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President Trump unleashed a new plan for tax reform in a speech at the Indianapolis State Fairgrounds on Wednesday.
The plans are the product of discussions between White House Treasury Secretary, Steve Mnuchin, the House Ways and Means Chairman, Kevin Brady, the Senate Finance Chairman, Orrin Hatch, House Speaker, Paul Ryan, Senate Majority Leader, Mitch McConnell, and White House economic policy chief, Gary Cohn. Their purpose will be to strengthen the middle class, grow the economy, and engender economic recovery by broadening the tax base, closing loopholes, and fostering growth.
According to a press release by the Treasury Department, the reforms will mean that less of the earnings of middle-class families will be subject to Federal income tax, and will reduce the number of tax brackets from seven to three: 12%, 25%, and 35%. It will also increase child tax credits and repeal the death tax and alternative minimum tax.
For business, the reforms seek to reduce the corporate tax rate to 20% and limit the taxation imposed on small and family-based businesses operating as sole proprietorships and small businesses corporations to 25%.
“This has been a long time coming. Instead of a source of pride, our tax code has become a constant source of frustration. It’s too big. It’s too complicated. It’s too expensive. Today, we are taking the next step to liberate America from our broken tax code.”
Similarly, the House Freedom Caucus, which is comprised of Congress’ most conservative members, said in a statement:
“President Trump has delivered a forward-looking tax reform framework that will let hard-working Americans keep more of their money, simplify our system, end carve-outs for special interests, and will help make our businesses competitive abroad. The Freedom Caucus looks forward to sending a final bill based on this framework to President Trump’s desk as soon as possible.”
Senate majority leader, the Republic Senator from Kentucky, Mitch McConnell, is planning to introduce a bill, to the US Senate next week. The bill, nicknamed ‘Graham-Cassidy, will represent the Republican’s latest attempt to repeal and replace Obamacare.
The bill is named after the bill’s sponsors: the Republican Senator from South Carolina, Lindsey Graham, and the Republican Senator from Louisiana, Bill Cassidy. Republicans are under pressure to get the bill passed before the opportunity to pass it with a simple majority expires with the Reconciliation Bill on September 30th.
The objective of the Graham-Cassidy Bill is to abolish individual and employer insurance mandates and to increase the power of state governors to veto certain regulation in their state. Along with individual and employer mandate, it will eliminate:
- Medicaid expansion
- Cost-sharing subsidies
- Tax credits
And will make changes to:
- Traditional Medicaid
- Essential health benefits
- Price restrictions on older Americans
- Health savings account.
Under the Graham-Cassidy, Bill states will receive their Medicaid funding through block grants. This change will put an end to the Obamacare’s Medicaid program where states could have ninety-percent of their funding for new beneficiaries subsidized by Washington. This encouraged the states to expand their Medicaid programs to include individuals and families earning up to 138% of the Federal poverty level.
Under this new system, southern states that did not expand their Medicaid programs stand to receive more federal funding. Furthermore, the bill will also give greater power to the states by allowing them to spend their funding as they see fit.
Monday night, Utah Republican Senator, Mike Lee, and Kansas Republican Senator, Jerry Moran, joined Kentucky Republican Senator, Rand Paul, and Maine Republican Senator, Susan Collins in announcing their refusal to support the motion to proceed on the latest Obamacare Replacement Bill.
Positively, the legislation would have axed individual mandates (which prevented health insurance companies from altering their rates based on the health of the individual), insurance subsidies, the expansion of Medicaid, and funding for Planned Parenthood.
The Republican mandate has faced strict opposition from both the Democrats and the public. According to an article published by National Review, the majority of the American public dislike individual mandates and desire lower health care costs over all health problems. In spite of this, however, the American public also dislikes attempts to roll-back coverage on pre-existing health conditions.
The Democrats, needless to say, have been overjoyed at the legislation’s failure. Vermont Senator, Bernie Sanders, stated: “I am delighted to see that the disastrous Republic health care plan will not succeed.” Meanwhile, the chair of the Democrat National Committee, Tom Perez, referred to the defeat as a “victory for human decency.”
Speaking from the White House, President Trump commented: “I am disappointed, very disappointed. For so many years I’ve been hearing ‘repeal and replace, let Obamacare fail and then everyone will have to come together to fix it.'” President Trump went on to say: “let Obamacare fail, it’ll be a lot easier, we’re not going to own it. I’m not going to own it. I can tell you Republicans are not going to own it. Let Obamacare fail and then Democrats are going to come to us asking ‘how do we fix it?'”
Republican responses to the failed legislation appear mixed, however. Senate majority leader, Mitch McConnell, has made an executive decision to revive the Republican’s 2015 Obamacare repeal bill (originally vetoed by President Obama). The bill would repeal Obamacare over two years. But, as a 2017 Congressional Budget Office report points out, the repeal would leave thirty-two million Americans uninsured by 2026.
Other Republicans, such as New Jersey Governor, Chris Christie, have suggested that President Trump abandon his focus on repealing and replacing of Obamacare and instead focus his energies on other priorities. In an interview with MSNBC, Christie commented: “I’d advise him to move on and move on to other priorities like tax reform and infrastructure. I’ve said that to the president for months. I don’t think there’s a will in Congress. I think they’ve shown that there’s no will in Congress for them to work with each other.”
In an attempt to find a solution to the issue, President Trump is planning to host a lunch at the White House with all fifty-two GOP Senators.