Latest Tax Reform Plan Just a Starting Point

“It would have to be changed radically for that to happen”, said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.

Republicans in Congress from states with relatively high income taxes might torpedo this idea.

Rep. Brian Babin (R-TX): “This framework – supported by both the White House and leaders in Congress – marks an important first step in delivering pro-growth tax reform and relief to the American people”.

Taxpayers spend 6 billion hours each year preparing individual tax returns.

Brady then explained that the tax reform blueprint would collapse the current framework’s seven tax brackets into three and create income tax rates of 12, 25, and 35 percent. Inc., said “a simpler, fairer, modernized tax code is what’s needed to end the offshoring phenomenon and bring our nation’s tax code into the 21st century”.

The truth is that anyone getting overly passionate about this subject is most likely just hearing what they want to hear or letting their emotions get the best of them. The plan says it would “significantly increase” those credits by an unspecified amount.

The framework is the most detailed seen this year but leaves many decisions up to the House Ways and Means and Senate Finance committees, including setting the top individual rate and implementing base erosion measures for multinational corporations. At that same time 592 miles away ‎in Washington, Members of the House of Representatives were gathered at the National Defense University to discuss the specific rate reductions and simplifications to the tax code, making it possible to simultaneously increase take home pay for workers, while also allowing all Americans to file their taxes on a single post card sized piece of paper.

We view the unified framework for tax reform, released September 27 by the Trump administration, the House Ways and Means Committee, and the Senate Finance Committee, as a starting point for tax reform negotiation; we don’t think it’s truly representative of what an eventual tax reform bill may look like. PIA recognizes that hard choices will need to be made by the tax-writing committees regarding business tax credits and deductions not specifically outlined in the framework released today. That’s because families will lose the personal exemption.

We understand this approach will come with short-term pain as some people and interests lose credits and deductions. Lawmakers shouldn’t cut Social Security, rack up debt, or burden the middle class to make the rich richer. There are more if people are self-employed.

The US economy needs strong medicine to break out of the slow-growth “new normal” it’s been trapped in since the Great Recession. Congress would also have the power to impose an additional tax surcharge on the wealthiest individuals.

The larger middle-class benefit projected by some conservative economists is not the tax cuts themselves, but the effect that changes to business taxes could have on economic growth. President Donald Trump has said that he will not negotiate on this number. In fact, the United States is the only major economy that uses a worldwide tax system instead of a territorial system.

Now that the framework has been released, congressional leaders can focus on passing a budget resolution for 2018, which would include reconciliation instructions, the mechanism by which any tax bill could be passed by a simple majority in a filibuster-proof way.