Recently, both the House and Senate formulated their versions of the sweeping overhaul of the federal tax code this past Thursday. Likewise, these two versions of the potential overhaul are drastically different thus many experts expect that there will be clashes between the two chambers. Similarly, experts expect that these differences will likely make it problematic for the two chambers to pass a single version and get it to President Trump’s desk to sign by the conclusion of this year. Yet the two both have at least one commonality which is their name “The Tax Cut and Jobs Act”, but they deviate in the tax policy that affects the business and individual sides of the tax code.
The Senate’s version maintains all current seven tax brackets but have adjusted income levels for each. Likewise, the Senate’s version doubles the average deductions for the following: individuals, married couples and single parents. Also, the Senate bill protects and keeps intact many of the deductions, which the House bill wants to do away with. Those deductions are for the following aspects: medical expenses and interest on student loans to pay for college. Furthermore, the Senate bill also preserves popular deductions, which consist of the charitable giving and the mortgage interest deduction for current homeowners. Moreover, the bill would continue the threshold for deductions on impending house purchases at the 1-million-dollar level rather than dropping it to 500,000 dollars, which the House bill has done. Moreover, the bill does not at any point change or adjust the current tax protections on 401-K’s retirement investments and the Senate bill does not rescind the Affordable Care Act’s individual mandate as well. Yet, the word around the chambers are that in the final bill if it can be reached that aspect will hopefully be rescinded as many Republicans along with President Trump want to rescind that mandate.
Like the House bill the Senate’s version also increases the tax credit known as the child tax credit from 1000 to 1650 dollars. Additionally, unlike the House bill the Senate bill is drastically less liberal to multimillionaires because unlike the House bill which repeals the estate gift tax wholly, the Senate bill doubles the amount to 11million. Additionally, both the house and senate versions would eradicate the alternative minimum tax.
Now on the corporate side both House and Senate bills have commonalities in that both want to ultimately lower the corporate tax rate from the current 35% to 20%. Additionally, both want to grant more generous deductions to smaller firms. Furthermore, the main objective for this overhaul on the corporate side is to ultimately stop the sheltering profits overseas, which many United States Multinational companies have been actively pursuing and doing through the years by the dropping of the tax rates on these corporations.
While the Republicans in the legislature are hacking out a tax code overhaul bill the White house is trying to garner Democrat support for the overhaul bill. The Democrats, which the Whitehouse is going after are ones that are running for reelection in Trump victory states.