Congressional Republicans Scared You will See Their Tax Reform Bill as Gift to the Rich
Congressional Republicans are scared you will see their tax reform bill for what it really is – a massive giveaway to the rich that hurts poor and middle class Americans.
A group of Republican senators Wednesday met to find ways to get their leadership to leave the lowest tax bracket for poor Americans at the current 10 percent instead of the proposed 12 percent – a two percent increase. The same group of senators want a fourth tax bracket for the rich that curtails the tax break going to the top earners in the new tax reform bill.
One such Republican senator is David Perdue of Georgia who said Wednesday that the optics of raising the rate for poor Americans from 10 to 12 percent while lowering those of millionaires and billionaires does not look good.
“The optics don’t look very good, taking 10 percent to 12. If you’re a 10 percent payer, you’re really going to zero [under the bill], but the optics are that it looks like you’re going from 10 to 12. The same thing with 39.6 going to 35,” said Sen. David Perdue (R-Ga.). His numbers come from the framework released in September by Trump administration and GOP leaders in Congress.
Under the GOP framework the seven tax brackets will be reduced to three – 12, 25 and 35 percent. It increases taxes for low income Americans from 10 to 12 percent while lowering the top bracket from 39.6 to 35 percent, a nearly 5 percent decrease.
“I never thought anybody should pay over 25 percent,” said Sen. Richard Shelby (R-Ala.). “People with money save money, create jobs, create risk. People with no money — I’ve been there — create nothing. You’re trying to live, to survive.”
Republicans argue however that low income Americans will see lower tax bills in their new tax reform plan because the plan increases standard deduction to $12,000 and $24,000 for individuals and couples.
But GOP senators acknowledge the difficulty they face in trying to explain to Americans why their new tax reform bill is lowering the tax rate for wealthy Americans by nearly five percentage points while increasing taxes for poor Americans by two percentage points.
“I understand why there’s a move to 12 percent and it can be explained, but it’s difficult to explain, and I’m not sure the flame’s worth the candle. We’re talking about just going back to the 10,” said Sen. John Kennedy (R-La.).
Senate Democrats led by Minority Leader Charles Schumer of New York say they do not buy GOP’s argument for raising taxes for the poor while lowering the rate for the rich.
“It doesn’t add up. How do you explain it? I can’t wait to see them (Republicans) try to explain it,” Sen. Schumer said. “At the risk of using a Halloween pun, we’re sure that the Republican tax plan will be full of tricks for the middle class and full of treats for the wealthiest Americans and the biggest corporations,” Schumer added.
Schumer said the GOP tax reform bill is in trouble as more Americans understand what it contains and who it benefits. “Thirty percent, and it’s going to get lower,” he said of public support for the GOP tax framework. He added that it will sink like the earlier proposal to repeal and replace ObamaCare.
Concerned by GOP’s ability to effectively sell the tax plan to skeptical Americans, Sen. Deb Fischer (R-Neb.) expressed concern when she along with other Republican congressional leaders met with President Donald Trump last week.
“I’ve talked about keeping the 10 percent bracket,” she said. “I think that’s important. We want to make sure we target working people and target the middle class.”
She admitted that she decided against proposing specific tax brackets when she sat down for lunch with Trump but she said she urged the president to focus the tax reform on poor and middle class families.
“I think we’ll end up maybe with more than four brackets. We’ll see. That’s not set in stone,” she said before adding that she believes the Senate Finance and House Ways and Means committees will eventually expand the number of tax brackets to address these criticisms.
Maine Republican Senator Susan Collins who was instrumental in defeating the proposed ObamaCare repeal and replace bill said Tuesday she supports keeping the tax bracket for high income Americans at the current 39.6 percent while maintaining the rate for poor Americans at 10 percent.
If she sticks to this point, it could severely lower the chances of the bill passing as Republican leadership can only lose three senators if every Democrat decides to vote against the bill.
“There’s widespread support for making sure that tax relief goes to middle-income working families and small businesses as well as lowering the C-corp rate,” Sen. Collins said. By C-corp rate, she was referring to the U.S. corporate tax rate, which is currently 35 percent.
“I just don’t see a justification for lowering the top rate for those who are earning more than $1 million a year,” she added.
But conservative GOP senators are insisting on lowering the rate to 35 percent or even lower. “I never thought anybody should pay over 25 percent,” said Sen. Richard Shelby (R-Ala.). “People with money save money, create jobs, create risk. People with no money — I’ve been there — create nothing. You’re trying to live, to survive.”
Congressional Republican leaders will unveil their tax reform bill later this week.
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