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The scoop on recent American tax reform

In December 2017 the United States Senate passed an amendment to the internal revenue code, changing major aspects of the tax code in the United States. Many Republican lawmakers along with Donald Trump’s administration hailed it as a win for the middle class and for small businesses.

“We enacted the biggest tax cuts and reforms in American history,” President Donald Trump said last year. “Our massive tax cuts provide tremendous relief for the middle class and small business.”

Like the president, many senators who were proponents of the new tax plan advertised it as a tax cut for hard-working American families. Detractors of the bill like senator Bernie Sanders argue differently. 

“We are presumably going to pass legislation, when at a time of massive income and wealth inequality, 62 percent of the tax benefits go to the top one percent,” Sanders said on the Senate floor in December 2017.

This divide in regards to the nature of the tax plan runs deeply between the two major political parties. During the last half of 2017 and all throughout 2018, many Republicans have said that the middle class and the average American worker would benefit from the new tax plan while Democrats have universally rejected this narrative and consistently referred to it as a giveaway to the wealthiest Americans in the country and an abandonment of the average American.

With such different narratives in regards to the same piece of legislation, it’s hard for the average American citizen to know how the tax plan will really affect their lives. Even though Republicans say one thing and Democrats say another, the truth actually lies somewhere in the middle.

It is true that the new tax plan will cut taxes for 80 percent of Americans. But the amount of the tax cut will vary depending on how much any individual or family makes a year.

For example, according to The Washington Post, middle income taxpayers will, on average, get a tax break of about $1,000. This is due to the fact that the bill did lower taxes on individuals who make between $38,700 and $98,700 from 25 percent to 22 percent.

But from the Democrats’ viewpoint, the biggest tax cut was, in fact, given to corporations whose taxes were lowered from 35 percent to 21 percent. Many detractors of the bill point out that this will increase the nation’s debt by over $1 trillion within the next 10 years.

Another major point about the tax plan is that the tax cut that middle-income earners did receive will expire. Although taxes did go down for many Americans currently, they will actually go up for some after the current tax cut for middle income Americans expires sometime in the next five years.

On the other hand, the major tax cuts that corporations received from this bill are indefinite. 

By going over some of the major takeaways from the bill, it is clear that the narrative from both Republicans and Democrats were, in fact, true in some way. The effects of the GOP’s recent tax plan will only really be understood in the coming decades.

Only time will tell if this new tax plan will be a continued cause of income inequality like many Democrats claim or if it will actually help the middle class in the way Republican lawmakers say it was designed to. 

 

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