Over 400 millionaires are in the works of writing a letter to Congress in hopes of persuading Republican lawmakers not to cut their taxes, according to a report Sunday from The Washington Post.
This eagerness from the millionaires is in response to the tax plans the Republicans in the House of Representatives and the Senate unveiled on Nov. 2. The $1.5 trillion plan was met with questions and debate, and here’s why:
The proposed bill gives the largest tax breaks to corporations and businesses. The New York Times reported the bill would add $1.5 trillion to federal budget deficits over a decade without taking into consideration the additional economic growth it could create. These reports were according to calculations by the Joint Committee on Taxation.
The new plan also provides a new tax structure for low and middle-income Americans. Instead of the seven tax rate brackets, based on income that exist currently, the bill would create rates of 12 percent, 25 percent and 35 percent. The plan still includes a 39.6 percent tax rate for millionaires, according to The New York Times.
Limits on mortgage interest deduction will be implemented as part of this new plan. This new rule should not affect many new homebuyers, according to Dr. Tony Caporale, the chair of the department of economics and finance at UD.
“People who need to take out big loans to buy homes in expensive areas such as New York, Boston and San Francisco could see their taxes go up,” Caporale said. “It could have a negative effect on higher end home construction. It shouldn’t affect the median home buyer.”
Another major shift written in the plan is the gradual repeal of estate tax. The bill would double the tax threshold to about $11 million by 2018 and do away with the tax completely by 2024, according to Caporale. He said there are advantages and disadvantages to each.
“Proponents argue that doing away with the tax would create more jobs as people use the money to invest or grow their businesses,” Caporale said. “Those against the change point out that the revenue loss would raise the deficit and cause other taxes to be higher.”
Republicans argue that their plan will keep jobs in the country and promote business. Caporale agrees that it could help the employment outlook.
“A lower tax rate could encourage companies to repatriate some of the profits they’ve kept abroad to avoid taxes,” he said. “In theory, that could encourage investment, hiring and wages.”
The Senate plan, disclosed Thursday, has some similarities. Like the House bill, the Senate plan would double the standard deduction for both singles and married couples, according to CNN. The plan also still favors big businesses and reduces the corporate tax rate.
One of the biggest differences in the two, however, is the estate tax question. The Senate plan keeps the tax in effect, but doubly raises the exemption level.
In addition, the Senate plans to retain the seven brackets regarding individual income. The plan differs slightly from the current system in terms of the income amount cut-offs for each bracket.
With Republicans in control of both the House of Representatives and Senate, the bill could get the votes it needs to pass easily if Congress voted along party lines. However, Republican lawmakers, such as Sen. Jeff Flake (R-Arizona) and Sen. Marco Rubio (R-Florida) have voiced their concerns for specific parts of the legislation. Furthermore, Democrats have vowed to fight this bill in both chambers.
Republicans have admitted their plan will need a lot of work, and Caporale would agree.
“Whatever ends up passing will likely be radically different from the current proposal,” he said.
Republican lawmakers hoped to have this bill to President Trump by Christmas, but revisions and edits to the plan could take much longer than that, according to CNN.
Photo Taken from NBC News