Trump Signs into Law Sweeping Tax Reform Measure
This morning, President Donald Trump signed into law a sweeping $1.5 trillion tax reform measure. After entering into conference committee to finalize the measure last week, Congressional Republicans secured enough votes for the measure to gain passage in the House and Senate on Tuesday and Wednesday. On Wednesday afternoon, President Trump hosted Congressional Republicans at the White House for a celebration of the passage of the measure.
H.R. 1, the Tax Cuts and Jobs Act, significantly reduces tax rates and modifies credits and deductions for individuals and businesses. Notably, the corporate tax rate is permanently reduced from 35 percent to 21 percent; individual tax rates are reduced temporarily.
On Monday, the Joint Committee on Taxation (JCT) released its analysis which found that approximately 23 percent of tax cuts for individuals included in the bill would go to those in the middle class. Over the next decade, however, those same individuals would see their taxes rise.
Also according to the analysis, middle class taxpayers (about half of the people filing taxes in the U.S.) would receive about $61 billion in tax cuts in 2019. Taxpayers making $500,000 or more (one percent of people filing taxes in the U.S.) would also receive $61 billion in tax cuts in 2019.
H.R. 1 includes a repeal of the Affordable Care Act (ACA) individual insurance coverage mandate tax penalty beginning in 2019. The Congressional Budget Office (CBO) previously estimated that with the elimination of the individual mandate, the number of uninsured Americans will increase by 13 million over the next decade. Average health insurance premiums are also expected to increase by 10 percent with the elimination of the mandate penalty.
As we previously reported, H.R. 1 threatens existing vital programs, including Medicare and the Prevention and Public Health Fund (PPHF). If Congress does not enact offsetting budgetary savings, the Statutory Pay-As-You-Go Act of 2010 (SPAYGO) will be triggered, resulting in massive automatic program funding cuts over the next ten years.
With the passage of H.R. 1, Congressional Republicans delivered on a long-promised legislative commitment. Congress has now adjourned for the December holidays and will return in early January where it faces several high-profile legislative battles in 2018.