United States Senator Susan Collins, Advisor to the President Ivanka Trump, former Congresswoman Nan Hayworth and U.S. Treasurer Jovita Carranza talk about tax reform at Volk Packaging in Biddeford, Maine on November 10, 2017.
WASHINGTON – The United States Senate will begin voting tonight on a tax reform proposal that varies slightly from the bill passed by the U.S. House just weeks ago.
The votes, which will begin late in the day Thursday, comes after the Senate voted 52-48 to move the bill forward to the floor yesterday. That initial vote saw all Republicans vote in favor, and all Democrats opposed. The votes on the floor of the US Senate are typically referred to as the vote-a-rama as many amendments are considered and voted on in a marathon process before a bill sees a final vote for passage.
The Senate bill does vary in some ways from the House bill. While the Senate’s proposal does not repeal as many individual credits and tax breaks as the bill the House put forward, it does offer competitive, and in some cases, greater tax relief for middle-income Americans.
Among the differences, the Senate bill increases the child tax credit to $2,000 per child, while the House bill increased it to $1,600 per child. Currently, the child tax credit is at $1,000 per child.
On the child tax credit, the thresholds also expand, allowing for more Americans to get the full benefit.
Currently, the child tax credit begins to phase out by $50 per $1,000 in taxable income at $55k for married couples filing separately, $75,000 for single and head of household filers, and $110,000 for married couples filing jointly.
After doubling the child tax credit amount, the Senate proposal increases the threshold to $500,000, ensuring all working and middle-class American parents who can claim their children get the full tax credit.
Rates also change in the Senate bill, but the changes are not a wild departure from the House bill, except in the number of brackets.
The House tax reform bill collapsed the current tax brackets into just four brackets, starting at 12% on the low end and topping out at 39.6%, while the Senate bill maintains seven total brackets, it starts at a lower rate on the lower end, at 10%, and tops out at 38.5%.
Based on several scenarios run by Maine Examiner, most Maine families would see some level of tax relief from either the Senate or House hill, likely ranging from several hundred to two thousand dollars.
A typical Maine family of four that takes the standard deduction and earns between $50,000 and $120,000, is likely to see their overall federal tax burden reduced by 8% to 12% under the changes in the House or Senate plan.
Some in the Senate, including Sens. Marco Rubio and Mike Lee, are floating the idea of trimming the corporate tax rate cut by a small amount and using that change to target more working-class American families.
That proposal, which has so far not been embraced by the entire Senate Republican caucus, would change the corporate tax rate from 35% down to 21% or 22%, instead of the current proposed 20%, and use the savings to index the child tax credit to inflation going forward, essentially keeping the child tax credit in place for middle-class Americans going forward as inflation naturally increases their income.
While Democrats have attacked the Senate proposal for the technical language in the bill that allows the individual income tax reform to expire in about a decade, using that expiration to attack the bill as a “tax hike”, most impartial observers, and Republicans across the board, have responded to those attacks by saying they can imagine no scenario where Congress would vote to return to the old tax rates.
Maine’s Senior U.S. Senator Susan Collins has yet to officially announce her position on the bill, but she did vote with Republicans to move the bill forward to the floor. Senator Angus King, Maine’s Junior Senator, voted against the bill and has attacked it publicly.