On Friday, December 1, 2017, the Senate garnered sufficient votes to pass their version of tax reform legislation. Previously, the House had already passed their plan for tax reform.

At this point, the two plans will need to be reconciled before a final bill goes to President Trump for approval.

Critics of the legislation claim that it has been rushed already without consideration for the long-term consequences the bills could bring. Regardless of what happens during the reconciliation process, millions of American lives will be impacted.

Here's what this pending tax legislation could mean for your bottom line, and the direction reconciliation should take in order to truly give the biggest tax break to the largest number of people.

Pending Tax Changes: The Basics

The biggest changes under the proposed legislation impact health care and higher education.

Under the Senate plan, the individual mandate would remain; however, the penalty for failing to have health insurance would be reduced to zero.

Critics of removing the penalty cite the Congressional Budget Office, which estimates that approximately 13 million Americans would lose insurance due to healthy people failing to obtain insurance without the threat of penalty, driving up costs for sicker individuals who have no choice but to purchase coverage.

Supporters of eliminating the penalty state that it is absurd to further penalize individuals who can't afford health insurance in the first place.

Another area of potential health impact is the House's proposed measure to eliminate the medical expense deduction.

Critics, most notably the AARP, state that the repeal of this deduction in effect creates a “health tax” on those with chronic long-term conditions that are costly to treat.

Under the Senate measure, not only does the deduction remain, but those claiming the deduction will be able to claim expenses in excess of 7.5% of their adjusted gross income (AGI) as opposed to the current 10% limitation.

Higher education students will also be impacted.

Under the House bill, graduate students receiving tuition waivers would need to claim the amount waived as income, even though it does not add anything to their disposable income.

In addition, the House bill eliminates the deduction for student loan interest paid. The results of this could mean low-income graduate students paying high amounts of tax on income they do not actually realize and establish a higher hurdle for low-income individuals pursuing a higher education.

Both the House and the Senate bills increase both the standard deduction and the Child Tax Credit. The House plan increased the Child Tax Credit to $1,600; the Senate, $2,000.

However, both bills also eliminate the personal exemption, currently $4,050 per each individual in the household.

The result?

Households without children or with older children who no longer qualify for the CTC could see a reduction in benefits.

Even families with young children who qualify for the credit could see little benefit given that they'd sacrifice the personal exemption for a slightly higher, if refundable, credit.

A Modest Path Forward

During the reconciliation process, committee members will be tasked with hammering out legislation that stands a better than average chance of meeting the approval of both legislative bodies.

With Republicans controlling the House, Senate, and White House, a major change to the tax code appears not just likely, but inevitable.

With this in mind, legislators must carefully consider the needs of all Americans, not just those most able to donate to their causes. A reasonable middle ground can and must be found that will at least minimally satisfy the needs of the majority.

On the surface, the Senate bill appears less extreme in all aspects other than the repeal of the individual mandate. Even here, reason and common sense must prevail.

Without doubt, many Americans have been impacted by a further penalty for failing to carry health coverage they cannot afford in the first place.

However, as a full repeal of the mandate would lead to many individuals desperately needing care without the means to afford it, reducing the penalty to zero must remain an option for only the neediest taxpayers.

Likewise, a full repeal of the health care expense deduction unjustly impacts seniors, many of whom are already living on fixed incomes. Should any repeal of this deduction be considered, exceptions should be made for those over the age of 60 and younger individuals suffering from chronic and costly diseases.

Taxing graduate students on income not actually realized seems as absurd on the surface as charging a penalty for not being able to afford health insurance.

Likewise, eliminating the student loan interest deduction at a time when the cost of higher education is skyrocketing at 2 ½ times the rate of inflation seems unnecessarily cruel, especially given that even entry-level jobs nowadays require a college degree.

Legislators face tremendous pressure in trying to present a bill to President Trump in advance of the upcoming holidays.

However, given the lasting impact this legislation will have on millions of Americans, a hasty rush to push a bill through is myopic in the extreme. Given time, care, and sufficient debate, a reasonable tax plan can actualize.

The job legislators face now should not be how quickly they can get the job done, but how they can best provide a true tax break for the majority.