Republican lawmakers are pushing hard this week to pass tax reform. The Senate Finance Committee chairman, Sen. Orrin Hatch of Utah, said there’s a strong desire to get a bill, which would be the GOP-controlled Senate’s first legislative win, passed by Friday.
President Donald Trump will visit Capitol Hill Tuesday to meet with Senate Republicans over lunch in order to address the tax bill and other issues. Trump has said on Twitter that the GOP tax plan is “coming along very well” and has “great support.”
The Tax Cut Bill is coming along very well, great support. With just a few changes, some mathematical, the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well!
— Donald J. Trump (@realDonaldTrump) November 27, 2017
What the CBO said about the GOP tax plan
A report from the nonpartisan Congressional Budget Office on Sunday showed that over the next ten years, the plan would raise taxes for workers making less than six figures and add over one trillion dollars to the national deficit.
A new provision repealing the Obamacare mandate, which taxes Americans who did not have health insurance, would also have a negative impact for low-income families, according to the CBO projections.
By 2027, people earning less than $75,000 a year would be worse off under the proposed GOP tax plan. Meanwhile, millionaires and those earning between $100,000 and $500,000 would see the biggest benefits.
Some Republican senators have been vocal about their dissatisfaction with the the GOP tax plan.
Sens. Steve Daines of Montana and Ron Johnson of Wisconin have said they want to see the individual income tax deduction for small business owners and other pass-through entities increased from the 17.4% rate currently in the Senate bill. Seventy percent of pass-through income winds up going to the top 1% of American earners according to research by Owen Zidar, an economist at the University of Chicago’s Booth School of Business.
My statement on the current Senate tax plan: https://t.co/FItbAWUQM3pic.twitter.com/8axNBJ1GPZ
— Steve Daines (@SteveDaines) November 27, 2017
Pass-throughs account for 96% of all U.S. Businesses, including many leading job creators in Wisconsin. They deserve a fair shake. #TaxReformpic.twitter.com/9y7gmplMtC
— Senator Ron Johnson (@SenRonJohnson) November 16, 2017
When is the next GOP tax plan vote?
If the GOP wants to move the bill out of the Senate Budget Committee, it needs to convince Sens. Johnson and Daines lawmakers to get on board by 2:30 p.m. EST on Tuesday (C-SPAN will be airing the hearing online). Sen. Johnson sits on the committee, where Republicans have only a single-vote majority, and has said he will vote against the tax plan if additional tax cuts for businesses are not included.
Sen. Bob Corker of Tennessee, another Republican who sits on the Senate Budget Committee, said Monday that he would not vote for the plan if it did not address his concerns about raising the deficit.
How the GOP tax plan could impact the deficit
The CBO report found that the bill would add $1.4 trillion to the deficit over the next 10 years. This estimate takes into account growth in consumer spending that Republicans say will be the result of their tax plan lowering corporate tax rates from 35% to 20%.
Even if those senators concerned about this addition to the deficit vote for the bill, the cost will trigger sequestration. This process would require $136 billion in mandatory spending cuts in 2018 if the GOP can’t find a way to reduce this deficit figure.
What the GOP tax plan means for students
Graduate students could see their taxes increase by nearly 300% with the elimination and consolidation of several tax credits meant to offset the costs of higher education.
While some have argued that the simplification of the tax code and cuts for small businesses would help millennials pursue entrepreneurship, the elimination of the student loan interest deduction would be harmful to millennials with student debt that’s keeping them from buying homes and investing.