Democrats call tax legislation a giveaway to the wealthy
The Republican-controlled U.S. House of Representatives gave final approval on Wednesday to the biggest overhaul of the U.S. tax code in 30 years, sending a sweeping $1.5 trillion bill to President Donald Trump for his signature.
A news report by Reuters stated that in sealing President Trump’s first major legislative victory, Republicans steamrolled opposition from Democrats to pass a bill that slashes taxes for corporations and the wealthy while giving mixed, temporary tax relief to middle-class Americans.
The House approved the measure, 224-201, passing it for the second time in two days after a procedural foul-up forced another vote today, coming a few hours after the Senate passed it with 51-48 votes.
It would be recalled that President Trump had emphasized a tax cut for middle-class Americans during his 2016 campaign. At the beginning of a Cabinet meeting on Wednesday he said lowering the corporate tax rate from 35 percent to 21 percent was “probably the biggest factor in this plan.”
Reuters reports that the President planned a tax-related celebration with U.S. lawmakers at the White House in the afternoon but will not sign the legislation immediately.
After Trump repeatedly urged Republicans to get it to him to sign before the end of the year, White House Economic Adviser, Gary Cohn said the timing of signing the bill depends on whether automatic spending cuts triggered by the legislation could be waived. If so, the president will sign it before the end of the year, he said.
The debt-financed legislation cuts the U.S. corporate income tax rate to 21 percent, gives other business owners a new 20 percent deduction on business income and reshapes how the government taxes multinational corporations along the lines the country’s largest businesses have recommended for years.
With the fiscal measure, millions of Americans would stop itemizing deductions under the bill, putting tax breaks that incentivize home ownership and charitable donations out of their reach, but also making tax returns somewhat simpler and shorter.
Similarly, the bill keeps the present number of tax brackets but adjusts many of the rates and income levels for each one. For instance, while the top tax rate for high earners is reduced, the estate tax on inheritances is changed so far fewer people will pay.
Once signed, taxpayers likely would see the first changes to their paycheck tax withholdings in February. Most households will not see the full effect of the tax plan on their income until they file their 2018 taxes in early 2019.
In two provisions added to secure needed Republican votes, the legislation also allows oil drilling in Alaska’s Arctic National Wildlife Refuge and repeals the key portion of the Obamacare health system that fined people who did not have healthcare insurance.
“We have essentially repealed Obamacare and we’ll come up with something that will be much better,” Trump enthused after the passage of the bill by the House.
However, Democrats have called the tax legislation a giveaway to the wealthy that will widen the income gap between rich and poor, while adding $1.5 trillion over the next decade to the $20 trillion national debt, which Trump promised in 2016 he would eliminate as president.
Commenting, House Democratic leader, Nancy Pelosi, said: “Today the Republicans take their victory lap for successfully pillaging the American middle class to benefit the powerful and the privileged.”
Despite Trump administration promises that the tax overhaul would focus on the middle class and not cut taxes for the rich, the non-partisan Tax Policy Center, a think tank in Washington, estimated middle-income households would see an average tax cut of $900 next year under the bill, while the wealthiest 1 percent of Americans would see an average cut of $51,000.