President Trump signed the Republican tax-overhaul bill to little fanfare on Friday, delivering a major tax cut to U.S. corporations along with a package of temporary cuts for other businesses and most individuals.
“We are cutting taxes,” Trump told reporters in the Oval Office before signing the legislation. “We are taking care of people.”
Trump’s signature caps a seven-week sprint that began when the House unveiled its tax bill last month, and it gives the GOP its first major legislative victory since January. The private setting was unusual given the significance of the legislation, but the process had been delayed until Congress passed a stopgap spending bill late Thursday.
The legislation hasn’t scored well in national polls, in part because of concerns about its benefits for corporations and top earners. But Trump and other Republicans say average Americans will embrace it.
The bill slashes the corporate tax rate to 21% from 35% and cuts individual tax rates across the board — though analyses have shown that most of the benefit would go to those at the top of the income scale. It also imposes new limits on deductions used heavily in high-tax states with high home values, meaning some people in those areas will see higher tax bills.
Trump highlighted corporate responses to the new law. AT&T said Wednesday that it would give a special $1,000 bonus to 200,000 U.S. workers to celebrate the tax cut. Boeing Co. separately pledged $300 million for employee training, improved workplace infrastructure and corporate giving, crediting the new tax law.
“This is having an even bigger impact faster than I thought,” Trump said Friday.
Congress on Thursday night cleared the way for Trump’s signing by waiving automatic spending cuts that would have been triggered in January due to the $1.5 trillion revenue loss the bill would cause. The stopgap spending bill keeps the government open until Jan. 19, waiving cuts in all future years due to the tax bill under the 2010 PAYGO law.
Overall, the bill is projected to decrease federal revenue by almost $1.5 trillion over the next decade — though its individual tax cuts are set to expire in 2026 in order to avoid adding to the deficit outside that window. Trump and GOP leaders have said they expect the business tax cuts to spur enough economic growth to make up for the revenue loss — an assertion that many economists have questioned.
The legislation — and public perceptions of it — are expected to play a major role in 2018 elections that will determine whether Republicans retain control of Congress.
Trump has repeatedly described the plan as a boon for the middle-class — and the bill includes provisions that almost double the standard deduction and expand the child tax credit. Those measures will benefit millions of families, not just those in the middle class.
GOP leaders say a “typical family of four” that’s earning $73,000, the median family income in the U.S., would see a tax cut of more than $2,000 under the bill. But the bill also cuts the top marginal tax rate on households earning more than $600,000 a year, and provides a new tax break for owners of partnerships, limited liability companies and other so-called pass-through entities.
Source: Bloomberg News