramification of repealing the insurance mandate would be that 13 million people would lack insurance, which in turn would save millions upon millions of dollars that once went towards subsidization. These savings are theorized to be used to go towards the paying off of the new tax cuts produced from this GOP bill.
However, the most influential aspect of this new GOP bill is that it would reduce the marginal income tax brackets today to four from seven. This will happen through the increase of the income ranges affected. Although state and local tax deductions (SALT) of the high-class isn’t being repealed, the new bill places a limit of $10,000 per person for property taxes. What is interesting about the Republican Party’s attempts at achieving such a large tax cut is that in order for them to utilize special Senate budget rules, all they would need is 51 votes, as opposed to the usual 60 votes. This means the Senate Republicans won’t need the assistance of any Democrats.
This ratification for large tax cuts would make one wonder where exactly they plan to get the money to pay of them off. Since the beginning of Trump’s presidency, the republicans have been working towards eliminating the insurance mandate. Although they have not completely succeeded in this feat yet, the new GOP bill will inevitably force the insurance mandate to diminish in order to pay off the major tax cuts. This is a byproduct of the new GOP bill enactment that most likely cannot be avoided.
There has been much backlash against the new GOP bill from the Democrats. Wisconsin Senator Ron Johnson commented, although this major tax cut would assist businesses, it will only benefit large corporations. On top of that, recent analyzation of the GOP bill conducted by the Tax Foundation concluded that a lot more savings will need to be found from a different source in order to pay for the tax cuts of the corporal companies. Another reason why this new tax plan has agitated Democrats is the fact that this tax bill is chock full of bonus benefits for senators who want to start drilling in the Arctic National Wildlife Refuge in Alaska. Such as Senator Lisa Murkowski, who has dedicated her political career to make these drilling rights possible.
All in all, This new GOP tax plan is sure to make a significant impact on the US economy. The new tax plan has officially been ratified at 2:00 in the morning on December 2, 2017.