Yes, the wealthy would be big winners in the tax reform plan recently rolled out by Republicans in the U.S. House of Representatives.
But there is much for the middle class to like. And if the plan can promote the growth that Republicans predict, it would create new jobs — including, one hopes, manufacturing jobs.
Many Democrats, predictably, called the proposal a handout to the rich. But, unlike the bungled health care debate, the Democratic criticism was not across the board.
Sen. Sherrod Brown (D., Ohio) praised the proposal for preserving 401(k)s. He also sounded optimistic about his idea of offering tax incentives to companies who pay their employees at least $15 an hour and offer health care and retirement benefits. President Trump has supported Mr. Brown’s idea, which could be included in the Senate’s version of the bill.
“President Trump and I agree that tax reform should put money back in the pockets of working Americans and make it easier for them to save — not hand a tax cut to corporations who outsource jobs. I hope he will work with me to do that in the Senate bill,” Mr. Brown said.
The corporate tax rate would be permanently reduced from 35 percent to 20 percent and companies could write off expenses for new equipment. The bill would also allow companies to bring back piles of cash that are being stored overseas and have it taxed at 12 percent rather than 35 percent. Apple has billions of dollars in profits sheltered in overseas accounts.
Under the bill, the estate tax exemption would be initially doubled to $11 million, and the tax would be phased out over six years.
The child tax credit would rise to $1,600, and there would be a $300 credit for each parent and nonchild dependent.
The number of tax brackets would be decreased from seven to four. A married couple filing jointly would have up to $90,000 taxed at 12 percent. Currently, that couple would fall in a 25 percent tax bracket. Republicans estimate that a family of four making $59,000 would pay $1,182 less in taxes in 2018.
The GOP proposal would also expand the standard deduction for married couples to $24,000, from $12,700, meaning the majority of Americans will no longer need to itemize their taxes.
Republicans are banking that growth and the elimination of some deductions will pay for the estimated $1.5 trillion price tag for the bill. That is a gamble, and attention needs to be paid to the national debt. But this proposal is a good start and the end result is likely to be a win for the middle class and the economy as a whole.
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