When Republicans say they want to lower taxes and get rid of loopholes to make up the lost revenue, they’re talking about eliminating some very popular tax breaks enjoyed by millions of people.
That’s why making big changes to tax laws is so hard — and why it hasn’t been done for 30 years.
Unless Congress simply cuts taxes for everyone, there will be winners and losers, and the losers won’t go quietly. If Congress does cut taxes for everyone, lawmakers risk exploding an already large budget deficit.
Republican leaders in the House and Senate say they don’t want a tax overhaul to add to the national debt. That’s what they mean when they say “revenue neutral.” The new system would raise the same amount of tax revenue as the old one, after taking into account some broader economic effects.
President Donald Trump has said he will make public a tax proposal in the coming weeks. Republicans in Congress are also working on plans, with the House GOP taking the lead.
Last year, House Republicans released a blueprint that would lower income tax rates and reduce the number of tax brackets. The gist of the plan is to lower tax rates for just about everyone, and make up the lost revenue by scaling back exemptions, deductions and credits.
A look at the biggest tax breaks enjoyed by individuals, along with The Associated Press’ assessment of how safe they are as Congress works to overhaul taxes. All estimates are from the nonpartisan Joint Committee on Taxation, the official scorekeeper for Congress.
Contributions to pension plans are tax-exempt, including defined benefit plans and defined contribution plans, such as 401(k)s. This exemption saved taxpayers $180 billion in 2016, making it the biggest tax break for individuals.
EMPLOYER-PROVIDED HEALTH INSURANCE
Nearly half of all those in the United States get their health insurance from an employer. The value of those insurance policies is exempt from…