Breakdown of the Senate Tax Reform Bill
Freedom, Justice, Patriotism and Taxes. Yes, taxes. One of the most disliked words in our society
is in fact found in the United States Constitution in Amendment 16.
“Congress shall have power to lay and collect taxes on incomes, from whatever source
derived, without apportionment among the several States, and without regard to any
census or enumeration.”
While this is one amendment we both may like to forget, it does have tremendous ratifications on our individual lives and economy. And none the less important is the first substantial legislative victory for the Republicans since Trump took office: The Tax Cut and Jobs Act. This latest tax reform was passed early Saturday (Dec. 2, 2017) morning on the Senate floor by a 51 to 49 vote. It stands as the largest renovation of the US tax system since the President Ronald Reagan signed the 1986 Tax Reform Act.
So what does the Senate Tax Cut Bill really do? And how may it affect you? This complex and almost 500-page bill will affect numerous aspects of the lives of Americans but let’s break it down to 4 major changes to the current system:
● Deduction of Corporate Tax: Under the Senate version of the Tax Cut and Jobs Act, corporation tax will drop from 35% to 20%.
● Amount Changes to the Seven Bracket System: Yes, under the Senate version, the 7 bracket system is maintained, however; the amount of the income brackets will be changed and most of the tax rates lowered. Good news? Well, don’t get too excited because, if adopted, these new changes would dissolve by 2025.
● Obamacare Mandate Eliminated: This section of the bill no longer requires a person to have Obamacare insurance by removing the penalty fee of originally opting out. Supporter, Senator John Barrasso, stated that, “Families ought to be able to make decisions about what they want to buy and what works for them — not the government.”
● Elimination of State and Local Tax Deductions (Income and Sale): The Senate tax cut bill was on track to completely rid the current system of deductions of State And Local Tax (SALT), until Senator Susan Collins made an exception for tax deductions of private property under $10,000.
So, should we expect these changes for 2018? Not quite! Now that both the House of Representatives and Senate have approved their own version of the tax cut bill, a committee will be formed to work out differences and hopefully create one complete bill for the President to sign. Trump tweeted he hopes to complete it by Christmas.
And whether the founding fathers would have approved of the Tax Cut and Jobs Act or not, it is important for us to always refer to the Constitution for us to gain a greater insight into how the United States was designed to prosper.