Senate Passes Tax Reform Bill

Early last Saturday morning, Senate Republicans passed a sweeping tax reform bill that will affect nearly every American. Here, btw takes a look at the story of how the bill passed, as well as some of the possible positive and negative outcomes.

What Happened?

The Senate tax reform bill, which was nearly 500 pages long, passed in the middle of the night last weekend by a vote of 51-49. Tennessee Senator Bob Corker was the only Republican to vote against the legislation. All Democrats voted against it as well.

Senate Democrats were angry about the content of the bill as well as they way it was prepared and discussed. The bill passed narrowly and in the middle of the night, just hours after lawmakers were presented with a substantially revised version. The critics of the effort argue that there is no way such a large document could be read and sufficiently understood in such a short period of time.

Republicans, on the other hand, were eager pass a significant bill after nearly a year of high profile legislative failures.

What’s Good About It?

The tax bill was advertised as a tax cut for the middle class. Now, about 70 percent of middle-class families will receive a tax cut. Businesses stand to benefit as well: instead of paying a tax rate of 35 percent, they will now permanently pay only 20 percent. Small businesses will also receive large tax breaks.

Many last-minute amendments were added to the bill to get a few hold-out Republicans to support it. One example of this is that the bill now includes protections for “Dreamers”–the recipients of President Obama’s Deferred Action for Childhood Arrivals (DACA), which allows children of undocumented immigrants to remain in the United States without deportation.

What’s Bad About It?

While it’s true that 70 percent of middle-class families will receive an immediate tax cut, millions of families now will have to pay more in taxes, since the new bill takes away many common tax breaks. Moreover, according to the non-partisan government groups that have reviewed the content of the Senate bill, the new tax bill disproportionately helps the wealthy. For example, only 4 percent of people who make under $10,000 per year will receive a tax cut, while 80 percent of taxpayers who make over a million per year will receive a cut.

Democrats are also very concerned about the effect this tax bill will have on the national deficit (the amount of money owed by the federal government). Republicans claim that the tax cuts will pay for themselves, because people will have more money to put back into the economy, promoting greater economic growth. Many independent studies, however, have contradicted this. In fact, the Congressional Joint Committee on Taxation says that the bill will add $1 trillion to the deficit over the next decade.

Aside from all of this, environmentalists are also very upset that the bill opens up the Arctic National Wildlife Refuge in Alaska to gas and oil drilling.

What’s Next?

Now, the House and Senate will have to work together to come up with a compromise bill, which they hope to deliver to President Trump to sign into law sometime before Christmas.

What Do You Think? This online tool allows you to click on different income brackets to see what effect the Senate tax bill would have on that group of Americans. Imagine that you are a U.S. senator. Based on what you have learned from this online tool, would you have voted for or against the Senate tax bill? Why?