Idaho Republican Sen. Mike Crapo has unveiled a draft tax bill in the Senate. This version appears to be a refined improvement over the previous House bill. A key point is that the tax cuts from Trump’s 2017 reforms are largely made permanent, eliminating some of the more controversial aspects of the House proposal.
However, a significant shortcoming remains: there are no substantial spending cuts within the $7 trillion framework of the bill. Senate leaders are hopeful that revisions will occur this fall as the budget is finalized.
Positive Aspects:
- The bill reinstates a $10,000 cap on state and local taxes, as opposed to the House’s proposed $40,000 cap.
- Many of Trump’s tax cuts from 2017 are made permanent, covering areas like capital cost deductions, school choice tax credits, and opportunity zones.
- Taxes on remittances are confined to cash transactions, avoiding the House’s method of blocking banking transactions that could impact foreign investment.
- Tips of up to $25,000 and overtime earnings of $12,500 annually are exempt from taxes.
- The current policy baseline of the bill aims at reducing what is considered the “costs.”
Negative and Concerning Aspects:
- No corporate tax reductions are included; Trump had aimed for a 15% rate.
- The tax on income from university contributions is lowered to 8%, compared to the 21% rate in the House version.
- Private foundations will not face an excise tax on investment returns.
- Trump’s proposal for a 15% business tax on products made in the USA is not included.
- The expansion of health savings accounts (HSA) beneficial for reducing health costs has been eliminated.
- The bill includes various provisions aligned with Green New Deal energy initiatives.
- It maintains what some see as an unfair double taxation on immigrant remittances.
The two chambers seem to be relatively close on the issues, suggesting that adjustments can be made quickly and Trump’s agenda can be signed into law soon.
This development is viewed as a significant win for American families, workers, and businesses, especially as it aims to prevent a $4 trillion tax hike anticipated for January 1st.
For some Republicans, failure is simply not an option if they want to avoid severe repercussions in the upcoming midterm elections.
