The first major rewrite of the U.S. tax code in three decades is in the works, as Senate Republicans revealed the details of their sweeping tax legislation Thursday.
The Senate version of the bill includes a one-year delay in plans for a major corporate tax cut and leaves the prized mortgage interest deduction untouched for homeowners, in a concession to the real estate lobby.
While Republicans have focused on findings that the bill would lower taxes across all income levels over the next several years, Democrats have returned repeatedly to a section of the same findings, created by Congress’ nonpartisan Joint Committee on Taxation, which shows taxes would actually go up beginning in 2023 for some 38 million taxpayers, or families making $20,000 to $40,000 a year.
The legislation adds $1.5 trillion to the swelling national debt, delivers a major tax cut to corporations, and repeals the estate tax, which would benefit a tiny percentage of the wealthiest families in the country. It also simplifies the loophole-ridden tax code by collapsing today's seven personal income tax brackets into four. It nearly doubles the standard deduction used by people who don't itemize, and it increases the child tax credit, an element supported by first daughter Ivanka Trump.
The CA10 Progressive Coalition stormed Congressman Jeff Denham’s office last weekend in response to the tax plan, calling for “Not One Penny” of tax cuts to billionaires.
“This proposal provides massive tax cuts to the wealthiest Americans, while providing very few benefits to low and middle-income Americans; in fact, the proposal actually raises taxes for many middle-income families, particularly in California,” said CA10 Progressive Coalition. “These low and middle income families are those who will be most affected by the social programs that are being slashed to pay for tax cuts for the wealthy — programs like Medicaid, Medicare, food stamps, and Social Security.”
The Central Valley Association of Realtors has also vehemently opposed the plan, saying it weakens the incentive for homeownership. While the mortgage interest deduction will remain untouched, the Senate has ignored a House compromise on the hot-button issue of state and local tax deductions.
“For centuries middle-class families have built wealth through homeownership and real estate investment,” said Kris Klair, president of CVAR.
Klair and other association leaders are sending the same message to their congressional representatives that “homeownership allows families to protect themselves against rising rents and inflation, while offering an opportunity to build equity over time.”
“If those incentives went away, homebuyers would see their dream pushed further out of reach, while current homeowners would have the welcome mat pulled right out from under them,” said Klair.
“Comprehensive tax reform is a worthy goal, and lawmakers should be applauded for their ambitious approach,” he added.
The National Federation of Independent Business supports the tax reform plan, saying that the bill would extend tax relief to small businesses.
“It includes real tax relief, allowing small business owners to keep more of their money to invest in growth and create new jobs,” said NFIB. “Small business represents half the economy and half of all jobs. The Senate should move quickly so that tax reform can be sent to the President’s desk for his signature.”
Denham believes that Valley residents are taxed too much, he said in an op-ed for the Journal, and that the bill will provide much-needed tax relief for Americans.
Denham made the bold prediction regarding The Tax Cuts and Jobs Act based on the fact that the bill will cut rates, remove loopholes and special interest tax credits, bring overseas profits of American companies back to our shores, and encourage business investment in our communities.
“Under this plan, the typical American family of four will see a tax cut of $1,182. With the holidays upon us, that extra money would go a long way toward providing gifts for your loved ones, new coats and shoes for rapidly-growing children, paying off a bill, taking a family vacation, or just saving for a rainy day,” said Denham. “As a hard-working taxpayer in the Central Valley, you deserve more money in your pocket, less time and money spent navigating our burdensome tax code, more job opportunities, and the ability to save for college or invest in your retirement.”
Denham’s average constituent, or about 70 percent of the people he represents, claim the standard deduction, he said. This means the first $12,000 per year an individual earns (up from $6,350) and the first $24,000 per year a family earns (up from $12,700) is tax-free.
“The Tax Cuts and Jobs Act presents the first opportunity in three decades to create a fairer, simpler tax code that lowers rates, promotes real economic growth, creates jobs, and puts more money in workers’ pockets at the same time,” said Denham. “I am encouraged by this proposal before us, and I invite you to read it and contact my office with your comments for consideration as we move forward in this process.”