A host of tax cuts for individual taxpayers would now be temporary, expiring after 2025, under a major revision late Wednesday to the Senate tax reform plan by Finance Committee Chairman Orrin Hatch.
It’s an effort to bring the legislation into compliance with arcane budget rules in the Senate barring the legislation from adding to the government’s long-term debt.
But because Hatch would simultaneously make tax cuts for businesses permanent, it’s certain to be attacked by Democrats as siding with big business over average Americans.
That’s one of the biggest but hardly the only change Hatch is proposing. His revised plan is littered with new proposals as well as changes to previously offered ones.
He is beefing up the child tax credit more than he had proposed, to $2,000 per child, while reducing the income threshold at which it would begin to phase out to $500,000 from $1 million.
Hatch is also tweaking the rates and incomes at which his various tax brackets would kick in. And he’s added provisions allowing people to set up 529 education savings accounts for unborn children.
The revised plan drops provisions related to deferred compensation opposed by Silicon Valley. Other provisions would make it easier for businesses known as “pass-throughs” to claim his reduced business rate.
Though the stated purpose of the legislation is to reform the tax code, the revised plan offers special treatment to certain groups, including citrus growers and those who put on theatrical productions.
As expected, the plan would kill the Affordable Care Act’s individual mandate to have health insurance, beginning after next year.
The changes are intended to assuage concerns from fellow Republicans about the tax plan Hatch first unveiled last week while getting the legislation to jibe with the Senate’s Byrd rule against adding to government red ink.
The scope of the changes introduced will likely incense Democrats because they come after the Finance Committee has already been considering the legislation for the past two days, with a goal of wrapping up work on Thursday.
The description of the changes by the official, nonpartisan Joint Committee on Taxation runs 103 pages. It includes 44 new proposals, as well as 16 modifications of previous proposals, according to JCT.
Many Democrats are already unhappy with the decision to add the individual mandate repeal, which Republicans are relying upon to help make their tax math work.
Budget scorekeepers said killing the mandate raises money because, while the government would not collect penalties from people for failing to have coverage, that would be more than offset by fewer people getting federally subsidized health coverage.