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House Passes Budget, Sets Up Process for Tax Reform

House Passes Budget, Sets Up Process for Tax Reform

Keep your hands off my retirement.

https://www.youtube.com/watch?v=Z4_iLu8V7Vs

The GOP-controlled House passed the budget on Thursday by a slim margin of 216-212. With the House and Senate budgets in sync, the lawmakers have activated a procedure that will allow a tax bill pass the Senate without a filibuster.

The majority of Republicans that voted no hail from high taxed states since tax writers are toying with the idea to do away with state and local tax deductions.

From Politico:

The House’s initial plan, favored by fiscal hawks, would have required lawmakers to offset the costs of new tax cuts and to find $203 billion in extra savings from some welfare programs. But those requirements would not fly in the more moderate Senate, which passed its budget last week.

Under immense pressure to pass a tax reform bill by year’s end, Republican leaders struck a time-saving deal to forgo a formal conference committee to resolve differences between the House and Senate plans.

Although many House GOP lawmakers have derided that decision and complained about the final text, most rank-and-file Republicans still quickly resigned themselves to supporting the budget in order to move on to the GOP’s tax reform aspirations.

For their part, Democrats have seized on what they called the “hypocrisy” of fiscal conservatives backing a plan that would drive up the debt. The Senate budget envisions tax cuts that could add $1.5 trillion to the deficit over a decade.

Speaker Paul Ryan (R-WI) is pleased to move onto tax reform:

“Tax reform will help reignite the American dream,” House Speaker Paul Ryan told reporters after the vote. “It will help bring us back to a place of confidence, freedom, happiness and a stronger, healthier economy. And this budget that the House just passed, 20 minutes ago, brings us closer to making that dream a reality.”

House Ways and Means Committee Chairman Kevin Brady (R-TX) hopes to release the tax bill on November 1. He has closely guarded the talks around the bill even though President Donald Trump’s administration released a framework in September.

The committee will hold a markup session on November 6 “where the committee goes through the bill line by line and revamps the package before advancing it to the floor.”

The GOP-controlled Congress has become obsessed with tax reform since they have failed to repeal Obamacare each time it came up. If they can pass tax reform it’d be the first big victory of Trump’s administration.

Unfortunately, Brady has made it known that he wants to make changes to retirement funds. From The Washington Post:

The Texas congressman, speaking at a breakfast hosted by the Christian Science Monitor, said, “We think in tax reform we can create incentives for people to save more and save sooner.”

He said he was “working very closely with the president” on the issue and added that many people who have tax-incentivized retirement accounts contribute $200 per month or less, a level he thought was too low. “We think we can do better,” Brady said. “We are continuing discussions with the president, all focused on saving more and saving sooner.”

Several hours later, Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) also said he would oppose Trump’s vow to protect 401(k) plans but that he was open to changes if they made sense. “I’m open to look at anything,” Hatch said Wednesday morning. “I don’t have any problem looking at everything.”

He also said he doesn’t feel pressure to change the Senate’s eventual tax bill because of pressure from the White House. “No I don’t think so,” Hatch said. “He has his point of view, and he may prove to be right in the end. We’ll just have to see. But I’m open-minded about it.”

Also, Brady wouldn’t provide “details about how he planned to change incentives to encourage more savings.” He said “that the current construct of 401(k) accounts and Individual Retirement Accounts was not working well.”

Whatever, dude.

Brady has six days to release the bill, but as WaPo points out, the most pressing details have not been decided yet:

For example, he said he hasn’t decided what income levels would merit certain tax rates or how many tax deductions to eliminate to partially offset the lower rates. He said he hasn’t decided whether to impose a top tax rate for the wealthiest Americans or whether the tax cuts would be retroactive to income earned in 2017.

He also wouldn’t say how the tax bill would affect the type of taxes paid by hedge fund managers, even though Trump has promised to eliminate their special preferences.

“In about a week, you will be able to see the reforms proposed and where we are heading with it,” Brady said. He said he couldn’t guarantee that every American would see their taxes go down because of the changes, but he could “guarantee that every American will be better off because of a simpler tax code that lowers those rates and improves their paychecks.”

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Comments

buckeyeminuteman | October 26, 2017 at 1:54 pm

State budgets and taxes are not the prerogative of US Congressmen and Senators. Quit dillyducking around and do the right thing. I don’t really care if people in high tax states lose deductions, that’s a personal problem.

Of course the easy answer is to drastically cut spending and we all know neither party wants to do that.

Paul In Sweden | October 26, 2017 at 2:15 pm

High tax states reap in “stolen” money from the other states by lessening unfairly the federal treasury. If the High Tax States want to keep the thrills of all of their programs they can darn well pay for them themselves on adjusted income and take the heat from their state tax base for their frivolous spending.

nordic_prince | October 26, 2017 at 2:38 pm

If they want people to save more, they can start by not penalizing work: remove the income tax.

Whatever you tax, you get less of, since a tax is a penalty.

If you want people to save more and spend less, shift to a consumption tax. If you’re concerned about the regressive effects on the poor, there’s a relatively simple fix – no consumption tax on food and basic necessities, up to some defined amount to cover food, utilities, necessary items like clothes, and so on.

It’s not rocket science, although people tend to make these things more complicated than they really are.

“For their part, Democrats have seized on what they called the “hypocrisy” of fiscal conservatives backing a plan that would drive up the debt. The Senate budget envisions tax cuts that could add $1.5 trillion to the deficit over a decade.”

Funny, adding 900 million per year, every year, from the “one time” Stimulus that was added as ‘Baseline budgeting’ from 2008-on due to ‘Continuing Resolutions’ didn’t bother them at all.

And wasn’t the Dept Ceiling eliminated?

These dirty rotters just need to cut 150 billion from a 4 TRILLION dollar budget. That would take care of their “$1.5 trillion to the deficit over a decade” whinging.

As if.

There will never be a balanced federal budget, because the federal government is now in the business supporting social services which it has NO Constitutional authority for. The Congress has been buying votes for the last 100 years and they can not afford to stop now. As noted above, for the last eight years, the Congress has reauthorized the nearly $1 billion stimulus every single year, using continuing resolutions. Why? To keep a huge slush fund with which to buy votes. Now the nation not only has an astronomical amount of debt, but has to run a deficit every single year to maintain its social spending levels.

Nothing is going to change for the better this year. Nor will it change for the better next year. maybe it will change in 2019. But, nothing suggests that it will be for the better.

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