Posted on 11/02/2017 1:09:55 PM PDT by SeekAndFind
The long-awaited Ways and Means version of the Republican tax-reform bill has finally emerged from its back-room efforts to stave off any defections in the House and Senate. House GOP leadership launched the bill with a cheery press conference, with members clearly relieved at having a bill to move forward. It includes parts of several trial balloons, and excludes one in particular that backfired badly enough to earn a rebuke from Donald Trump.
As part of that reform package, the GOP aims to permanently lower the corporate tax rate to 20 percent.
The House bill would also slash the number of income tax brackets from seven to four: 12 percent, 25 percent, 35 percent and 39.6 percent.
The bill is also expected to raise the child tax credit to $1,600 from its current maximum of $1,000. It’s also expected to preserve popular retirement savings plans like 401(k)s and Individual Retirement Accounts.
That will cause some problems in the Senate, where reconciliation only requires a simple majority vote — but also a net reduction in deficit spending. The GOP floated the trial balloon on much lower 401(k)/IRA caps as a means to boost tax revenues overall, in order to allow Senate Republicans to pass the bill unilaterally. Sponsors of the bill will claim enough growth from the supply-side cuts to overcome the deficit-reduction hurdle, but it’s the CBO score that counts. If it comes up short, the Senate may well reopen the retirement-contribution caps and that entire can of political worms.
Two other components are clearly compromises from earlier proposals that got mixed receptions:
The GOP bill would also allow taxpayers to write off up to $10,000 in state and local property taxes.
But the plan would cut a popular mortgage interest deduction in half. While it would maintain the current deduction of $1 million in mortgage debt for current homeowners, that cap would be slashed to $500,000 for newly purchased homes.
Homebuilders won’t like that change; CNBC reported that stocks fell in that sector by two percent shortly after the announcement. It will allow middle-class earners to keep the deduction, assuming they have enough deductions to get past the expanded standard deduction, but will put higher-income earners more on the spot. Both of these are potential pay-fors for Senate reconciliation, but it’s questionable at the very least whether it will be enough. Republicans wanted to eliminate the state and local tax deduction (SALT) entirely, but that would have cost them a number of votes in the House from blue-state Republicans in places like New York and California.
Two more changes seem likely to complicate matters even further in the Senate, both for reconciliation and for class-warfare politics:
Lawmakers are also expected to move forward in repealing the alternative minimum tax, an extra tax that some have to pay on top of their regular income tax.
The Republican tax plan seeks to immediately double the estate tax exemption and repeal the tax in six years. The estate tax, also known as the death tax, is currently a 40 percent levy on estates greater than $5.49 million for individual filers or about $11 million for married couples.
There are good arguments to be made for these, especially the AMT, which has long been a problem for businesses filing under the individual tax code and for upper-middle-class earners. However, both will have the effect of lowering the tax burden primarily for higher earners, and also create more red ink that will impact the reconciliation process.
At some point, Senate Republicans will have to either attach deep spending cuts to this bill to qualify for reconciliation — cuts that pointedly did not get included in the budget resolution that enabled reconciliation — or raise revenues elsewhere to push the bill out of the red. When that happens, it’s going to reopen some of the same schisms that erupted during the futile attempts to repeal ObamaCare, and it’s going to get very tough to find a simple majority in either chamber to back the package.
One key Senate Republican has already sounded a skeptical note:
Corker says his staff is still going through House tax bill, but he’s looking for “permanence” of changes and $4 trillion loophole closing
— Liz Goodwin (@lizcgoodwin) November 2, 2017
That’s why one reporter asked Paul Ryan about Republican claims to effective governance if this bill fails to pass, just like ObamaCare repeal. And it’s also the reason why Ryan’s not taking the bait.
Reporter: "If Republicans can't get this done, do you deserve to control the Congress?"
Speaker Ryan: "What's your second question?" pic.twitter.com/jIL9wf1uGc
— NBC News (@NBCNews) November 2, 2017
I’m not expecting a constitutional Article I, Section 8-compliant tax code until sometime after the 2018 elections.
"Congress is not empowered to tax for those purposes which are within the exclusive province of the States."Justice John Marshall, Gibbons v. Ogden, 1824.
"The smart crooks long ago figured out that getting themselves elected to federal office to make unconstitutional tax laws to fill their pockets is a much easier way to make a living than robbing banks." —me
"Federal career lawmakers probably laugh all the way to the bank to deposit bribes for putting loopholes for the rich and corporations in tax appropriations laws, Congress actually not having the express constitutional authority to make most laws where domestic policy is concerned. Such laws are based on stolen state powers and uniquely associated stolen state revenues." —me
In the meanwhile, patriots are reminded that they have their work cut out for them, making sure that there are plenty of state sovereignty-respecting, Trump-supporting patriot candidates on the 2018 primary ballots.
Note that the ultimate, Section 8-compliant tax code includes a repeal of the 16th and ill-conceived 17th Amendments imo.
We just got our estimate for Obamacare $1000 per month for two people. It will break us (my wife and me).
Republicans — MCCain — I blame you!!!!
Example Calculation of Taxes Owed Finally, we are going to provide an example demonstrating how to use these tax rate schedules to calculate federal income taxes owed. In this example, let's assume the individual's tax filing status is Unmarried, and taxable income is $100,000 in 2017.
Looking at the above tables we see that $100,000 for Unmarried Individuals means it's necessary to use Rate Schedule X. This individual falls into the 28% tax bracket because $100,000 is between $91,900 and $191,650. Using the 28% row in the above table, it's possible to calculate the federal income taxes owed as follows:
$18,713.75 + 28% x ($100,000 - $91,900)
$18,713.75 + 0.28 x $8,100.00
$18,713.75 + $2,268.00 = $20,981.75
In this example, a Single filer with $100,000 of taxable income in 2017 would owe $20,981.75 in federal income taxes.
With the rates announced today that same taxpayer would be paying approximately 17.2% That works out to a savings of $3,781.00.
This looks like taking blood from one arm and putting it in the other. Reality is they have no intention of cutting anything. They are even telling us they arent going to cut anything when they say “revenue neutral” and we need to “pay for a tax cut”. I’m ok with it because it’s a win for the president but let’s be realistic. We need real cuts that would mandate cutting government and spending.
“will pay about $5000 to the State, but the IRS would still tax you on the full $100k, even though you really only took home $95k.”
I understand it. I benefited from it. I get it.
But I disagree with TruthShallSetYouFree, and others that want the state tax credits.
No, you earned $100K, so pay tax on the $100K.
The state taking the 5K is not the Feds problem.
(Ideally, eliminate the income tax. User fees & tariffs worked for 150 years. Pay your own way.)
But it should never have been there to begin with. Eliminate it like the rest of the bad ideas.
It’s subsidizing bad behavior by the States, and out-of-control spending by the Feds.
Lower & Flatten the rates dramatically.
End ALL of these Personal deductions.
But, but, how will we pay for it?
The Republicans want to cut taxes; the Dims do not. Neither one of the parties wants to cut the size of government.
“My taxes will be divided?”
that’s not so bad.
My taxes are going up significantly.
“Then we can hammer the dems for being self serving maniacs next year who do not care if Americans have more money to spend, “
Except for the millions of Republicans who are paying higher taxes.
“Redistribution of taxation.”
That’s ALL it is.
A different set of winners and losers.
Many of these differences can be resolved within the process of reconciliation. But, show the attention whores a camera and they have to say stupid things.
I believe no deduction on fed form for State taxes paid
Send me the $365 if you don’t want it.
These cuts as described will be a boon to 95% of those who pay taxes.
“I think the hope is for repatriation of corporate money and forcing states to lower taxes.”
Sounds like a righteous mission to me.
Who?
Some guys making over $400k?
Whatever....
“Some guys making over $400k?”
No, those guys are doing great under this plan.
May I ask how it will affect you?
(There's an old adage out there....(”EVERYONE does/votes what is in their own BEST interests”)...or should....
Care to enlighten us on your status and net worth?....Just wondering...
I have no intention of giving you the details of my family’s financial situation. Suffice it to say we live in the People’s Democratic Republic of Maryland and have always benefitted substantially from deduction of our very high state/local income taxes. We will, INITIALLY, be negatively impacted.
What I heard this am is that state and local income taxes are not going to be deductible, at this stage, but that the $10,000 cap will apply to Property Taxes. Who knows where this will end up. I think there will eventually be a means tested SALT deduction.
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