The House and Senate have passed somewhat different versions of major legislation to restructure the federal income tax. A House-Senate conference committee still needs to reconcile the two bills, with the goal of finishing before Christmas. Both bills would significantly overhaul the corporate income tax, increase the federal budget deficit, and disproportionately benefit upper-income taxpayers. And the bills include many provisions that are poorly understood and may have unintended consequences.
What Workers and Companies Should Know About the Republican Tax Bills
The House and Senate have passed somewhat different versions of major legislation to restructure the federal income tax. Both bills would significantly overhaul the corporate income tax, increase the federal budget deficit, and disproportionately benefit upper-income taxpayers. And the bills include many provisions that are poorly understood and may have unintended consequences. Let’s start with the positive. The bills would reduce the federal statutory corporate tax rate to 20%. The reforms of corporate and international taxation are broadly consistent with proposals from leaders in both parties in recent years. But the bills would reduce federal tax receipts by about $1.5 trillion over 10 years. And both bills provide relatively larger benefits to upper-income taxpayers than to lower and middle-income households. The tax bills reshuffle tax burdens within income groups, creating winners and losers, but with no obvious organizing principle behind the changes.