Politics

Republicans Unveil Their Framework for Tax Reform

taxes tax reformRepublican leadership took a major step in its goal to reform the tax code Wednesday by releasing a framework which details what the final bill may look like.

Republicans have worked for nearly two years in their most recent push to fundamentally reform the tax code. Their focus on rate reductions and simplification have remained a pivotal part of their plan throughout the process. President Donald Trump is scheduled to discuss the new framework later in Indianapolis, Indiana.

“Today, we move one step closer to fixing our broken tax code so that it puts Americans first,” House Speaker Paul Ryan said in a statement. “This is our best opportunity in a generation to deliver real middle-class tax relief, create jobs here at home, and fuel unprecedented economic growth.”

The tax reform framework reduces the seven current income brackets down to three. The top individual tax rate at 39.6 percent will be reduced to 35 percent. The framework also taxes middle-income earners at 25 percent, and lower-income earners at a slightly higher rate of 12 percent. It does leave room for lawmakers to add an additional top rate for high earners.

Republicans hope to boost economic growth through tax reform. The framework reduces rates for corporations down to 20 percent. The top rate for corporations is currently at 35 percent, which is one of the highest rates in the world. This high rate has led companies to keep more of their profits overseas or move their corporate headquarters abroad.

The GOP tax plan also limits the rate paid by small and family-owned businesses to 25 percent. The new rate limit is lower than the top rate that these businesses currently pay. These earnings are typically taxed as pass-through income to the owners.

Republicans hope to simplify the tax code by eliminating tax breaks that primarily benefit the wealthy. The framework also repeals the alternative minimum tax and the death tax. Homeownership and charitable gift tax deductions will be protected under the plan.

Trump has focused much of his agenda of keeping jobs from going overseas. The tax framework reflects that push by including a one-time tax on businesses keeping offshore profits. It also switches to a territorial tax system which is designed to benefit companies that keep operations within the country.

The tax system hasn’t been reformed in a comprehensive way since 1986. The Congressional Budget Office (CBO) found in an analysis that many other developed countries have been moving towards a more competitive tax system in the decades since.

“It has been 31 years since we last got this done, and hardworking families and small businesses cannot afford to wait any longer,” Ryan said. “Under President Trump’s leadership, we are determined to finally give the American people the simpler, fairer, and more competitive tax system they deserve.”

The tax reform framework comes after nearly a year of hearings and internal discussions that built upon previous policy drafts. House Speaker Paul Ryan and Rep. Kevin Brady introduced a blueprint last year which outlined their earlier policy goals. Trump later released a summary plan which included many of the same provisions April 26.

Republican leadership spent the last week ensuring party members had the chance to hammer out any last minute details. Republicans held a two-day private retreat so that they could hash out the details openly. The approach may help them avoid problems that caused their healthcare reform efforts to falter.

The National Taxpayers Union Foundation found in a 2015 study that the economy loses $233.8 billion and 6.1 billion hours of lost productivity annually because of the complex tax code. The Government Accountability Office found in a 2014 study that the tax code is so complex that very few professional tax preparers are able to calculate the correct tax refund.

The budget is also likely to play a pivotal role in getting tax reform passed. Republicans will only need a simple majority if they include tax reform as part of the reconciliation process. Republicans have to first pass a budget that includes provisions for tax reform for it to be included in that process. Democrats as a whole aren’t likely to support the eventual tax reform bill making party unity and a simple majority vote a necessity.

from - InsideSources.com - by Connor D. Wolf

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Jeff B.

I’ll believe it when I see it. In the meanwhile I’ll be expecting the usual failures, excuses, and caving in to minority party that we’ve seen on everything thus far. All talk, no action from the RINO swamp.

paul zenir

i hear so many rumors, from people pushing their own narritive. i have heard that our property and mortgage tax deductions will eliminated . i can only hope that i fall into a lower tax bracket, as i am retired now , it could hurt me. i voted for the Trumpster and i know he is trying his best to help us citizens in the united states!!!!! i will always have his back!!!! pjz

Mike

Having read the previous comments, it appears that Angela does not like the proposed tax reform. It also appears that the philosophic reason for her opposition is that, despite her claims to be “conservative”, her primary belief is that anyone who makes less money than someone else has a right to take, by force if necessary, from the more “fortunate” for the benefit of those who claim to be less so. Her thesis appears to be that a purpose of government is to decide what is “fair” and to redistribute from the “rich” to the less rich. Unfortunately there is no consistent definition of “Fair”. Mine is that everyone, whether one makes $200 or $200 million, should contribute an equal percentage in taxes. In my view, it is not for Angela or anyone else to decide how much is “too much” income, or whether someone’s income is more than that… Read more »

American Believer

I’ll believe it once it is law. The alternative minimum tax is a haven for illegal immigrants. They get a refund because the system “assumes” they paid taxes when in reality many either collect welfare dollars in some form or fashion or receive cash payments for services rendered.
Currently the top 10% of wage earners pay 70% of all federal income tax. An additional tax on “the rich”, or an elimination of high income deductions does nothing to grow the economy. The only reason those items are in the proposal is because swamp dwelling politicians of both parties want to appeal to the masses so they can get reelected.
I am NOT in that upper 10% but I am smart enough to recognize that ALL of us either now work for someone in that category or retired after working for someone in that category.

ken

At this point of my life, just due it, I got taxed out of business twice.. I want my kids to be able to Succeed..

Andie

For years now, I have filed income taxes with the help of a professional, scrupulously honest, not trying to pull any fast one. I minimize what is deducted from my paycheck as much as possible. Still I get back several TIMES the amount that was deducted from my paycheck over the year. If my income is such that there is no tax due, shouldn’t I only get returned what they siphoned out of my paychecks, nothing more? Even though this is monetarily in my favor, it sounds like a socialist wealth redistribution scheme. After the deep hole the last pretender in the White House dug for us, can America still afford the socialist pipe dream?

Jim S.

I agree with simplifying the system. It is convoluted and complex. I do not agree with the further flogging of more taxes out of the middle class. We are being penalized for working!

mike

The problem is and will continue to be mitch “do nothing, know nothing” mcconnell. A more useless senator never existed. If and when this tax overhaul gets done i will believe it when i see it. Most of these fools will reject it simply because its trump, they wont realize or care its in the best interest of this country, not one group but the country that will benefit. The argument will go on as it always does, its a tax cut for the rich! What poor man ever gave you a job?

Wayne A. Detzler

Thank you for this helpful summary of the new tax law. As a retired professor of social theory and history, I especially appreciate your in-depth approach.

Clem

It’s about time. A flat tax would also work every pay check that way no one would half to ever file again.

Jean R Thompson

Most of it sounds good. Wait and see if the Republican Congress can pull it off. They have been a disappointment thus far. I think Trump is doing extremely well considering he is getting little support from his own party and constant criticism from the media and much of congress.

Faith Rose

I certainly pray that this will go through. The big question is whether the rinos will buck up amd do what’s right or be bought off (or blackmailed) into fighting against it.

Louis

Fair Tax plan explained by Neal Boortz on his podcasts seems like a great idea. I have no confidence in Mitch McConnell in standing by anything Trump proposes. This Fair Tax plan needs serious viewing imo

Mary White

I like what I’ve read. Naturally the regressives obstructionists and RINOS will hate it. But just remember this , people who dont pay any taxes can not get a reduction.

Bob L.

Anything helps.
Americans mainly only see or think about taxes by yearly exposure to filing their federal tax return, but there are far more taxes of different kinds we pay we never even think about. There’s sales taxes, which can easily be 13% on items you buy at the store, property tax, excise taxes like on gasoline, state and local income tax and even hidden taxes on goods before they reach stores and are hidden in the price of the goods. Years ago I read an article on taxes and it stated the average American paid close to 50% of their gross income in taxes.

John G

Not sure this goes far enough make a difference in the tax code. The whole IRS should be eliminated and a unified tax plan implemented, something that is simple such as a flat tax program.

Vince

as described above it sounds like a positive plan to help get America out of its economic slump…at least in part.

Mike

While the general idea of tax reform is a plus, especially that of removing the unlawful “death tax” which is theft as it is double taxation, why have the republicans spent more time fighting President Trump than they have solving problems? It is clear that the gop establishment hates President Trump as much as the dnc, so why should we trust the gop at all? I for one no longer consider myself a republican but an independent. I also believe the evidence is clear that both parties are totally corrupt running what amounts to an organized crime syndicate for which they should be arrested under RICO statutes.

HANS KASPER

This is a death blow for seniors. Why? Under the current law, once you enter an adult care home for medical reasons, all of the expenses are deductible as medical expenses; therefore, when you take money out of a taxable retirement account or an annuity to pay for those expenses, there is little or no tax impact due to the retirement income being offset by the medical expenses. Under Trump’s plan, there would be no deduction for the adult care home expenses or any other medical expenses, which means that all of the money you take out of the retirement accounts or annuity will be 100% taxable. Now some people will say that you are getting a doubling of your standard deduction; however, with adult care home costs running between $5,000 and $10,000 per month, or $60,000 and $120,000, that additional standard deduction does little for you. What is my… Read more »

Ralph

I really don’t know what the Problem is except for the Islamic Muslim Lawmakers that are common crooks. Make a tax reduction over time a percent at a time with times for credits to leave the Tax system in steps as it goes along with a goal of 5% at poverty level, 10% for middle class, and 15% for business with all the loop holes gone and paper work gone that they have to have a lawyer work force for just to keep up with and doctors have to hire a team of people to just handle healthcare billing all because of trash ccalled lawmakers which have surely with out Question gone to American Schools for they are 100% Stupid