WASHINGTON — Republican members of the U.S. House of Representatives unveiled its tax overhaul bill Thursday, which includes decreasing the number of personal income tax brackets, cutting the corporate tax rate and the eventual elimination of the estate tax.
But opponents of the plan said working families would not benefit from the legislation, which would also add to the country’s deficit.
The Tax Cuts and Jobs Act includes four individual tax brackets with rates 12 percent, 25 percent, 35 percent and 39.6 percent, which the highest tax bracket remaining the same from the current system.
The standard deductible would nearly double for both individuals and couples, though deductions for medical expenses and student loan interest would be eliminated. Individuals would not be allowed to itemize deductions for state and local taxes.
The estate tax would double from $5 million to $10 million, before ending at the conclusion of the 2023 calendar year.
The corporate tax rate would be cut to 20 percent under the proposal, while taxes on “pass-through” businesses, in which profits are taxed at the owner’s individual rate, would fall to 25 percent.
“This plan is for the middle-class families in this country that deserve a break,” House Speaker Paul Ryan, R-Wis., said at a press conference. “It is for the families who are out there living paycheck to paycheck, and just keep getting squeezed.”
Congress last passed tax reform in 1986, an effort that took 17 months to happen.
“We need to update our cumbersome and outdated tax code, which will enable West Virginians to keep more of their hard-earned dollars, invest in their business, buy a home or save for their children’s college,” Rep. David McKinley, R-W.Va., said.
He added there are items left out of the introduced bill that will be examined going forward.
“As the debate over this bill progresses, I will be working with leadership to address these issues and get the best possible deal for the First District,” he said.
Like McKinley, Rep. Alex Mooney, R-W.Va., said he will continue to look at additional changes, adding Thursday’s action was a positive step.
“West Virginia taxpayers deserve a tax cut so that they can keep more of their hard-earned money,” he said. “The plan released today will lower rates on taxpayers, including small businesses which are the back bone of West Virginia’s economy.”
Rep. Evan Jenkins, R-W.Va., said the plan will benefit West Virginia businesses and employees.
“Many West Virginians are struggling after our state’s economic downturn, and they deserve to keep more of what they earn,” he said.
The Joint Committee on Taxation reported under the bill, the federal deficit would increase by more than $1.48 trillion dollars over the next 10 years.
“As soon as the ink is dry, you’re going to get calls to let’s cut Medicare, let’s cut Medicaid, let’s cut education spending,” said Chuck Marr, director of federal tax policy at the left-leaning Center on Budget and Policy Priorities.
The possible rise of the deficit is one issue Sen. Joe Manchin, D-W.Va., has with the bill, noting how the bill also put “investors over workers.”
“None-the-less, I believe tax reform is something we must do, so in the coming days, I will do what West Virginians do best,” he said, “bring people together and find common ground so that we can get something done.”
Marr said while the tax rate for high-income earners will remain at 39.6 percent, they will ultimately benefit from the bill because of the changes regarding the excise tax, corporate tax rate and taxes on “pass-through” businesses.
“I think you could make a very big case that upper middle-class people could pay higher taxes,” he said. “My question is: where is that money going to go to?”
Sen. Shelley Moore Capito, R-W.Va., called the proposal “an important step,” continuing by saying the Senate is working on crafting its tax overhaul legislation.
“Working with the administration, we will continue to make progress on this critical effort to provide tax relief and prosperity for West Virginians and millions of others across the country,” she said.
President Donald Trump said he hopes to have a bill signed by Thanksgiving if possible.