Tax Reform Expected to Pass in the House This Week

Kerry Lear

9 years ago

The GOP Tax reform legislation is expected to pass through the House by Thursday&period; Republicans seem&nbsp&semi;to have come up with a compromise, which means that Speaker Paul Ryan may actually reach his ambitious timeline of passing the bill before Thanksgiving&period;&NewLine;There has been tremendous pressure for Republicans to pass the bill after the ObamaCare repeal was unsuccessful&period; &nbsp&semi;&NewLine;&ldquo&semi;I do believe that the momentum continues to move us forward,&rdquo&semi; said Rep&period; Mark Walker (R-N&period;C&period;) &ldquo&semi;It will be difficult for members who voted against ObamaCare repeal to go 0-for-2 on their campaign promises&period; I&rsquo&semi;d look for a huge vote&period;&rdquo&semi;&NewLine;But, most Republicans anticipate that the bill will pass&period; &nbsp&semi;&NewLine;&ldquo&semi;In the end, I think what you&&num;8217&semi;re going to see is the House pass a bill,&rdquo&semi; said Steve Scalise (R-La&period;,) House Majority Whip on Sunday on Fox &amp&semi; Friends&period; &NewLine;An amendment introduced on Thursday has strengthened the House bill and its support&period;&NewLine;&ldquo&semi;The amendment created a new 9 percent tax rate for some small-business income &mdash&semi; earning the support of the National Federation of Independent Business, which panned the initial House bill&period; It also restored the adoption tax credit, a top priority for conservatives,&rdquo&semi; writes The Hill&period; &NewLine;It&rsquo&semi;s predicted that 225 to 230 Republicans will vote to pass the House tax bill, which is more than the 218 needed&period;&NewLine;So, what are the changes Republicans are introducing in the bills to the U&period;S&period; tax system&quest;&NewLine;First, the tax-cut bill revealed on Thursday would streamline tax filing, making file returns much simpler and smaller&period; &nbsp&semi;&NewLine;&ldquo&semi;The GOP plans would repeal the alternative minimum tax, a parallel tax system&nbsp&semi;affecting more than four million households&period;&nbsp&semi;The House bill&nbsp&semi;would&nbsp&semi;consolidate a tangle of tax breaks for higher education&period; Both plans would remove&mdash&semi;temporarily&mdash&semi;thorny depreciation rules&period; Narrow deductions&nbsp&semi;for tax-preparation fees, teachers&rsquo&semi; out-of-pocket expenses and moving costs&nbsp&semi;would vanish under the House plan, removing lines from tax forms&nbsp&semi;and pages from Internal Revenue Service publications,&rdquo&semi; writes the Wall Street Journal&period; &nbsp&semi;&NewLine;&ldquo&semi;It gets rid of several&nbsp&semi;things which add a lot of complexity for a lot of ordinary taxpayers,&rdquo&semi; said Lawrence Zelenak, a Duke University law professor&period;&NewLine;Although the plan would limit certain tax breaks&period;&NewLine;&ldquo&semi;Despite the larger standard deduction, the repeal of the personal exemptions means the amount of income that is tax free wouldn&rsquo&semi;t be close to doubled&period; Instead, fewer people would itemize deductions because fewer would&nbsp&semi;exceed the standard deduction,&rdquo&semi; writes the Wall Street Journal&period; &ldquo&semi;That is a backdoor way of limiting tax breaks for mortgage interest&nbsp&semi;and charitable contributions, and it&rsquo&semi;s why many home builders, real-estate agents and charities oppose the GOP plans&period;&rdquo&semi;&nbsp&semi;&NewLine;The current medical-expense and student loan interest deductions would disappear under this bill&period;&nbsp&semi;&NewLine;Although this bill is expected to pass in the House, the similar Senate bill complicates things further&period; The Senate plan retains deductions from student-loan interest, medical-expenses, and property taxes&period;&nbsp&semi;&NewLine;&ldquo&semi;Among the biggest differences in the two bills that have emerged&colon; the House bill allows homeowners to deduct up to &dollar;10,000 in property taxes while the Senate proposal unveiled by GOP leaders last week eliminates the entire deduction,&rdquo&semi; writes Newsmax&period; &ldquo&semi;The deduction is particularly important to residents in states with high property values or tax rates, such as New Jersey, Illinois, California and New York&period; Rep&period; Kevin Brady, chairman of the House Ways and Means Committee, said that he worked with lawmakers in those states to ensure the House bill &&num;8220&semi;delivers this relief&&num;8221&semi; and that he was committed to ensuring it stays in the final package&period;&rdquo&semi;&NewLine;However, both versions would eliminate deductions for state and local income taxes and paid sales taxes&period;&NewLine;Democrats argue that both plans would evidently make the middle-class pay higher federal income taxes&period; &nbsp&semi;&NewLine;&&num;8220&semi;The House&&num;8217&semi;s so-called &&num;8216&semi;compromise&&num;8217&semi; would be saying to the middle class we&&num;8217&semi;ll only chop off four of your fingers instead of all five,&&num;8221&semi; said Sen&period; Chuck Schumer (D-NY&period;)&NewLine;Rep&period; Kevin Brady, the House&rsquo&semi;s top tax-code writer, disagreed with Schumer&rsquo&semi;s statements&period;&NewLine;&ldquo&semi;Here is where I strongly disagree,&rdquo&semi; said Brady on Fox News Sunday&period; &ldquo&semi;I believe there is tax relief all up and down the income level for families, regardless of what they earn&period;&rdquo&semi;&nbsp&semi;&NewLine;His statements come after the New York Times reported that one-third of middle-class families would see a tax increase under the plan&period; &nbsp&semi;&NewLine;&ldquo&semi;They&rsquo&semi;re describing an America that doesn&rsquo&semi;t exist &&num;8212&semi; one where the economy never grows and one where your paycheck stays stagnant no matter what happens,&rdquo&semi; said Brady referring to The Times article&period; &ldquo&semi;I strongly disagree&period;&rdquo&semi; &nbsp&semi;&nbsp&semi;&NewLine;Brady also pointed out that the plan would increase paychecks, therefore stimulate economic growth&period;&NewLine;&ldquo&semi;It&rsquo&semi;s important to make sure people keep more of what they earn, even in these high-tax states,&rdquo&semi; said Brady&period;&nbsp&semi;&NewLine;But, he also said he won&rsquo&semi;t accept that Senate plan if it eliminates the property tax deduction&period;&NewLine;Both bills reduce the corporate tax rate from 35 percent to 20 percent, but the Senate version delays this massive cut by one year&period;&nbsp&semi;&NewLine;Both Ryan and Treasury Secretary Steven Mnuchin believe the House and Senate can iron out the differences by December&period;&NewLine;&ldquo&semi;The House will pass its bill, the Senate will pass its bill, and then we will get together and reconcile the differences, which is the legislative process,&rdquo&semi;&nbsp&semi;said Ryan, who promised to further negotiate a compromise&period;&NewLine;&ldquo&semi;The good news is, both the House and the&nbsp&semi;Senate&nbsp&semi;and the administration have the same objectives,&rdquo&semi; said Mnuchin on CNN&rsquo&semi;s State of the Union&period; &ldquo&semi;And that&rsquo&semi;s about middle-income tax relief&period; That&rsquo&semi;s about fixing the business tax system, so that we&rsquo&semi;re competitive&period;&rdquo&semi;&NewLine;&nbsp&semi;&NewLine;