During the presidential campaign, Donald Trump promised tax reform that would reduce taxes for millions of middle and lower-class Americans. Part of his plan was to also cut corporate taxes. He was basing his plan on what former President Ronald Reagan did in 1982 which was quickly referred to as Reaganomics.
Reagan’s plan consisted of 4 key parts: cut federal income and capital gains taxes, cut government spending, tighten money supply which helps control inflation and reduce many government regulations. The end result was a huge economic increase, which ended a decade long trend of rising inflation and increased unemployment.
President Trump has already been working to cut government spending along with cutting government staffing.
Donald Trump is doing his best to get Republicans to help make his plan happen. Last week, House Republicans unveiled their first draft of their tax reform. It was met with a great deal of criticism by House Democrats, but then they had been criticizing the plan for more than a month without even seeing it, indicating that it’s not the plan they actually object to, it’s Republicans in general.
They kept saying that the GOP plan would only benefit the wealthy (which is ironic since there are more wealthy Democrats than Republicans). However, the first House draft was estimated to cut the average American’s annual income taxes by over $1,000, while it kept the same higher tax rate for the wealthy.
Conservative Republicans are already wanting to make changes to the initial draft, but it’s not clear what all of those changes are.
News has also gotten out that Senate Republicans are planning to introduce their own tax reform bill. Everyone is clamoring to find out what the Senate GOP will offer in their plan, but legally, it won’t make a lot of difference, because their bill cannot legally be passed and signed into law for the same reason that the Affordable Care Act (Obamacare) was illegal from the moment Barack Obama signed it.
Ever hear of the Origination Claus in the US Constitution? Article 1, Section 7 states:
“All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”
The actual bill that eventually became the Affordable Care Act originated in the Senate, not the House. Since the bill contained 20 taxes or tax increases, technically, it raises revenue and therefore was a violation of the Origination Clause. Pacific Legal Foundation filed a lawsuit on behalf of a small business owner and Iraq veteran Matt Sissel, challenging the legality of Obamacare based on its violation of the Origination Clause. On January 19, 2016, the Supreme Court declined to hear the lawsuit.
Since the Senate tax reform bill does raise federal revenue, it’s passage would be a violation of the Origination Clause. The Senate can suggest or propose amendments to the House tax reform bill, but according to the US Constitution, the actual bill has to originate in the House and not the Senate. Therefore, legally speaking, Senate Republicans should be sitting down with House Republicans to iron out an amicable bill that they both approve of and then begin with its presentation in the House.