Congressional Republicans are shaping a tax reform bill that
they will introduce in the coming weeks. The plan currently being discussed has
several serious problems:
- The proposed corporate tax rate of 25% won’t apply to
80% of the U.S. economy. That’s because it excludes the service industry.
Non-service businesses would benefit from this new rate, while service
businesses would suffer.
- The plan eliminates the deduction for state and local
income taxes. This means that people who itemize their deductions will
have to pay more in taxes.
- The only businesses that benefit from the new corporate
tax rate and the deduction elimination are government-approved
manufacturers in the 7 states that have no state-level income tax.
to Congressional Republicans, the plan allows for an unspecified 4th
tax bracket, which would tax people higher than 35%.
- This plan fails to repeal any of the Obama-era punitive taxes or sur-taxes.
Sources:Davidson, K. and Rubin, R., "Mnuchin: Some Service Companies Won't Get Pass-Through Rate Under Tax Plan" Wall Street Journal.Mui, Y., "House Tax Plan Highly Likely to Include 4th Rate on Wealthy..." CNBC.com.
To House and Senate:
The Republican Tax Hike of 2017 would hurt our economy by penalizing individuals and businesses. Businesses in the service industry would be forced to play by different tax rules than other companies, even though most innovation today is happening in the service sector. Individuals who itemize their tax deductions would no longer be able to deduct state and local income taxes.
The future of individual income taxes remains murky, because the plan allows for a mysterious 4th tax bracket. If the bill goes through, the people who currently face the heaviest tax burden may get no relief. With the plan in its current form, Republicans have failed to undo many of the taxes instated during the Obama years.
Please do not pass this bill in its current form. It does not make the changes our economy needs, and it makes the tax burden higher for people who work in certain industries or itemize their deductions. This might be tax reform, but it is not tax relief.