Benjamin Franklin famously said, “nothing can be said to be certain, except death and taxes.”
Governments need taxes to pay for the needs of the country--for schools, roads, the military, and more. But politicians have long debated who should pay how much in taxes, and how the money is spent.
Generally speaking, Democrats tend to favor higher taxes, especially on the upper classes, because they believe that funding more government programs benefits all American citizens. Republicans, on the other hand, usually believe that taxes should pay only for the “essential functions” of the government to avoid wasting people’s earnings on programs that may be unpopular or ineffective.
This week, Republicans in the Senate passed a bill for a new United States tax plan. What will this new plan do, how can it be passed, and what are the tradeoffs it makes?
The Journey Of A Bill
Typically, a bill is introduced in either the U.S House of Representatives or the Senate by a member. It is sent to committees and sub-committees where it is researched, debated and modified if needed. Finally, the bill makes its way to the floor where all members of the House or Senate debate and finally, vote on it.
Since Republicans hold a majority in both the House and the Senate, the tax bill was passed on party lines - with Republicans voting in favor and Democrats opposing it.
The Senate and the House have to pass the same version of the bill before it is sent to the President for signature. In the case of the tax bill, the two have each passed their own version of the tax bill. Though the two are similar, the houses will need to come to an agreement and draft a final bill that will be sent to the president for approval.
The Pros and Cons
The new Republican tax proposal shows lower taxes for most classes of people in the short term. These cuts come at a cost, though.
To pay for the tax cuts, the bill removes the requirement for all citizens to purchase health insurance, which was an essential part of the Affordable Care Act, or Obamacare. As a result, about 13 million fewer people will buy that insurance. While the government saves money on their plans, those people are left without health care.
Even so, the government would lose $1.5 trillion because of tax cuts under this plan. The bill cuts taxes on corporations significantly, from 35% to 20%. Supporters of the bill believe that the money saved would allow those companies to grow, employ more people, and earn more money. Experts, however, debate whether we can really make up $1.5 trillion--in other words, whether it will be a net gain or a net loss.
But despite all this, many people will see their taxes go up over time by 2027, according to the Tax Policy Center. In short, this plan, like any policy, is full of tradeoffs. Economists, political experts, and millions of American families alike are trying to understand just what this all means for them.
To learn how bills become laws, check out this fun video from Schoolhouse Rock!
Sources: WashingtonPost, WSJ, FoxNews, votesmart.org, usa.gov