WASHINGTON — As the winners and losers under President Donald Trump’s massive, $5 trillion tax overhaul announced Wednesday were parsed, congressional lawmakers met to discuss the proposed blueprint for rewriting the tax code and what their next step would be.
“I could not be more excited for this once-in-a-generation opportunity to truly reform our tax system,” said Congressman Roger Marshall (R-Kan.). “Since 1986, the American people have not seen a meaningful update in federal tax policy. They have been asking for it for decades, and today, we’ve taken a huge step forward in delivering that promise.”
U.S. Senator Pat Roberts (R-Kan.), a senior member of the Senate Finance Committee, said the framework is a strong first step in providing critical tax relief to all Kansas families.
“There is widespread, bipartisan agreement on the need for tax reform. We ought to put aside partisan obstructionism, and take action on something in which a majority of Americans agree: Our tax code is burdensome, confusing and outdated.”
Cost details are scarce, though preliminary estimates put the cuts in the range of $5 trillion over the next 10 years. The net cost to the federal debt would be far less and the real battles will come as lawmakers quarrel over which tax breaks might be eliminated to help pay the balance.
What does the plan mean?
The plan would collapse the number of personal tax brackets from seven to three.
The individual tax rates would be 12 percent, 25 percent and 35 percent — and the plan recommends a surcharge for the very wealthy. But it doesn’t set the income levels at which the rates would apply, so it’s unclear just how much of a tax change there might be for a typical family, and whether its taxes would be reduced.
Early analysis indicates small business owners, large corporations and the super wealthy could fare well under the proposal. The middle-class could come out ahead, too, but the plan has too many holes to determine how individual taxpayers would be affected.
Trump unveiled his tax plan Wednesday at an event in Indiana. The plan has more winners than losers, largely because Trump is leaving it to Congress to figure out how to pay for it — or whether to pay for it.
Trump maintains that his plan will benefit the middle class, not millionaires and billionaires.
“My plan is for the working people and my plan is for jobs,” he said.
A matter of simplicity
“More than anything else, the most common complaint I hear about the existing tax system is its complexity,” Marshall said. “With this in mind, we aim to make it possible to file your taxes on a postcard.”
This simpler, quicker and easier system will give working and middle class Kansans the same access to the tax code as someone who has hired teams of accountants and lawyers to seek out every loophole.
“This reform is overdue, and why many of my colleagues and I came to this body — to bring real-world, commonsense reform for our generation, for our kids, and for our grandkids,” he said.
“These aren’t just abstract changes for those who don’t need it,” Marshall said. “Ideas like repealing the death tax and allowing the first $12,000 of income for individuals and $24,000 for couples to be tax-free, and married couples to keep the first $24,000, are tangible ways that this reform will allow more money to stay in your pocket.”
But Democrats swiftly condemned the plan.
“Each of these proposals would result in a massive windfall for the wealthiest Americans and provide almost no relief to middle-class taxpayers who need it most,” Senate Minority Leader Chuck Schumer (D-N.Y.) said at the Capitol. “It seems that President Trump and Republicans have designed their plan to be cheered in the country clubs and the corporate boardrooms.”
The plan would nearly double the standard deduction to $12,000 for individuals and $24,000 for families. This basically would increase the amount of personal income that is tax-free.
Deductions for mortgage interest and charitable giving would remain, but the plan seeks to end most other itemized deductions that can reduce how much affluent families pay.
Kansans could benefit
But, Roberts believes the plan would be good for Kansas.
“Tax reform is especially critical to grow small and medium sized businesses, which are the major job creators in Kansas,” Roberts said. “Farmers and ranchers can benefit from reforms to expensing requirements and by elimination of the death tax. Tax reform will also allow American companies to be more competitive in a global economy and keep jobs from going overseas.”
According to a CNN poll, 68 percent say the federal income tax system needs either a major overhaul or significant changes. Broken down along party lines, 77 percent of Republicans, 70 percent of independents and 62 percent of Democrats want major changes.
The Senate Finance Committee has jurisdiction on taxes. In June, Finance Committee Chairman Orin Hatch appointed Roberts to lead the committee’s examination of agriculture tax issues.
Roberts said the House and Senate will each need to approve Budget Resolutions initiating the Budget reconciliation process to allow the Senate to consider tax reform with a 51-vote threshold.
Once the Budget Resolutions are approved, the Senate Finance Committee and the House Ways and Means Committee will begin writing and marking-up the actual tax reform language.
The Associated Press contributed to this story.
