WASHINGTON, D.C.-- The U.S. House of Representatives passed the "Tax Cuts and Jobs Act" Thursday, November 16th, a bill that would affect every American and U.S. business.
Its main goal is to lower taxes on companies to encourage them to stay in America. The bill also lowers the corporate tax rate from 35% to 20% permanently.
Not so permanent, however, are the tax cuts for the average American. Next year, the average household would receive a tax cut of about $1,200. By 2027, that tax cut would drop to an average of $860.
Those estimates come from the non-partisan Joint Committee on Taxation, which says 92% of Americans would either pay less or see little change in their taxes for the next five years under the new plan. But after 5 years, only 40% of Americans would pay less, and 22% would pay more.
"This is about giving hardworking taxpayers bigger paychecks," said Speaker of the House Paul Ryan, after the House passed the tax plan Thursday afternoon. "This is about giving those families who are struggling peace of mind."
Next, the bill heads to the Senate. Senate Majority Leader Mitch McConnell outlined, "The plan before the finance committee fulfills our main goal for tax reform, taking more money out of Washington's pockets, and putting more money into the pockets of the middle class."
But there are already signs of trouble. The Senate's version is still in the works, but adds a provision to scrap the legal requirement that all Americans buy health insurance or pay a penalty.
One Republican Senator has already come out against that, and more are on the fence. If more than two Republican Senators vote "no," the tax plan will not pass.
The Joint Committee on Taxation says the Senate bill would be a "tax cut for millionaires, while raising taxes on lower income households."