J. Scott Applewhite/AP
Senate Republicans hope to vote after Thanksgiving on a sweeping tax overhaul plan that they say will cut taxes for nearly every individual and family in America. The bill calls for those cuts to last only for the next eight years, unless history is a guide.
The legislation recently approved by the Senate Finance Committee would permanently cut corporate tax rates. But benefits for individuals and families, like doubling the standard deduction and cutting individual rates, would disappear after 2025. Republicans say they hope a future Congress will decide to keep the tax cuts in place, but there are no guarantees, putting Congress on a collision course for a future political showdown.
Senate Finance Committee Chairman Orrin Hatch has promised that the tax bill will give sweeping rate cuts to individuals at every income level, with the majority of benefits going to middle class families. Under their plan, a family earning a median income of $73,000 would get a tax cut of nearly $1,500, according to Hatch.
“We have made good on our promise to deliver a bill that will improve the lives of average Americans who have been hit by nearly a decade of sluggish economic growth,” Hatch said in a statement after the legislation was approved in committee. “Bringing our outdated tax structure into the 21st century will help level the playing field for businesses — both small and large — and ensure we can keep more jobs and more investment here at home.”
Most Republicans would prefer to make the entire tax bill permanent to give individuals and businesses peace of mind as they plan their financial futures. That’s why they chose to permanently cut the corporate rate from 35 to 20 percent. That way companies can plan long-term, which Republicans say will result in investments that grow the economy.
But the entire tax proposal needs to comply with a complex Senate budget rule that would allow Republicans to pass their tax bill with 51 votes in the Senate, rather than the 60 needed for most other legislation. But the rule also says the tax bill can’t add to the deficit in the long-run.
White House Budget Director Mick Mulvaney is among those who say the only way to stick to those rules is to let the individual tax breaks expire.
“One of the ways to game the system is to make things expire,” Mulvaney said Sunday on NBC’s Meet the Press. “This is done more to force, to shoehorn the bill into the rules than because we think it’s good policy.”
Mulvaney said he believes good policy will become permanent and bad policy will expire.
CorrectionNov. 20, 2017
A previous version of this story referred to the Committee for a Responsible Federal Budget incorrectly as the Center for a Responsible Federal Budget.