Tax cuts are coming for many in US
Republicans deliver on promise to rewrite American tax code
Nothing as complex as the U.S. tax code, linked as the process is to the federal budget, can be amended in a manner that will make everyone happy.
Negotiators for the U.S. Senate and House of Representatives came up with something close, however.
It was approved this week, by both chambers of Congress, and is ready to be signed President Donald Trump. It is be early Christmas present for virtually all Americans.
A key goal is lessening the tax burden on businesses, allowing them to create new jobs and pass some of their tax savings on to existing employees though pay increase. By taking the top corporate tax rate down to 21 percent, from the current 35 percent, the compromise bill should accomplish that.
The final proposal also eliminates Alternative Minimum Tax provisions some businesses worried would hurt them badly.
Critics of the plan rest their case on two claims:
First, that the changes included in this tax law might “explode” the national debt. Even if it does not create new federal revenue by expanding the economy, the proposal is “scored” at costing the Treasury about $1.5 trillion. That, however, is a worst-case scenario, not a likely outcome.
It is strange indeed that most of those who now claim to be worried about increasing the debt by letting Americans keep some of our own money in our pockets had few qualms about truly exploding debt during the past 12 years, to grow government. During former President Barack Obama’s tenure alone, the debt grew by $9.4 trillion. It now stands at $20.6 trillion.
Another claim by critics is that tax reform will help only the rich.
That’s simply not true.
In addition to many other breaks for the middle class, the measure would increase the standard deduction to $24,000 for a married couple. Look at your own tax return. Pleased with that change? You probably will be.
Lawmakers should be applauded for approving the compromise bill. Americans need more jobs and jobs that pay better. We also deserve tax relief so that our take-home income will go up.
Congress should worry about the size of the government’s budget. That should definitely be on the agenda in the months and weeks ahead.
If, however, the robust economic growth that Republicans expect this tax law will help generate occurs, federal tax revenues will go up. That will help reduce federal debt if lawmakers hold the line on spending.