A Republican remake of the federal tax code bound for a U.S. Senate vote as soon as next week is being decried by Democratic Sen. Tammy Baldwin as a “giveaway to the wealthiest few,” while her potential GOP challengers are cheering President Donald Trump’s bid for a once-in-a-generation tax-code overhaul.
The Republicans officially running to face Baldwin next year are state Sen. Leah Vukmir, of Brookfield, and businessman Kevin Nicholson, of Delafield.
Both Vukmir and Nicholson said they broadly support Trump’s push for sweeping tax changes.
Nicholson sent out a fund- raising appeal to his supporters Saturday in which he urged the Senate to pass the tax bill.
Vukmir wouldn’t say if she supports the Senate bill in its current form, cautioning it could change before a vote.
She made clear, however, that she backs many of the bill’s key provisions.
The bill slashes taxes for businesses, including the corporate tax rate, which it would cut to 20 percent from 35 percent effective in 2019.
“Pass-through” businesses such as partnerships, sole proprietorships, S-corporations and limited liability companies also would get a break. Many pass-throughs would be able to deduct 17.4 percent of their income tax-free.
The bill’s impact for individuals is mixed, though most would see an initial tax cut. It eliminates tax deductions, including for state and local taxes, while increasing two widely used provisions in the individual tax code: the standard tax deduction and the child tax credit.
A critical change for the U.S. health care system was tucked into the bill by a late addition that wasn’t part of a House tax bill that passed last week.
The Senate bill would repeal one of the linchpins of Obamacare: its individual mandate requiring everyone to have health insurance or pay a fine.
Baldwin, D-Madison, said in a statement that she wants to simplify the tax code and make it fairer for families, small businesses and manufacturers.
“But the Republican plan is largely a tax giveaway to the wealthiest few and powerful corporations, while millions of middle-class families would get a tax hike,” Baldwin said.
Vukmir spokeswoman Jess Ward said in a statement that “Leah is tired of the garbage talking points used by Democrats that these tax cuts will only benefit the wealthy,” calling them “nonsense.”
“These tax cuts will mean real savings for middle-class Wisconsinites,” Ward said.
corporate tax cuts
Vukmir’s spokeswoman said she supports key elements of the bill such as reducing the corporate tax, eliminating the Obamacare individual mandate, the state and local tax deduction and the estate tax. The Senate bill doesn’t abolish the estate tax, but it doubles how much money in an estate can be exempted from the tax.
Nicholson’s campaign did not answer questions about his views on specific provisions in the bill.
Nicholson spokesman Michael Antonopoulos said in a statement that he supports “Trump’s call for bold tax reform.”
“He hopes that the legislative process will continue to improve the end product to ensure that the final package provides tax relief for every Wisconsin taxpayer, while driving economic growth,” Antonopoulos said.
Supporters of the bill say it could fuel an economic boom while providing long-overdue simplification of the federal tax code. They predict the bill, by cutting taxes for businesses, would create jobs and increase wages. The individual tax changes will translate to more take-home pay for workers, they say.
The House passed its version of the tax bill last week, while congressional Republicans hope to send Trump a reconciled version of the measure by Christmas.
The Senate bill is broadly similar to its House counterpart with a few key differences, among the biggest of which is the Obamacare individual mandate repeal.
Repealing the mandate creates $338 billion in federal savings in the next decade that the Senate proposes using for tax cuts.
The move also would lead to 13 million fewer Americans having health coverage by 2027 and cause premiums on the Obamacare insurance exchanges to increase by 10 percent, the nonpartisan Congressional Budget Office found.
Baldwin wants relief for start-ups, manufacturers
Baldwin and other Democrats maintain the bill is tilted to favor the wealthy and large corporations.
One study predicts that by 2027, the richest 1 percent of U.S. taxpayers would get an average tax cut of more than $9,000 from the Senate GOP plan, while the bottom three-fifths of income earners would see an average tax hike of $160.
The Institute on Taxation and Economic Policy, which published the study, also found that under the plan, Wisconsin is among 19 states that would pay more in federal taxes in 2027 than they do today.
Baldwin’s statement said she favors changing the tax code, just not like Senate Republicans are proposing.
Baldwin said she wants to expand the earned income tax credit for individuals and families, give tax relief to small business start-ups and manufacturers and boost the tax rate on carried interest.
The bill’s impact on the federal deficit is a point of contention. Congress’ Joint Committee on Taxation, which assists it in drafting tax proposals, predicts it will boost federal deficits by more than $1.4 trillion over the next decade.
That prediction is made on a static basis, meaning it doesn’t try to forecast how the proposal will affect the broader U.S. economy.
But the bill’s proponents predict it will fuel widespread economic growth that will produce higher tax revenues, partially or fully offsetting the cost of the tax cuts.
A Tax Foundation study that uses a different forecasting approach found the Senate plan would generate more than $1.2 trillion in additional federal tax revenue over the next decade, reducing its net cost in that span to $516 billion.
“(Nicholson) hopes that the legislative process will continue to improve the end product to ensure that the final package provides tax relief for every Wisconsin taxpayer, while driving economic growth.” Michael Antonopoulos, spokesman for GOP candidate