The legislation congressional Republicans finalized on Friday and are likely to enact next week delivers on many of the party’s—and President Trump’s— promises for a landmark overhaul of the tax code. But the rush to pass the bill through a narrow Senate majority and without Democratic support forced the GOP to sacrifice some of their long-held aspirations for tax reform.
The final bill permanently reduces the corporate tax rate all the way from 35 percent to 21 percent, nearly matching the 20 percent goal House Republicans set in their 2016 campaign plan (though not as low as the 15 percent Trump ran on). It cuts taxes sharply for business owners, and companies will be able to write off costly purchases of new equipment and buildings.
Individuals and families will benefit from a doubling of the standard deduction and the child tax credit. But Republicans were unable to simplify the tax code nearly as much as they wanted. Trump and House Speaker Paul Ryan had each called for collapsing the seven individual income-tax brackets down to three or four; the final compromise abandons that approach. And because Republicans refused to find enough revenue to offset the $1.5 trillion cost of their plan, they were unable to make most of the individual tax cuts permanent. The result will be changes that aren’t as lasting as they hoped or, if Congress extends them, will end up increasing the deficit by far more than the GOP projected.