The House bill does nothing for people making less than $260,000 (joint returns, lower thresholds) when it comes to business income.  And above that, it discriminates against people who actually work in the businesses and many service providers who don’t require a lot of capital.

The Senate bill is much more generous to those further down the food chain.  The Senate bill is probably a little simpler than the House bill.  Rather than creating a special maximum rate on a certain class of income (25%), it allows a deduction of 17.4% on pass-through income.  Arguably that is equivalent to a rate of around 33% on top bracket people, but it benefits everybody who has flow-through income.  Even the service providers like doctors and accountants get the break if their taxable income is below $150,000 ($75,000) for singles.

Some commentary will indicate that the act favors the high income, but I see a different theme here.  The really big cuts – the corporate rate reduction, the maximum rate on business income of individuals and the repeal of the estate tax and GST seem to favor those who get wealth without working – the New Gentry or the Entitled Children (I think I might have a poll as to which of those to use).  Many people who provide services without using capital don’t get the new preferred rate.  And some of those revenue gainers are directed at people who might be quite well off, but are still working for their money.  I’m thinking the deferred comp, entertainment expenses and rules that make it more painful to pay high salaries.

This is quite a bit different than the tax reform push in the seventies and eighties.  There was a hands the cross the aisle kumbaya moment between Ronald Reagan and Bill Bradley when they commiserated about the very high rate that they had had to pay – Bradley for playing basketball and Reagan for playing the Gipper. Prior to the big rate reduction in 1986, there was a maximum tax on personal service income that made the maximum rate on income you worked for 50%, while the coupon clippers still had to pay 70%.