Republicans from both houses of the US Congress released their tax bill on Friday which calls for sweeping changes to the American tax system. The tax bill promises massive tax cuts for the middle class and businesses. The Democrats, who are in Opposition, have slammed the bill alleging that it only benefits the rich.
The ‘Tax Cuts and Jobs Act’ lowers corporate tax rate to 21 per cent (beginning January 1, 2018) down from 35 per cent, the largest reduction in the history of the US.
The voting on the USD 1.5 trillion tax cut bill will be held next week and if passed will be the most sweeping tax overhaul in decades.
President Donald Trump, who had promised tax-cut during his election campaign, now wants the bill signed into law by the end of the year.
“By lowering tax rates, simplifying the rigged and burdensome tax code, and repealing the failed tax on lower- and middle-income households known as the Obamacare individual mandate, this legislation will grow our economy, raise wages, and promote economic competitiveness,” White House Press Secretary Sarah Sanders said.
According to the Congressional Budget Office and the staff of the Joint Committee on Taxation’s estimates, the plan would add USD 1.455 trillion to the deficit over next 10 years.
“President Donald Trump applauds the House and Senate conferees on coming to an agreement on the Tax Cuts and Jobs Act, and looks forward to fulfilling the promise he made to the American people to give them a tax cut by the end of the year,” Sanders said.
House Majority Leader Kevin McCarthy hoped to deliver the bill to the President’s desk just in time for Christmas.
“We have been working toward this for years, and now the American people are closer to a plan that will deliver higher wages, lower taxes, a simpler system, and a stronger American economy,” he said.
House Speaker Paul Ryan said the bill overhauls America’s tax code to deliver tax relief for workers, families and job creators, and revitalise the nation’s economy.
“The Tax Cuts and Jobs Act will help create more jobs, increase paychecks, and make the tax code simpler and fairer for Americans of all walks of life,” said Ryan.
With this bill, a typical family of four earning the median family income of USD 73,000 will receive a tax cut of USD 2,059. The Bill also expands the Child Tax Credit from USD 1,000 to USD 2,000 for single filers and married couples to help parents with the cost of raising children.
Ryan said the reduction in the corporate tax rate will help American businesses bring home foreign earnings to invest in growing jobs and paychecks in local communities.
But Democrat leader Nancy Pelosi said, “slashing the top tax rate for the wealthiest Americans even deeper is Republicans’ final insult to hard-working Americans in this deficit-exploding scam of a bill.”
(With inputs from agencies)