Speaker Paul Ryan has vowed to take up comprehensive tax reform in the 115th Congress.
Whether he can get what he wants will be up for debate, but Ryan, R-Wis., and president-elect Donald Trump share similar tax-cut plans.
Both would slash the top income tax rate from 39.6 percent to 33 percent. Both would reduce taxes on corporations, in largely similar ways. While some form of tax cuts would seem to be a given, longtime Democratic strategist Michael Lewan said bigger tax reform might not be so easy.
Trump’s victory sunned the Beltway, analysts said. With Republicans retaining control of the House and Senate, it will make it easier to get things done, but Lewan noted the GOP Senate edge is well short of the 60-vote supermajority.
Comprehensive tax reform is “still a tough, tough nut,” Lewan said. “Think about it, we haven’t had significant tax reform since the early days of the Bush administration. Speaker Ryan and Donald Trump are going to have to fashion a coalition of Democrats to get any type of meaningful tax reform done.”
The comprehensive tax package Ryan unveiled this summer includes several other components, including:
• Replace itemized deductions with a higher standard deduction. Most individual tax breaks and benefits would be cut, except the earned income tax credit and deductions for mortgage interest, charitable giving and education expenses. The Ryan plan would increase the standard deduction to $12,000 from $6,300 for single individuals and to $18,000 for single individuals with a child.
• Eliminate the alternative minimum tax and the estate tax.
• Slash investment income tax rates. Investment income is currently taxed at a top rate of 20 percent. Under the GOP plan, taxpayers could deduct 50 percent of their net capital gains, dividends and interest income.
• Increase the child tax credit. The proposal would streamline existing child credits into a single $1,500 credit and a $500 credit for non-child dependents.
One thing the new Congress will have to face early is the federal debt limit. A 2015 showdown led to it being suspended until March 16, 2017, at an estimated $20 trillion, which could quickly be reached by the federal government's accumulated debt. That would force Congress to make tough decisions early on.
While he stopped short of predicting Republicans will look to implement “austerity” spending policies, Lewan said they will likely cut domestic spending significantly.
“I think Republicans will want to dramatically increase military spending and Trump has consistently supported that throughout his campaign,” he said.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at email@example.com.
© Entire contents copyright 2016 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.