The House passed a tax plan, for the wealthy. They hope that the savings will trickle down.
Trump and Republican leaders in Congress are aiming to pass a bill that would cut taxes by as much as $1.5 trillion by the end of the year. Both the House and Senate bills deliver the majority of the cuts to businesses and wealthy Americans, but there are significant differences between the bills that will have to be resolved. The Washington Post
The Senate plan, if it passes, will send the tax plan into conference where the House and Senate leaders will need to work out the differences between the two plans. Therefore, tax reform faces two hurdles-
Passing the Senate and then getting through conference where the differences will need to be compromised. If the two-step process fails then there is no tax reform sending the bill back to square one.
The House bill delivers more than 80 percent of its overall cuts to corporations, business owners and wealthy families who are subject to the federal estate tax, according to estimates released by the Joint Committee on Taxation, Congress's nonpartisan tax analyst. But most middle-class Americans would see an immediate tax cut because of a lowering of individual tax rates, the near-doubling of the standard deduction and a larger child tax credit.
But many households that itemize their deductions — taking advantage of write-offs for state income taxes, medical expenses, and more — could see immediate tax increases. In future years, the benefits of the bill for individuals wane because of the phaseout of a key tax credit and the use of a slower measure of inflation to recalibrate bracket levels.
It remains unclear whether the final tax bill will resemble anything like what the House passed Thursday. A Senate version of the bill, titled the Tax Cuts and Jobs Act, contains major differences — including a controversial repeal of the Affordable Care Act's mandate that individuals purchase health insurance.
That provision would save the government about $300 billion over the next decade as it paid out less in insurance subsidies for low- and middle-income Americans, according to the nonpartisan Congressional Budget Office. The change would also, according to the CBO, result in 13 million more Americans going without coverage.
The Senate bill also takes a considerably different approach to the taxation of multinational corporations, as it phases in a lower 20 percent corporate tax rate and phases out virtually all individual tax cuts after 2025 to comply with the chamber's complex budget rules. Republican senators say those individual tax cuts will eventually be extended by a future Congress. The Washington Post
There is a lot of work to do before anyone knows what the final tax plan will look like, if Senate and House leaders can work out the differences.