And it promises that the revised tax code will be simple enough that most Americans can file their taxes on a postcard.
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The new plan does not include any price tags but rather resurfaces ideas that have always been discussed in Republican policy circles.
The House GOP has been building on years of work by Ways and Means Committee Republicans to develop pro-growth tax reform.
On Friday, as part of Speaker Paul Ryan’s “Better Way” agenda, House Republicans are delivering to the American people a plan for a 21st-century tax system. The increased deductions ensure that no one in the lowest tax bracket now would pay more, according to the plan. The third part would consist of a small claims tax court so that taxpayers will be able to address disputes with the federal government without the need for expensive lawyers or tax resolution businesses. It is not yet a bill, but it’s more of a talking point or proposal to initiate reforms on the 2010 Affordable Care Act, also known as Obamacare.
For people without insurance through their jobs, the Republicans would establish a refundable tax credit. That’s economically smart insofar as it diminishes the revenue loss and goes some way in counteracting the perennial liberal complaint that this is a giveaway to the rich. (Compare it to the Trump plan which loses $10 trillion and gives the rich a huge tax break.) If there is a way to describe the plan it might be “modest”.
This plan ends that by cutting the corporate tax rate from the existing 35 percent rate to just 20 percent.
The Republican plan discards the mandates and penalties that have made “Obamacare” a perennial target for GOP lawmakers, but it comes with uncertain costs and an unknown effect on the number of insured Americans.
“We want a tax code that works for taxpayers, not for tax collectors”. It would also shift the current system to a territorial system of taxing foreign income of USA multinationals without any word on how the US would protect itself against base erosion. “What we are laying out today is a first-time-in-six-years consensus by the Republicans in the House on what we replace Obamacare with”.
The lower corporate tax rate would be combined with a new “destination basis” for cross-border transactions: Products and services that are exported outside the US would no longer be taxed – while any products and services that are imported would be. That regulation creates the opposite incentive from Obamacare’s total prohibition: Healthy people have a reason to buy insurance, so no further action needs to be taken to get them to do it. And because of the tax credit, everyone would have the means to buy a policy.
Interest Deduction: Allows businesses to deduct interest expense from any interest income but disallows deductions from net interest expenses. Many Obamacare alternatives look to expand the use of high-deductible health plans paired with tax-free health savings accounts. It is slightly more restrictive, but not much: “No American should ever be denied coverage… on the basis of a pre-existing condition”. Short-term gains and interest are taxed at one’s top income tax rate.
Many veterans simply don’t know it’s an option, said Scott Thompson, executive director of the Board for Correction of Naval Records. “Ryan and Brady are smart to put a detailed plan out there now and rally support for bold changes”.
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Party insiders say that Mr. Trump would happily sign the GOP’s sweeping tax and financial regulatory reforms in a NY minute, because they would ignite an explosion economic expansion – after eight years of painfully slow growth under Mr. Obama’s presidency.
