By Kenrya Rankin on Color Lines
At 1:36 a.m. EST on Saturday (December 2), the United States Senate passed a tax reform bill 51-49, with only Bob Corker (R-Tenn.) disrupting the party line vote. The decision came two weeks after House Republicans passed their version of the bill.
But before the tax reform can become the law of the land, both houses of Congress must pass a reconciled version of the bill that brings the two pieces of legislation into alignment. This happens via a conference, which Speaker of the House Paul Ryan (R. Wis.) says will happen “quickly.”
The Washington Post has a good breakdown of the gaps that need to be bridged between the two bills. Here are the key points of divergence:
- The Affordable Care Act’s individual mandate. The House bill preserves it. Senate wants to kill it, which the Congressional Budget Office says will knock 13 million people off the insurance rolls.
- The tax brackets. House Republicans want to move to just four tax brackets, with a top rate of 39.6 percent, which would kick in at a higher income rate than it does today. The Senate maintains the seven brackets, but caps the top rate at 38.5 percent.
- The corporate tax cut. The House bill would cut the corporate rate to 20 percent starting in 2018. The Senate version would make the same change in 2019.
- An expiration date for the individual and corporate tax cuts. They are both permanent in the House bill. The Senate’s individual cuts would expire in 2025.
- The estate tax. It would be eliminated by the House bill, limited dramatically by the Senate bill.
- The child tax credit. It would increase to $1,600 in House bill, and $2,000 with the Senate bill (up from $1,000 per child now). But both plans would exclude families with low incomes from claiming the credit.
- The mortgage interest deduction. House Republicans want to limit the deduction to interest on up to $500,000 in home loans. Their Senate colleagues don’t want to implement that threshold.
In the interim, Democrats in Congress are urging citizens to put pressure on the GOP to draft a bill that is friendlier to the middle class
While members of Congress wage battle, you can see how the two versions of the bill could impact your bottom line for the 2018 tax year and beyond with two handy tax calculators.
The Washington Post offers a tool that lets you plug in your income and see how your taxes would be impacted both in the short- and long-term. It shows that a person who makes $50,000 will see their taxes drop by $850 in 2019, but will save just $50 in 2027. Meanwhile, a family of four living at the poverty level—making $24,600 or less annually—will, on average, save $50 in 2019, but owe $10 more by 2027. There are 23 million people of color living in poverty in the United States.
MarketWatch collects more information—your salary, your filing status, your number of dependents—to break down how much you would pay in taxes under the proposed House plan versus the proposed Senate plan. Access that tool here.
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