By Jessica Domel
Multimedia Reporter
Senate Republicans unveiled their plan for tax reform last Thursday. It promises bigger paychecks for American workers and families, more American jobs and a stronger U.S. economy.
The plan promises an overhaul of the American tax code, including a doubling of the current estate, or death, tax exemptions to $11 million for $22 million for a surviving spouse.
Senate Republicans say this will “reduce uncertainty and costs for family-owned farms and businesses by making it less likely that Washington will impose an unnecessary layer of taxation on Americans who want to pass on their life’s work to the next generation.”
The tax plan considered by the House Ways and Means Committee last week, which passed in a party line vote, calls for more estate tax exemptions at first, followed by a full repeal of the estate tax after six years.
Farmers, ranchers and small business owners would be able to fully and immediately expense new equipment under both plans.
Under the Senate Republicans’ plan, a typical family of four earning a median income of about $73,000 a year will reportedly see a $1,500 tax cut.
“For years, Congress has examined, debated and vetted policies designed to remake the tax code in a way that will keep pace with the 21st century economy and better meet the needs of the American people,” Congressman Orrin Hatch, Senate Finance Committee chairman, said. “Helping Americans keep more of their hard-earned dollars, find new jobs and increase their take home pay has always been at the heart of this effort. And now, with a willing president, we have an opportunity to turn this effort into a reality.”
The plan, called the Chairman’s Mark, is similar to the House GOP bill, because both are based on the unified framework released by the administration, House and Senate earlier this year.
The Senate GOP plan, however, offers different approaches to reach some of the goals in the plan.
“We’ve preserved and even strengthened incentives that ease financial burdens associated with growing families and ensured Americans can save for their retirement and invest in their future,” Hatch said. “The Senate proposal benefits Main Street businesses and modernizes the tax system in a way that will shift our economic landscape to make America a more inviting place for businesses to invest, keeping jobs from being shipped overseas.”
The plan calls for lowering the individual tax rates for low and middle income Americans by expanding the zero tax bracket and maintaining a 10 percent tax bracket.
The Senate plan calls for seven income tax brackets compared to the House’s three. They would be: 10 percent, 12 percent, 22.5 percent, 25 percent, 32.5 percent, 35 percent and 38.5 percent.
Like the House plan, Senate Republicans call for an increase in the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples.
Both include elimination of the Alternative Minimum Tax.
The Senate plan retains mortgage interest deduction on the first $1 million. The House plan limits the deduction to the first $500,000 of the loan.
Under the Senate plan, deductions for state and local and property taxes would be eliminated. The House GOP also eliminates deductions for those taxes and puts a cap at $10,000 for property taxes.
The House GOP plan repeals deductions for personal casualty loses, tax preparation and medical expenses. An amendment to the plan, offered in committee, would keep the adoption tax credit.
Charitable contribution deductions would be limited.
The Senate plan retains deductions for those contributions and for medical expenses.
Under both plans, the corporate tax rate would drop to 20 percent from 35 percent.
Unlike in the House, the Senate Finance Committee hosts conceptual markups where they debate the legislation and examine it as a narrative rather than looking at the actual text of a bill.
The committee is expected to begin markup of the conceptual mark, their tax plan, this week.
“We expect robust committee debate on the policies in this bill, will have an open amendment process, and hope to report legislation by the end of next week,” Hatch said. “I’m confident that if we continue to allow each chamber the opportunity to work its will, we can easily reconc