What Does The Senate Tax Bill Mean For Texans?
From Texas Standard.
As the clock ticks down, what ultimately happens with this tax bill could shape the terms of engagement for the midterm elections in 2018.
A small group of GOP senators may not be on board with the plan yet. John Diamond, director of Rice University’s Center for Public Finance, says that at least one senator is concerned that the tax plan doesn’t help small businesses.
“I wouldn’t say it’s a widespread issue, though,” Diamond says. “It seems like only Senator [Ron] Johnson is really making the case that small businesses need to be treated more generously. He wanted to see the deduction for small businesses increased from 17.4 percent to 20 percent in order to make the deal a little more favorable to small businesses.”
“Estimates are that the number of taxpayers that itemize would decrease by about 95 percent – from basically 45 million to 8 million,” Diamond says. “So once people cannot itemize, they can’t deduct their charitable giving, so that makes charitable giving more expensive in the sense that every dollar you give, you don’t save 70 cents on your tax bill.”
He says the plan to repeal the estate tax could also be a hit to nonprofits.
“To the extent that a lot of giving is done by the very rich at the end of their lives, if you repeal the estate tax and you maintain step-up basis, which is allowing heirs to value the assets they receive at the time they receive them, rather than the time they were bought, all of those things would reduce the incentive to give contributions to charities,” Diamond says.
In another controversial move, the House bill gets rid of the Johnson amendment, which bans tax-exempt organizations from making political endorsements.
Under the Johnson amendment, Diamond says, “if churches and other charitable entities are going to get this tax exemption, they’re not allowed to take a side in a political fight. Or they can take a side, they’ll just lose their tax exemption,”
But will the Senate go along with the House’s vote to repeal the amendment?
“I don’t know what the mood in the Senate is on this issue,” Diamond says. “My best guess is yes, they will.”
Diamond says the first reason why the GOP is racing tax reform through Congress is because they haven’t passed any of their other hallmark legislation this year, so they want to get something done.
“Two, they do view tax reform as important, so they’re passing it under this reconciliation process, as an omnibus bill, and so it has to be passed this year,” he says. “They have strict deadlines that they have to meet or it will be pushed into January or February, in which case it won’t be passed until the next legislative year.”
Written by Jen Rice.