After nearly a year behind the reins of the country’s executive branch, President Donald Trump finally managed to get major legislation on his desk, and sign the first truly significant bill of his presidency into law. This came after several months of negotiations on Capitol Hill, as Senate and House Republicans bickered and argued as they tried to lay out a consensual initiative that could clear both chambers and get to President Trump’s desk before Christmas. In the end, the Tax Cuts and Jobs Act of 2017 ended up passing the House of Representatives 227-203 and the Senate 51-48 towards the end of December. The president signed off on it on December 22, 2017, shortly before departing to Florida, where he intended to spend Christmas with his close family.
According to most estimates, and official government projections, over 90% of American families will receive a tax cut, and most businesses will be rewarded with them too. The highest income tax rate, which stood at 39.7% for married couples earning over $470,000 per year would be lowered to 37%. In addition, the requirements to qualify for this tax bracket were modified, and will now only apply to individuals earning more than $500,000 or married couples earning more than $600,000 yearly. The working and middle class will see their taxes cut too, with the rates being slashed from two to four percent among the several tax brackets. The reform allows more Americans to owe nothing in taxes, and the number of non-tax paying Americans will grow from around 44% to 47.5% of the country’s adult population.
The bill also included many other changes to the tax code. For starters, the corporate tax rate, which was one of the highest in the developed world was cut to 21%, from the previous 35% rate. It is important to point out that although personal tax cuts will expire in eight years, these are to remain permanent. Working-class families will also get larger child credits, increasing it to $2000 per child. Another key provision in the bill is the repeal of Obamacare’s individual health mandate. This means that Americans will no longer be required to have health insurance by law, and those who opt out of it will no longer be facing a legal penalty.
Now it’s up to the passage of time to determine whether these prove to be a significant boost for the American economy in coming years.