Congress on Wednesday passed an overhaul of the U.S. tax code that supporters and opponents claim will benefit Americans. But they disagree on which ones.
Republicans say the measure, the biggest rewrite of the tax law in more than 30 years, will boost paychecks for middle-class households. Democrats contend the bill represents payback by Republicans to the party’s wealthiest donors.
Among other changes, the legislation will cut the rate on corporate taxes to 21 percent from 35 percent, lower the top rate paid by the highest earners to 37 percent from 39.6 percent, nearly double the dollar amount of the so-called standard deduction ($6,350 for single taxpayers in 2017), and expand both the tax credit for child care and the deduction for medical expenses.
The measure lowers the tax bill for owners of so-called pass-through businesses via a deduction of 20 percent. (Pass-through entities constitute roughly 95 percent of U.S. businesses and sweep in everything from sole proprietors to law firms and hedge funds.)
The bill would limit, to $10,000, deductions for state and local taxes, curb deductions that homebuyers can take for the interest on mortgages, and reduce taxes on inheritances.
All but 12 Republicans voted for the measure, which Democrats opposed unanimously.
Here are a few of the reactions to the bill, which President Trump is expected to sign on Jan. 3.
President Trump: “The typical family of four earning $75,000 will see an income tax cut of more than $2,000. They’re going to have $2,000, and that’s, in my opinion, going to be less than the average. You’re going to have a lot more than that.”
Senate Majority Leader Mitch McConnell: “If we can’t sell this to the American people, we ought to go into another line of work.”
Chuck Schumer, Senate Democratic leader: “There are only two places where America is popping champagne over the #GOPTaxScam: The @WhiteHouse & the corporate boardrooms, including Trump Tower.”
House Speaker Paul Ryan: “Tax rates are going down and paychecks are going up.”
Representative Lloyd Doggett, Democrat of Texas: “We will be cleaning up this mess and the blunders in this bill all of next year.”
Keith Hall, director of the Congressional Budget Office: “[The legislation] would reduce revenues by about $1,649 billion and decrease outlays by about $194 billion over the period from 2018 to 2027, leading to an increase in the deficit of $1,455 billion over the next 10 years.”
Douglas Holtz-Eakin, conservative economist: “Faster productivity growth will translate into more compensation — wages and benefits — for workers.”
Kimberly Clausing, liberal economist: “These tax cuts are unlikely to spur large increases in wages; careful cross-country evidence fails to find benefits to wages from corporate tax cuts.”
Stephen Myrow, a former Treasury official under President George W. Bush and now a policy adviser based in Washington: “Whether or not people feel it does something for them, it enables Republicans to reclaim the governing narrative they lost after failing to repeal Obamacare. People like winners.”
TJ Helmstetter, communications director of Americans For Tax Fairness: “This is not tax reform, it’s a money grab by the ultra-wealthy, including the multimillionaires in Congress and Trump’s own cabinet, who will benefit.”
Chad Moutray, chief economist, National Association of Manufacturers: “Our members are very happy about the tax bill as it’s written. You wouldn’t see that level of optimism if they didn’t think this was something that’s going to benefit them.”
Alec Phillips and Blake Taylor, analysts at Goldman Sachs: “We note that the effect in 2020 and beyond looks minimal and could actually be slightly negative.”
Dennis Mullenburg, CEO, Boeing: “The [tax bill] is the single-most important thing we can do to drive innovation, support quality jobs and accelerate capital investment in our country.”
Janet Yellen, chairwoman of the Federal Reserve: “It’s not a gigantic increase in growth.”
The Committee for a Responsible Federal Budget, a nonpartisan, nonprofit organization: “The bottom line is that while tax cuts can help accelerate economic growth in some circumstances, they will not generate anywhere close to enough growth to fully offset the revenue losses they create.”
Vice Money:“Republicans argue that these measures will be good for economic growth, which slowed markedly after the Great Recession. Maybe. But they will also likely shrink the American middle class even further in the years to come, as American inequality hits levels once considered, well, Latin American.”