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The U.S. Congress has announced that it has resolved the differences between the House and Senate versions of a tax cut bill, where both houses will soon vote on the final version. The New York Times reports:
Party leaders in the House and Senate agreed in principle to bridge the yawning gaps between their competing versions of the $1.5 trillion tax bill, keeping Republicans on track for final votes next week with the aim of delivering a bill to President Trump’s desk by Christmas. The House and Senate versions of the tax bill started from the same core principles — sharply cutting taxes on businesses, while reducing rates and eliminating some breaks for individuals — but diverged on several crucial details.
In the end, more of the Senate bill appeared to be included in the final version, though lawmakers continued to make significant changes from the legislation that passed either the House or the Senate.
The changes included a slightly higher corporate tax rate of 21 percent, rather than the 20 percent in the legislation that passed both chambers, and a lower top individual tax rate of 37 percent for the wealthiest Americans, who currently pay 39.6 percent. But the bill will still scale back some popular tax breaks, including the state and local tax deduction and the deductibility of mortgage interest.
Since the tax cut would double the standard deduction for households, an overwhelming majority of middle class Americans will see their federal tax bill decline. The bill does however cap the mortgage interest deduction, which limits the amount of interest that amount that Americans who itemize their tax can claim on their tax returns, which can increase the tax bills of these households.
Because it lowers the amount of revenue that the U.S. government will collect, the house bill is likely to boost the overall debt of the U.S. government over what has been projected for the next 10 years. Several estimates based on the Senate version of the tax cut bill put the total amount of the increase for the national debt above what it would otherwise be under current law by the end of the next ten years anywhere from $0.516 to $1.39 trillion. Should it grow by the amount of the largest figure, the rate at which the national debt will increase as a result of the tax cut would be similar to the rate that elected politicians found acceptable for it to grow during President Obama’s second term in office.
With the tax deal now made, the big question now is whether the U.S. Congress will address its excessive spending problem, which may now be on tap for 2018. Jeff Stein of the Washington Post reports:
House Speaker Paul D. Ryan (R-Wis.) said Wednesday that congressional Republicans will aim next year to reduce spending on both federal health care and anti-poverty programs, citing the need to reduce America’s deficit.
“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said during an appearance on Ross Kaminsky’s talk radio show. “… Frankly, it’s the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements — because that’s really where the problem lies, fiscally speaking.”
That would be a welcome development, especially with the recent confirmation that an obscure section of a law that expanded health care entitlements back in 2003 opened to door to billions more in spending through a kind of pay-for-play system that uniquely benefited politicians and hospital administrators who jacked up their costs. Closing the government’s checkbook to stop funding those kind of corrupt crony relationships could go a long way to reducing the cost of health care entitlements for U.S. taxpayers without impacting the quality of health care.