The House of Representatives today approved the latest version of a sweeping change to the US tax code that will now go before the president to be signed into law. The news was celebrated by the Entertainment Software Association trade group in a statement provided to GamesIndustry.biz today.
"The legislation passed today includes provisions that will help modernize our current tax system, which has not been updated in over 30 years," the group said. "ESA supports driving economic growth, innovation, and high tech job creation - which are all paramount to our industry's ongoing success. It is also important that this reform benefit our industry's 220,000 employees and millions of customers, and put our nation on a path to long-term economic prosperity."
One key provision of the bill is a permanent reduction in the corporate tax rate, which currently goes as high as 35%. Assuming the bill becomes law, beginning next year it would drop to a flat corporate tax rate of 21%. According to a review of the legislation by the non-partisan Congressional Budget Office, the bill would also reduce most income tax rates for individuals, though those breaks would expire at the end of 2025. It would also repeal the mandate that individuals obtain health insurance, a key part of the previous administration's health care reform intended to keep down premiums people need to pay for insurance.
The CBO and Joint Committee on Taxation projected that the bill would increase the government's deficit by almost $1.5 trillion over the next decade. That estimate doesn't take into effect possible macroeconomic effects, even though all such major legislation requires such effects to be included in the CBO's budgetary assessment "to the extent practicable." In explaining its absence, the CBO said, "It is not practicable to provide an estimate of the budgetary impact of the bill's macroeconomic effects at this time."
No public hearings were held during the drafting of the legislation, the first draft of which was unveiled in late September. The legislation passed without a single vote in favor from the Democrats in either the House or the Senate.