The Republican tax bill has passed. This time, for real.
After falling afoul of the Senate’s strict budget rules on Tuesday, the House of Representatives voted on and passed 224-201 their overhaul of the country’s tax code for the second time in 24 hours.
This it’s time going straight to President Donald Trump’s desk where he is expected to sign it and remake the American tax code for individuals and businesses. Some of the changes will be felt almost immediately in 2018 while some consequences will be gradually felt over years and decades.
The focus and centerpiece of the Republican plan is a permanent lowering of the corporate tax rate from 35 percent to 21 percent. That cut will significantly increase the national debt but Republicans believe it will make American businesses more competitive in an increasingly global economy and thereby spur the domestic economy.
Individuals taxpayers will see a much more complicated landscape. Every taxpayer will see the tax rate in their income brackets lowered but not every taxpayer will pay less money in taxes. While the rates have gone down, many deductions on state and local taxes and mortgages are now capped. Whether people pay more in the long run will depend in part on how their states and localities respond.
Complicating matters further, the changes in individual tax rates are only temporary and set to begin rolling back in 2025 Republicans argue that Congress only did this to abide by the Senate’s budgetary rules and that Congress will extend those tax cuts when the time comes. But that’s not guaranteed, unlike the corporate tax cuts which are permanent.