- The House passed the GOP’s “Tax Cuts 2.0” package on Friday.
- The centerpiece of the three-bill package was a measure to extend the individual tax cuts form last year’s Tax Cuts and Jobs Act.
- Those individual cuts are currently set to expire after 2025, but the new bill would make them permanent.
- According to tax experts, the extension would offer a small boost to economic growth in the short-term, give most of the gains to wealthier Americans, and substantially increase the federal deficit.
- Due to Senate rules, the House bill is likely dead on arrival in the upper chamber.
House Republicans passed a major tax reform package on Friday, known as the “Tax Cuts 2.0” package, in an attempt to follow up on last year’s massive tax-cut effort.
While the package will now head to the Senate, it’s likely that the second tax cut is dead on arrival in the chamber.
What’s in the package?
The Tax Cuts 2.0 package is three separate bills: The American Innovation Act, the Family Savings Act, and the Protecting Family and Small Business Tax Cuts Act of 2018.
The centerpiece is the third bill, which would extend the individual tax cuts from last year’s Tax Cuts and Jobs Act, or TCJA.
Republicans were forced to choose last year whether to make permanent corporate tax cut or individual tax cuts, due to Senate rules around the federal deficit. To have the bill qualify under the rules, the GOP chose to let the individual cuts to expire after 2025 while making corporate cuts permanent.
The Protecting Family and Small Business Tax Cuts Act would extend the individual cuts into 2026 and beyond. The bill passed the House by a 220-191 vote, with three Democrats voting for the bill and 10 Republicans voting against it.
The other two other elements of the package, which would change the tax treatment for certain retirement accounts and allow businesses to deduct start-up costs, passed by wider margins of 240 to 177 and 260 to 156 respectively.
What would be the effects of Tax Cuts 2.0?
Similar to the TCJA, most independent analyses show the bill would provide a modest boost to the US economy in the short-term, while the benefits would be tilted toward wealthier Americans.
According to the Tax Policy Center (TPC), a nonpartisan think tank, the individual tax cut extension would cut taxes for American households by $1,600 on average in 2026. But the gains would not be shared equally among different income cohorts.
“The bill to extend the TCJA’s individual and estate tax cuts has the same structural flaws as the original. It is an enormous budget-buster that primarily benefits high-income households,” Howard Gleckman, a senior fellow at TPC, wrote.
- For example, households in the lowest income quintile (households making up to $28,600) would receive an average tax cut of $100, or a 0.5% boost to after-tax income.
- Those in the middle-income quintile (incomes of 54,800 to $95,000) would get an average cut of $980, a 1.3% average boost to incomes.
- People in the top 1% of income earners (making $836,200 and up) would get an average cut of $40,180, a 2% boost to after-tax income.
- Additionally, while most people — around 66% of households — would receive a tax cut, roughly 9% of households would actually see their tax bills increase due to the elimination of some tax credits.
- The other 25% would see a change in their tax bill of $100 or less.
The TPC and the conservative-leaning Tax Foundation also estimated that the bill would boost economic growth, but they differ on how much. The TPC estimated a 0.5% GDP boost in 2026, 0.4% in 2028, and 0.1% in 2038. On the other hand, the Tax Foundation estimated the extension would boost GDP by 2.2% over the long-run.
The package would also add to the federal deficit. According to the Joint Committee on Taxation, the extension of the individual tax cuts alone would add $545 billion to the federal deficit between 2019 and 2028 when factoring in the economic boost from the law.
TPC estimated that the entire package would add $631 billion to the deficit through 2028 and another $3.8 trillion from 2029 to 2038. The Tax Foundation estimated that the move would decrease federal revenues by $576 billion through 2028 and $113 billion every year afterwards even when factoring in the economic growth benefits.
Is this going to become law?
The TCJA was able to make it through the Senate despite the GOP’s narrow majority because Republicans used a procedure known as budget reconciliation. This meant that the bill only needed a majority vote in the Senate and was not subject to a filibuster.
By contrast, Tax Cuts 2.0 is being advanced outside of the budget reconciliation process and would need 60 votes to avoid a filibuster. Given the GOP’s 51-49 seat margin in the Senate, this would require nine Democrats to support the bill.
Even if Republicans could pick up a few votes from across the aisle, it is not clear that every GOP senator would even support the package. Many Republican members, such as Sen. Bob Corker, were barely able to stomach the TCJA’s contribution to the federal deficit and the prospect of adding another heap of debt could be a nonstarter.
Jon Traub, managing principal at Deloitte’s Tax Policy Group, wrote after the House passage that there is unlikely to be more movement.
“This may be the last action we see taken on this issue in 2018, as its unlikely those changes would get to the White House this year,” Traub wrote.
Public officers above 58 years and with pre-existing conditions told to work from home: The Standard
Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.
However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
SEE ALSO: Thinking inside the cardboard box for post-lockdown work stations
Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
SEE ALSO: Working from home could be blessing in disguise for persons with disabilities
Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.
Uhuru convenes summit to review rising Covid-19 cases: The Standard
President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
SEE ALSO: Sakaja resigns from Covid-19 Senate committee, in court tomorrow
Drastic life changes affecting mental health
Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.
Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.
Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.
The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.
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With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.
In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020. It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.
A study by Dr. Habil Otanga, a Lecturer at the University of Nairobi, Department of Psychology says that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.
The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.
KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.
Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.
As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.
“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”
Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.
“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.
Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.
“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”
Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.
“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.
Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.
Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.
She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.
Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.
“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added
Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.
“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and also engage in reading that would help expand their knowledge.