Tax Cut Battle Heats Up as U.S. Budget, Middle-Class Americans Remain Vulnerable

Republicans Scramble to Get Budget Completed to Avoid Democrat Filibuster

The Republicans of both Houses met on October 5 in an effort to iron out the details of the White House tax plan, one that would see massive cuts go to corporations and richer Americans while the middle-class will receive smaller gains, and some may even see an increase in taxes depending on the state in which they reside.

The battle that is raging on in the Republican party stems from a tax plan that is being pulled in multiple directions by multiple factions within the party. On the one hand, you have fiscal conservatives who want to see tax reductions across the board. The issue is, however, that tax reductions will result in a loss of revenue for the federal government. Without significant cuts to government programs, the loss of revenue will add to the already large debt and deficit.

At the same time, protecting taxes goes against the principles of many of Republican House and Senate members.


One solution being proposed to deal with the loss of revenue is to cut the reductions that residents receive in their federal taxes. These deductions apply to people who live under high state taxes and are therefore permitted to deduct from their federal income.

Republicans are divided on whether this deduction should be cut in order to help pay for the massive reduction in taxes across the board, including a slash of the corporate rate from 35% to 20%.

The Republicans are looking to enact a budget as soon as possible. This is not normally required for a tax plan to be passed, but the budget would include language allowing them to push through a separate GOP-only tax bill without necessitating Democratic votes in the Senate.

The House has already adopted its budget resolution and Republicans hope to produce a joint budget later in October.

“It’s uphill, there’s no doubt about that,” Senator Orrin Hatch of Utah, chairman of the tax-writing Finance Committee, told reporters Wednesday about the road forward.

House Democrat Steny Hoyer, in a statement Wednesday, called the House resolution “merely a vehicle for achieving partisan tax reform,” and added, “Their plan is to push through tax changes that massively increase deficits.”

Moreover, some of the U.S.’s most beloved entitlement programs are being cut to help pay for the tax cuts. About $200.0-billion is being earmarked in reductions to Medicare and Medicaid. For some conservatives, that didn’t go far enough; they instead wanted a $400.0-billion reduction. Meanwhile, defense spending has increased and other cuts have been either nominal or nonexistent.


Why Tax Cuts Will Only Get Harder From Here,” Bloomberg, October 5, 2017.


Categories: Government Cutbacks, News