There has been consensus on the need for tax reforms, but how and how much reform will happen will stay debatable until Congress has acted. Presently, the hot issues are estate tax, the immigration bill, student loan interest rates and the farmer bill.
Two bills to repeal the federal estate tax have been presented. Both bills seek permanent repeal of the estate tax. Senator Thune revealed facts to convince that the repeal is important and essential. Statistics reveal that currently, more than 70 percent of family businesses do not survive to the second generation, and around 90 percent of family businesses do not survive to the third generation. These facts though do not state how estate taxes are responsible for it.
The tax issues under focus have lead to fears that Congress may focus on the not-so-important taxes while leaving the important tax issues unattended.
Student Loan Interest Rates
An important change for students and their parents will come with the finalizing of the agreement to introduce changes in how the government sets federal student loan interest rates.
All undergraduates will pay the same interest rate irrespective of whether they are from low or middle-income level. Up to now, low and middle-income undergraduate students paid lower rates. Graduate students that come with a higher income tax bracket will pay higher interest rates.
Resolution of the farmer bill does not seem certain. Even though farmers are benefitting from reform in the estate tax, it is the right time to make their voices heard. The revised bill will benefit those who inherit farm or ranch land of under $5 million. They will not need to pay estate tax on the inherited property. Inherited farm or ranch land exceeding $5 million will be subjected to the tax cap of 40 percent.
There has been much unhappiness over the way a comprehensive tax reform is being initiated. Many opine that Congress must not conduct the tax reform in a haphazard way, which might lead to more harm than good. In the near future, it will become clear whether the tax priorities of the country and those of Congress are in conflict or in agreement.