On Thursday, the House passed a budget blueprint for the 2018 fiscal year, which paves the way for President Trump’s tax reform plan.
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Rep. Kevin Brady (R-Texas) on Thursday said President Trump helped pass the $4 trillion budget. The congressman also addressed some of the key concerns with the president’s tax plan.
“Today marks the beginning of the end of this horrible U.S. tax code. President Trump played a key role in passage through both the Senate and House,” he told FOX Business’ Lou Dobbs on “Lou Dobbs Tonight.”
In order to help pay for Trump’s tax plan, Republicans are considering limiting the maximum amount of money Americans will be able to deduct from their taxes for 401(K) contributions. The GOP is considering limiting pre-tax contributions to $2,400 from the current $18,000 a year.
“He wants to increase the amount saved in 401(K)s, lift the limit, so do I. We want to encourage more people to save sooner in life and save more. The average saver in America is saving about $200 a month. That will not last them in retirement,” Brady said. “If at the end of the day, if we can’t find consensus in the country on how best to do that, we’ll leave them as they are.”
However, President Trump recently took to Twitter saying, “There will be NO change to your 401(K). This has always been a great and popular middle class tax break that works, and it stays!”
Trump and congressional leaders also want to create revenue by not allowing federal taxpayers to deduct the cost of their state and local taxes. If imposed, it is estimated to generate $1.3 trillion over 10 years.
“We are proposing to flatten the brackets, lower the tax rates for everybody in every state and protect more of the first dollars they earn. That will provide tax relief for Americans regardless of where they live,” Brady said.
Lawmakers in high-taxed states believe state and local deductions need to remain in place in order for residents to avoid paying higher federal taxes under the plan.
“Lawmakers in very high-taxed states, New York, New Jersey, Illinois and California, they are worried because their state and local politicians are just hammering them with taxes. We’re working with those lawmakers… I want people to keep more of what they earn regardless of where they live,” he said.