Tax Bill Déjà Vu

Yong hian Lim

Yong hian Lim

Steven Bishop (11th), Reporter

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Negotiations have begun between House and Senate republican lawmakers to combine their separately created tax bills. Each bill is extremely similar to the other but both chambers are being stingy with their versions. Neither group wants to lose the support of the other or the GOP led tax reconstruction will fail.

Under current tax law people who itemize and deduct eligible expenses on their federal tax return are able to deduct state and local income, sales, and property taxes. These are called SALT deductions and both the Senate and House bills eliminate this and cap property tax deduction sat 10000.

Eliminating these deductions could place strain on funding needed for progress and services provided at the state level such as infrastructure and education. Cutting these funds will force local governments to lower taxes to offset higher federal taxes which could result in job loss at the local government level. Safety and infrastructure repairs will be negatively affected.

The Government Finance Officers association, a nonpartisan government association, says that thirty percent of all taxpayers across all income levels use SALT deductions, and fifty percent of these using the SALT deductions make under 200,000 a year. This income range is where most Americans reside. Taxes would increase by roughly 2000 a year for the those who use the SALT deductions says the Urban-Brookings Microsimulation Model.

Each tax bill resides on the concept trickle-down economics. This methodology is based on lowering taxes for large income companies and individuals in hopes that they will then use their wealth to provide higher pay for their employees and hire new workers as will. Trickle-down economics was first tried in 1981. That same year it failed miserably and resulted in tax increase in 1982 and 1983 to accommodate for the losses. The economy did later rise but only after the strategy was no longer in use.

The tax bills are reducing taxes but are compensating for the losses by taxing areas that were protected before. College students will now not be able to write off textbook expenses on their taxes, parents working at colleges and universities will be taxes on reduced education costs they provide for their children as apart of their income despite not actually not being paid the additional amount, and graduate students who volunteer as student teachers to pay for the cost of their tuition will be taxed on the price as if they physically receive the money first even though they do not.

Hopefully changes will be made to the tax bill to benefit as wide of a range as possible. Compromise is hard to come by though in a time when reason is swapped for extremes.

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