Missouri’s Republican U.S. Senator predicts his chamber will pass a tax plan with unanimous GOP support along with a handful of Democrats.
Roy Blunt appeared on the Fox News TV program “Sunday Morning Futures” yesterday, where he outlined the tax measure in the Senate. He said there are two priorities that must be fulfilled: working and middle-class people must see more take home pay immediately, and the economy must be made more competitive on the global stage.
One of the biggest components of both the House and Senate measures is a 15% reduction in corporate taxes from 35%-to-20%, which Blunt says is vital to getting the U.S. on equal footing with the rest of the world.
“You can’t have the highest tax bracket in the competitive world and expect to be as competitive as the people who are at 20% or below,” said Blunt.
The Senate plan would drop corporate taxes in 2019, while the House version would implement an identical reduction in the upcoming year.
Blunt, a member if the Senate Appropriations Committee, thinks the intention of both chamber’s to nearly double the standard deduction will mean far fewer people will itemize their returns.
“(There are) about 70% of the tax payers now that don’t file itemized anyway. The estimate on this bill is that 90% of the tax payers that file, will take advantage of that new double deduction.”
The Republican proposal in both chambers will raise the standard individual deduction to $12,000 from its current rate of $6,350, and the deduction for a married couple to $24,000, up from $12,700.
The tax model that Senators are marking up this week would completely do away with state and local tax deductions. The House version would only repeal it only for state and local income and sales taxes, but keep in place a property tax deduction up to $10,000 a year.
Blunt, who is vice-chairman of the Senate Republican Conference, contends the issue of state and local taxes would only impact high income people, about 10% of filers, who would still be itemizing deductions under the House and Senate plans.
Among the other differences between the competing proposals centers on income tax brackets. The House version would squeeze seven brackets into four, and leave the top rate at 39.6%. The Senate plan keeps the seven brackets while it lowers rates, including the top level which would drop to 38.5%.
The chambers also differ in how they’ll address the estate tax, although both call for large breaks for the few high-income people who must file it. The House version doubles the estate tax exemption and repeals it in six years, while the Senate version also doubles the exemption, but leaves it in place.
For his part, Blunt disagrees with economists from both the political left and right who contend the tax plans in both chambers have no means to pay for the $1.5 trillion in tax cuts they would bring. He says the resulting economic growth would more than offset the deficit.
Blunt concluded his Sunday appearance on Fox News by saying Republicans are now figuring out what elements of a tax plan will pass both the House and Senate moving forward.
“How do you take all those moving parts and put them together in a way that should be very focused on doing everything possible to get not just 50, but 52 Republican votes. And you’ll add some Democrats to that if that happens.”
Blunt predicted a handful of the 10 Democratic Senators from states in which Donald Trump won the Presidential vote would embrace the Republican tax bill. He did not offer a thought on how Missouri’s Democratic Senator Claire McCaskill would vote. Trump won Missouri by 19 points.
The President himself could have complicated the tax bills in both the House and Senate Monday morning when he called for Republicans to do away with the individual mandate in the Affordable Care Act. The House had already ditched a plan to drop the mandate, which requires most people to buy health insurance or pay a penalty.
In a tweet, President Trump said dropping the mandate would allow for lawmakers to lower the top income tax rate to 35% and also cut taxes on middle income people.