The Senate Finance Committee introduced their version of tax reform to the GOP caucus this past Thursday. While official legislative text of the bill has not yet been released, reports have come in that the Senate version contains several important differences from the House version:
- The Senate bill would delay the corporate tax rate cut until 2019.
- The Senate bill would have seven brackets for individual filers, as opposed to four brackets in the House bill.
- Individual tax rates for both the lowest and highest individuals would be slightly lower under the Senate bill (10 percent for the lowest income earners, and 38.5 percent for the highest income earners).
- The Senate bill would preserve the medical expenses deduction, the mortgage interest deduction, the adoption tax credit, and the student loan interest deduction.
- The Senate bill would eliminate the state and local tax deduction.
- The Senate bill would retain the estate tax, but reduce the number of estates to which it applies.
While tax reform is no means a certainty, a battle within the GOP to co-ordinate and combine the two bills, once accomplished, is expected to face stiff opposition from the Democrats, who take the position that the proposed tax reform bills will balloon the deficit, increase taxes for many middle-class working Americans, and benefit those high-income earners that could most afford to pay increased taxes.