Thursday, the tax reform bill was released; the bill cuts the corporate tax from 35 percent to 20 percent and cuts individual tax rates. It has also increased the standard deduction for individuals and families. Things remaining status quo are retirement plans including 401(k) and the top tax rate for wealthy Americans.
Now tax writers and House Republican leaders are busy briefing their colleagues on its various aspects. This overhaul of the tax code can initiate a grueling effort to procure legislation for President Donald Trump by year end. Expected to be released on Thursday, the proposal is the biggest rewrite of the tax code in a generation. It proposes tax cuts on businesses and most individuals to cut down plenty of narrowly drawn tax breaks. It is still unclear who would be on the receiving end and would need to pay higher taxes but the scope of changes required to implement the change is bound to catch many lawmakers by surprise.
The National Association of Realtors has started its war against the proposal. It is placing online ads heavily against the Ways and Means members and issuing warnings about changes to the popular mortgage interest deduction and a write-off for state and local taxes. The ads warn of a tax increase for middle-class homeowners.
Post failure to repeal the Affordable Care Act; Republicans are desperate to turn the tax proposal into a victory to flaunt before next year's elections. They want to expedite it through the House by next week and through Senate by the end of the month. Senate Republicans are also looking to unveil their competing plan which they have written in secret by next week so that a compromise plan can reach Trump's desk by the end of this year. Their plan had skipped on the tax breaks that may get quashed under the proposal with the aim to keep lobbyists at bay. However, very few Republican lawmakers have a clue to its content leaving leaders short of an opportunity to lobby support from rank-and-file members for controversial proposals.
Post months of closed-door negotiations, tax writers are burning the midnight oil to put the finishing touches on the legislation but it may still have blanks to fill in when the Ways and Means committee takes it up next week. One speculating feature is the proposal to remove people from 401(k) retirement plans. Here savings are taxed at withdrawal and also on Roth accounts where taxation happens at the outset. POLITICO was informed about the drop of the idea by a GOP tax writer and congressional staffers but the deal is on shaky grounds and may resurface again when the tax-writing committee formally takes up the legislation. Other issues awaiting clarity until Thursday are if corporate tax cuts would be a temporary or permanent affair and whether the compromise on state and local tax deduction is sufficient to appease balking lawmakers from high-tax states.,