Republicans in the House and Senate have agreed upon a final tax reform bill that would cut a key provision of Obamacare while giving corporations a record tax break.
The tax bill – which the Trump administration hopes to make their first major legislative victory – would give disproportionately large tax breaks to businesses and the wealthy, according to independent analysts. It would also lower individual taxes for the majority of Americans – at least until 2025, when the tax cuts expire.
Senator Bernie Sanders called the bill “a moral and economic obscenity”.
“It is a gift to wealthy Republican campaign contributors and an insult to the working families of our country,” he tweeted.
House Minority Leader Nancy Pelosi referred to the bill as a "daylight robbery".
"With every iteration, the GOP tax scam becomes even more cowardly, outrageous, dishonest, brazen-theft from middle class families, giving money from them to the richest people in our country and to corporations," she said in a press conference the day before the bill was officially rolled out. "It’s a monumental con job."
Almost every personal income tax bracket would see a tax reduction under the bill – including the top income bracket, or those making more than $500,000 a year. The wealthiest Americans would see their taxes drop to 37 per cent from 39.6 per cent.
The bill also raises the threshold for the estate tax, which affects property passed down when a family member dies. Under current law, Americans can pass down $5.5m worth of property to their family members tax-free. The Republican bill raises that threshold to $11m.
Corporations also get a major tax break under the bill, from a 35 per cent rate down to 21 per cent. The decrease would be the largest one-time reduction in the corporate tax rate in US history, according to a Washington Post analysis. The bill also eliminates the corporate alternative minimum tax, after legislators received pushback from businesses for including it in a previous version.
Controversially, the legislation would repeal the individual mandate – a key component of Obamacare – which taxes individuals who do not sign up for health insurance. The bill would also reduce the amount individuals can write off based on their state and local taxes, capping it at $10,000.
But the bill also preserves some carve-outs for middle- and low-income Americans. Tax payers would still be able to take deductions for student-loan interest and medical expenses, and graduate students would keep their tax waiver. Parents would also be able to take a $2,000 child tax credit under the bill – a provision added to win over the support of Republican Senator Marco Rubio.
President Donald Trump has said he wants the bill on his desk by Christmas, so he can sign it into law before the end of the year. The bill is widely expected to pass the Republican-controlled House in a vote on Tuesday.
Republicans have a narrower margin for victory in the Senate, where they need 50 of their party’s 52 legislators to sign on. Senators Susan Collins, Jeff Flake, and Mike Lee remain uncommitted on the bill, but Republican leadership seemed confident they had the necessary votes on Friday.
"I think we'll get the support on Tuesday or Wednesday and have the vote,” Senator Rob Portman told reporters. “We already had enough Senators as it came through the Senate and the bill has even improved further in the House-Senate conference process.”
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies