While most of the media's attention in the United States was focused on the Senate’s confirmation hearing for Supreme Court nominee Brett Kavanaugh, the House of Representatives approved Friday a US$3.1 trillion tax cut for the country's qualities citizens.
The bill is the second phase of tax reform enacted through last year’s Tax Cuts and Jobs Act, president Donald Trump’s signature legislative victory, that would make tax cuts for individuals of all income brackets, initially set to expire within a decade, permanent.
The Tax Cuts and Jobs Act that became law in January permanently cut the corporate tax rate from 35 percent to 21 percent.
The bill that would go into effect in 2025 was supported by 220 legislators, including three Democrats, and is expected to add an additional US$600 billion the national debt between 2025 and 2035, and US$3.2 trillion within the following decade.
That’s on top of the US$1.9 trillion the original tax package added to the deficit projections, according to the Congressional Budget Office, GritPost reported.
The U.S. currently has a national debt of US$21 trillion debt, which exceed its yearly Gross Domestic Product (US$19.4 trillion in 2017, according to the World Bank).
For the bill to become law it will have to be passed by the Senate, which according to Fortune is “unlikely to take up the legislation” due to its unpopularity. Last week, Bloomberg News reported that a survey commissioned by the Republican National Committee revealed that 61 percent of respondents think president Donald Trump’s tax overhaul helps the wealthy instead of middle-class families.
The bill's detractors argue it will create a deficit problem that will force the government to cut social spending.
Representative Linda Sánchez (D-California) argued Friday “I guess their giveaway to the ultra-wealthy wasn’t enough the last time around, so they’ve come back for round two… When the bill finally comes due, I’m terrified Republicans will pay for it by cutting Social Security and Medicare.”
Republicans, on the other hand, argue “this relief goes to middle-class families and low-income families working their way up,” like Representative Kevin Brady from Texas said of Friday’s measure.
Howard Gleckman of the Tax and Policy Center warned on Sept. 12 the biggest benefits would go to households making between US$357,000 and US$836,000, “whose after-tax incomes would rise by 3.3 percent in 2026, or by an average of $14,700. By contrast, those in the bottom 20 percent of the income distribution (who will make $28,600 or less in 2026) would get a tax cut of about $100, or roughly 0.5 percent of their after-tax income.”