Graphic: Donkey Hotey. License: CC BY 2.0
Bill narrowly makes it from committee to Senate floor
U.S. President Donald Trump has moved a step closer to one of his campaign promises: The relevant Senate committee forwarded a bill for his promised tax reform to the plenum, which may now debate it, with a narrow Republican majority of twelve votes to eleven. Among other things, the bill would cut the previous seven federal income tax rates of 10, 15, 25, 28, 33, 35 and 39.6 percent to 10, 12, 22, 24, 32, 35 and 38.5 percent and corporate taxes would be lowered from 35 percent to 20 percent.
The basic deductible amount, which can be deducted without receipts, will be increased for single people from the current 6.350 to 12.000 and for married persons from 6.350 to 24.000, which should reduce the bureaucratic burden on both taxpayers and tax authorities. Children could be eligible for 2.000 instead of the previous 1.000 dollars deduction. Other deductions – for example, local property taxes – will be significantly reduced.
If the Senate agrees on this or a different bill, it will have to be harmonized in further negotiations with the bill already passed by the House of Representatives. Instead of seven new income tax brackets, this one provides for only four: 12, 25, 35 and 39.6 percent. The corporate tax cut, which the Senate bill does not want to apply until 2019 in view of the budget deficit, the House of Representatives wanted to enact earlier.
Democrats against it
Democrats oppose the tax reform, fearing an annual revenue shortfall of $170 billion and criticizing the tax cuts for being too broadly targeted at high-income earners and corporations. However, according to the Wall Street Journal, some of them may be able to deduct less from their taxes in the future – for example, mandatory insurance premiums that banks have to pay to the Federal Deposit Insurance Corporation (FDIC). To analyst Charles Peabody of Compass Point Research Trading under this debated new rule could cost large banks with assets of more than $50 billion a year one to two percent of their revenues.
If Congress agrees, it would be the first comprehensive realization of one of Trump’s campaign promises – after the health care reform he announced failed, no agreement is yet in sight on the NAFTA free trade agreement, entry restrictions have been weakened by courts and his new Homeland Security Secretary Kirstjen Nielsen told the Senate committee at her 8. November said no need for a wall on the border with Mexico "from Sea to Shining Sea".
On the other hand, the president can point to good economic data: To fewer unemployed than at any time in the last 17 years, and to stock market highs that are perceived more broadly in a country where retirement benefits depend more heavily on them than in Germany. In addition, his political opponents so far do not really seem to have learned from his victory in November 2016. On the anniversary of his election, for example, particularly fanatical opponents of Trump staged a public shouting match with the heavens, impressively demonstrating to users of social media what the alternative currently is.
Hillary Clinton, adored by such SJWs, who failed against Trump last year, is still being touted as the Democratic nominee for the 2020 presidential election, even as new revelations like the one about the sale of Canada’s Uranium One to Russia’s state-owned Rosatom Group (which thus controls more than one-fifth of U.S. uranium holdings) cause her more and more problems. The U.S. administration approved the acquisition at a time when Clinton was secretary of defense – and shortly after Uranium One made a large donation to the Clinton Foundation.
Senator Elizabeth Warren, who also ran for the Democratic nomination, is repeatedly referred to by Trump in public as "Pocahontas" since the blonde and blue-eyed woman from Oklahoma claimed, without proof, to be partially descended from Native Americans. At a ceremony for Navajo veterans on Sunday, the president said: "Long before any of us were here, you were here – even though we have one in Congress who is said to have been here a very long time, too; you call her Pocahontas." In response to media reports, his spokeswoman then explained: "I think most people find it offensive that Senator Warren is leering over her heritage to further her career."