Yesterday, the Senate upped the ante in the war for tax cuts by taking President Trump’s advice and including repeal of Obamacare’s individual mandate as part of its package.
This was a bold move. As Business Insider shows us, repealing the individual mandate gives the Senate the flexibility to cut taxes even further beyond its $1.5 trillion revenue box, and pass on greater relief to American households.
After adding individual mandate repeal to its tax bill, the Senate promptly cut rates further. Here is where they stand now:
- 10%: $0 to $9,525 of taxable income for an individual; $0 to $19,050 for married joint filers.
- 12%: $9,526 to $38,700 individual; $19,051 to $77,400 joint.
- 22%: $38,701 to $70,000 individual; $77,401 to $140,000 joint (was 22.5% in original Senate bill).
- 24%: $70,001 to $160,000 individual; $140,001 to $320,000 joint (was 25% in original Senate bill).
- 32%: $160,001 to $200,000 individual; $320,001 to $400,000 joint (was 32.5% in the original Senate bill).
- 35%: $200,001 to $500,000 individual; $400,001 to $1,000,000 joint.
- 38.5%: over $500,000 individual; over $1,000,000 joint.
Repealing the individual mandate gives Congress flexibility to enact the sort of across-the-board rate reduction (on both the corporate and individual side) that will lead to booming economic growth.
The Senate proposal cuts rates more than its House counterpart, and Senator McConnell has demonstrated enormous political courage by holding strong against class warfare demagoguery and putting forward a proposal that will lower the top marginal rate. That’s another big check mark in the economic growth column.
Of course, McConnell’s bold move to cut taxes further was met with ridiculous opposition from senators like Al Franken. In response to the Senate’s updated tax bill, Franken tweeted:
RED ALERT: Senate GOP just added provision to their tax plan that would gut ACA & kick 13M ppl off insurance. Yes, it’s same tax plan that would add $1 trillion+ to deficit while giving majority of benefits to corporations & the rich. We need you to make your voices heard again.
— Sen. Al Franken (@SenFranken) November 14, 2017
First of all, repealing the individual mandate doesn’t “kick” people off insurance — it just gives them the choice not to buy it. That’s like saying I was “kicked out of” Subway today because I chose to walk by the store and order pizza instead. It is no surprise that, if the individual mandate was repealed, less people would buy insurance — because the government would no longer threaten to punish them if they didn’t.
Second, Senator Franken appears blissfully unaware of who actually pays the individual mandate tax. It isn’t “corporations & the rich” — it is mainly lower-and-middle-income households.
As an eye-opening chart from Senator Daines shows us, in Senator Franken’s state of Minnesota, over 78 percent of those who pay the individual mandate tax make less than $50,000 a year. Even worse, more than 1-in-3 individuals who pay the mandate tax make less than $25,000 a year.
Repealing the individual mandate isn’t a giveaway to the rich. It’s an enormous tax cut for the lower and middle class.
With the inclusion of individual mandate repeal, the Senate is closer to giving Americans the sort of relief from taxes and Obamacare that they yearned for when electing this Republican Congress. Hopefully the Senate will remain strong on its rate cuts and mandate repeal as it works with the House to craft the final package.
Photo credit: 401(K) 2012 via Flickr, CC BY-SA 2.0