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Tax Reform — Figuring it Out is Taxing

Posted By Administration, Monday, November 20, 2017

The House has passed its tax reform bill. The count: 227 yes, 205 no. A whopping 13 Republicans voted no. That’s kind of a surprise. What isn’t a surprise? No Democrats voted yes.

The bill — which has been analyzed in this publication already — simplifies the tax code and puts $1.5 trillion in tax cuts into play. Democrats say it’s a boon for corporations and the rich. Republicans say no way, the real beneficiary is the middle class and small business.

House Speaker Paul Ryan said, “Passing this bill is the single biggest thing we can do to grow the economy, restore opportunity, and help these middle-income families who are struggling. This is something that’s going to refresh our confidence in ourselves and our confidence in each other.”

Minority Leader Nancy Pelosi — as expected — disagrees and says most Americans are going to get a raw deal with this one. “This tax scam won’t create jobs. It won’t raise wages. . . . It will only fill the coffers of donors and the fat cats,” she said.

Shortly after the House passed the bill the Senate Finance Committee voted to send the Senate version of tax reform to the Senate floor. And that bill — which we have also analyzed — now includes a repeal of the Affordable Care Act’s individual mandate.

That move went over like a lead balloon with Democrats.

Senate Minority Leader Charles Schumer said “Republicans just can’t help themselves. They’re so determined to provide tax giveaways to the rich that they’re willing to raise premiums on millions of middle-class Americans and kick 13 million people off their health care.”

Oregon Sen. Ron Wyden is the ranking Democrat on the committee and he also pointed out the loss of the individual mandate “will cause millions to lose their healthcare and millions more to pay higher premiums.” He then asked for additional time to submit more amendments to the bill but committee chairman Sen Orrin Hatch of Utah said no. Amendments can be done on the Senate floor. 

That’s just one battle the bill will face on the floor when the full Senate takes it up after Thanksgiving. With a slim majority of 52 to 48 and the for-sure-prospect that no Democrats will vote for the bill, Republicans cannot afford too many defections if it has any chance to pass.

More controversy was generated on the Senate’s bill when Congress’ Joint Committee on Taxation did an analysis and found — over the next decade — it gives large tax cuts to the rich and raises taxes on families earning $10,000 to $75,000.

 

The committee’s analysis of changes in the federal tax rate in the Senate plan between 2021 and 2027:

Less than $10,000

2021 — down 4%

2027 — up 6.5%

 

$10,000 to $20,000

2021 — currently it’s down 1.6% under this bill it goes to a 0.6% drop

2027 — It goes from a 0.8% reduction to an increase of 0.7%

 

$20,000 to $30,000

2021 — even

2027 — up 13.3%

 

$30,000 to $40,000

2021 — down 3.2%

2027 — up 7.8%

 

$40,000 to $50,000

2021 — down 4.9%

2027 — up 4.2%

 

$50,000 to $75,000

2021 — down 6.9%

2027 — up 1.1%

 

$75,000 to $100,000

2021 — down 7%

2027 — down 0.2%

 

$100,000 to $200,000

2021 — down 6.2%

2027 — down 0.3%

 

$200,000 to $500,000

2021 — down 7.5%

2027 — down 0.4%

 

$500,000 to $1 million

2021 — down 8.5%

2027 — down 0.5%

 

$1 million and over

2021 — down 4.2%

2027 — down 0.7%

 

Hatch completely disagrees and said the committee used bad accounting methods to come to its conclusions. “Anyone who says we’re hiking taxes on low-income families is misstating the facts. Obviously, we have no intention of raising taxes on those families. Every Republican on this committee has been committed to providing tax cuts for every income cohort,” he said.

Hatch may not be worried but the people — says a Quinnipiac University poll — are concerned. It asked a series of questions to Democrats, Republicans and Independents.

 

Question 1: Who do you expect this to benefit most (percentages approximate):

All

5% — low income

24% — middle income

60% — the wealthy

 

Just Democrats

2% — low income

3% — middle income

80% — the wealthy

 

Just Republicans

15% — low income

55% — middle income

23% — the wealthy

 

Just Independents

4% — low income

23% — middle income

65% — the wealthy

 

Question 2: Do you think the plan favors the rich at the expense of the middle class (percentages approximate):

All — 62%

Just Democrats — 85%

Just Republicans — 24%

Just Independents — 60%

 

Source links: The Washington Post — link 1, link 2, link 3, US News, The Hill

Tags:  Insurance Content  Insurance Industry  Insurance News  Tax Reform — Figuring it Out is Taxing  Weekly Industry News 

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