The House Passed Trump's Tax Reform, & Here's What That Means For You
2017 is quickly coming to an end, and with it, President Donald Trump's hopes of passing any major legislation in his first year. With the failure of the myriad versions of health care, as well as the proposed travel bans and the trans military ban, and no border wall between the U.S. and Mexico to speak of, it seems that his last hope lays with taxes. And he could be in luck: the House just passed the Republican tax plan, which means it goes onto the Senate. But before the Senate OKs a complete overhaul of the American tax code and Trump keeps one major promise, it's important to know: what is in the GOP tax plan?
On Nov. 16, the House of Representatives voted 227-205 in favor of a complete overhaul of the tax code, according to The New York Times. The House "easily" passed the bill, but it now goes to the Senate, which is a bigger beast for the GOP to manage, as they can afford to lose only two votes and pass a bill on party lines. If enacted, the plan would mean $1.5 trillion in tax cuts for both individuals and businesses.
Tax reform was one of Trump's most ambitious campaign promises — something that the GOP has been pushing for years but hasn't succeeded since the 1986 Reagan tax cuts. And Trump, along with other GOP leaders, has been pushing this most recent legislation as a major win for the middle class. Tax cuts for regular Americans, he promised. A simpler code, one that doesn't require an accountant.
On Sept. 27, Trump announced his plan, and described it as a boon for the middle class. According to The Washington Post, he said, “Our framework includes our explicit commitment that tax reform will protect low-income and middle-income households. Not the wealthy and well-connected. They can call me all they want; I’m doing the right thing.”
But what will Trump's tax plan really do if enacted?
Let's break it down.
So, would the bill lower taxes?
The House bill would, per the Times, cut taxes more than $1.4 trillion over ten years. Similarly, the Senate's version of the bill would cut taxes by $1.5 trillion. Both bills include a permanent cut to the corporate tax rate for businesses, from 35 to 20 percent, which both Trump and GOP leaders have said will help the economy grow.
The math, however, doesn't quite square: GOP reps have touted the line that under the House bill, the average family of four would see their taxes cut by $1,182. But that's not exactly the case. According to both the left-leaning think-tank Tax Policy Center and the nonpartisan congressional Joint Committee on Taxation, these tax cuts and simpler tax brackets heavily favor wealthy Americans.
Per CNN Money, the House bill would, if enacted, mean tax cuts on average for all income groups next year and most groups by 2027, but that is largely because the bill so heavily favors wealthy earners. In fact, the Tax Policy Center "estimates that next year about 10% of middle income filers and 20% of the highest income households would pay more. Those percentages rise to 30% for each group by 2027."
Trump's tax bill would also eliminate individual deductions. This could have devastating effects on teachers, who would no longer be able to deduct school supplies, and graduate students who rely on tuition waivers to pay for school.
The cuts for individual people would be temporary — but the ones for businesses permanent.
These individual tax cuts would reportedly expire in 2025, according to The Atlantic, which means that people on the lower- and middle-income end of the scale could see their taxes increase in 2026 if Congress didn't act. The corporate tax cut for businesses, however, would be permanent.
At the Nov. 16 White House press briefing, when asked about the expiration date, White House Press Secretary Sarah Huckabee Sanders said that the bill does exactly what the president wants it to.
Sanders said that Trump wants to see a tax code that "[slashes] taxes for businesses of all sizes so they can grow, create jobs, raise wages for their workers, and compete in the global market place."
And the tax plan would potentially affect health care too.
The Senate recently included a provision in their version of the bill that would repeal the individual health care mandate from the Affordable Care Act (ACA, aka Obamacare) — which compels Americans to buy insurance or pay a fine. This would, according to The Washington Post, free up over $300 billion over the next decade — but it would also, per the Congressional Budget Office, mean 13 million fewer people with health insurance, which would result in its own long-term costs, likely cancelling out the benefits of the initial cut.
So, what's next?
Though the House's version handily passed on Nov. 16, the plan still has to go through the Senate. And there are quite a few GOP senators who are either unsure of or flat-out do not plan on voting in favor of the plan.
Wisconsin Senator Ron Johnson, for example, announced on Nov. 15 that he is against the bill, the first GOP senator to do so. Johnson told CNN that he sees both versions of the bill as heavily favoring large corporations.
"Unfortunately, neither the House nor Senate bill provide fair treatment," he said, "so I do not support either in their current versions."
Several other GOP Senators, including Maine's Susan Collins and Tennessee's Bob Corker, have expressed doubts, as well.
In short, at this point, it's hard to say whether or not the Senate will pass a GOP plan on tax reform. Enough GOP senators are on the fence that it is certainly not as secure as today's House vote, and it largely depends on what a few key senators decide to do. Per the Times, the Senate will potentially vote on the bill after Thanksgiving.
So, if you're not sure if you want to see Trump's tax reform plan pass, you can always call your senators and express your dislike for the bill. We put together a handy guide to calling your senators this summer for health care, but it's just as useful for tax reform.