GOP Tax Plan "Talking Point" Highlights Released

Tyler Durden's picture

Moments ago, the GOP released the "talking point" highlights of the republican tax plan which, as previewed earlier this morning, will keep the 20% corporate tax cut as permanent, and which allegedly will assure that a family of 4 making $59,000 will get a $1,182 tax cut.

As discussed previously, the bill keeps a top rate of 39.6% for the highest-earners and doubles the standard deduction for middle class families. It expands the child tax credit to $1,600 from $1,000 and will not make any changes to the 401(k) plans. The bill also “makes no changes to the popular retirement savings options that Americans have today — including 401(k)’s and Individual Retirement Accounts, or I.R.A.s. Americans will be able to continuing making both traditional, pretax contributions and ‘Roth’ contributions in the way that works best for them.”

So far so good; where there will be problems however, is that the bill also includes the repeal of an itemized deduction for medical expenses, a key provision for households with extraordinary health-care costs. It also repeals the tax credit for adoption and the deduction of student-loan interest. The bill also limits the home mortgage interest deduction: for new home purchases interest would be deductible only on loans up to $500,000, down from $1 million, although existing loans would be grandfathered.

A key issue will be the treatment of the state and local tax deduction, which lawmakers are proposing to cap at $10,000. That will not be enough for Republicans in some high-tax states, where middle-class families make heavy use of the deduction. As the NYT notes, "the compromise, as it had been sketched out this week, would preserve the deduction for property taxes, but not for state and local income taxes, and it appeared as if there would be a cap on the deduction. But at first glance, it did not appear as if that was enough to win over all of the New York and New Jersey members."

Here are the most notable changes:

  • Lowers individual tax rates for low- and middle-income Americans to Zero, 12%, 25%, and 35%; keeps tax rate for those making over $1 million at 39.6%
  • Increases the standard deduction  from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples.
  • Establishing a new Family Credit, which includes expanding the Child Tax Credit from $1,000 to $1,600
  • Preserving the Child and Dependent Care Tax Credit
  • Preserves the Earned Income Tax Credit
  • Preserves the home mortgage interest deduction for existing mortgages and maintains the home mortgage interest deduction for newly purchased homes up to $500,000, half the current $1,000,000
  • Continues to allow people to write off the cost of state and local property taxes up to $10,000
  • Retains popular retirement savings options such as 401(k)s and Individual Retirement Accounts
  • Repeals the Alternative Minimum Tax
  • Lowers the corporate tax rate to 20% – down from 35%
  • Reduces the tax rate on business income to no more than 25%
  • Establishes strong safeguards to distinguish between individual wage income and “pass-through” business income 
  • Allows businesses to immediately write off the full cost of new equipment
  • Retains the low-income housing tax credit

A visual summary of the new tax brackets:

And the full document:

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Max Damage's picture

where is the rest of it. the bit were you don't smash debt further thru the roof?

NoDebt's picture

Paul Krugman says deficits don't matter.  And he's got a Nobel prize so you can't argue that point.

(Reality:  We passed "way too late" about 8 exits back on that issue.  Might as well just keep going until it all collapses.  No matter how much you bitch what an awful ride this is you're not getting your money back at the end so you might as well try to enjoy it.)

knukles's picture

Krugman.

Congrats, you alone just deducted 1% real growth in the 4th quarter.  Now go break some windows.

gatorengineer's picture

Comming supposed in the Antifa riots on Saturday.

jay35's picture

What about the death tax / estate tax? Did they finally get rid of that? (Guessing nope.)

I Write Code's picture

Geez guys read the article, they reduce the estate tax (raise the exclusion) and then eliminate it in six years.

Juggernaut x2's picture

So property tax deduction up to $10K is still available?  Trump must have acceded to the NAR 

synergize's picture

You're an idiot - the property tax deduction should be unlimited.  Why should you get taxed on TAXES?

NoDebt's picture

I just had a thought.... one of these days somebody is going to hit the anti-lottery and get taxed more than 100% of what they earned.

 

gatorengineer's picture

NoDebt - you are in Pennsyfucky so like me you have a ticket.

RockRiver's picture

You're an idiot - the property tax deduction should be unlimited.  Why should you get taxed on TAXES?

Cook County Illinois has been doing this for years. They tax the federal tax on gas. Nothing new.....

Raymond K Hessel's picture

Also, if you don't cap state tax deductions then you can raise state taxes over and above what you'd owe to the federal, thus forcing states with lower taxes to fund the full weight of the income tax burden.

There should be no deductions for anything.

Here's your fucking tax, now pay it. Then people would be like, FUCK THAT SHIT!! 

So long as the elites have access to tax lawyers, it's all a stupid shell game.

JimmyJones's picture

I believe the whole Income Tax the way its applied is illegal to begin with but since they (the tax man) have the guns and can put me in a cage if I don't pay I suggest a flat National Sales tax and do away with income taxes.  If you are a saver you don't pay, if you are wealthy and don't give a crap you pay.  If you are poor you pay, rich you pay, middle you pay.  No free rides, no deductions, no brackets, no loop holes, no BS.  You buy, you pay.  You save, you don't.

MoreFreedom's picture

You don't get taxed on taxes, you get taxed on income.  That you can't deduct taxes from one juristiction from your income isn't any different then  being taxed for multiple things: sales tax, license taxes, sewer tax, property tax, income tax, inventory taxes, etc.  You're taxed multiple times.

You can't deduct losses from criminals - why should it be any different when government takes it from you? 

A Likely Story's picture

And you're a jackass.  Why should real property owners get subsidized by everybody else?

FreeMoney's picture

If you are taxed on real property do you really own it?  

 

The taxes we should be bitching about are the ones we dont pay for on returns but we all pay for anyway.

Government debt of any form

Government promises of any form

Expansion of the money supply in any form.

gatorengineer's picture

Property, State and Local Taxes combined capped at 10k.........  Thats a ginormous fuck you to the blue states.....

Anon2017's picture

How are state income taxes affected? Are they no longer deductibleor do they come under the $10,000 cap? If one itemizes, is there still a personal exemption?

gatorengineer's picture

Anything over 10k combined property and income is no longer deductible

There is no longer a personal exemption.

So in short FU.

Raymond K Hessel's picture

That will force states like NY and CA from jacking up income taxes. If they're not deductible then the full tax will have to be paid, hence these states will be forced to lower state and local income taxes to near zero.

QQQBall's picture

Dude, give your head a shake. Cali is never going to volunatrily stop spending. 

Raymond K Hessel's picture

You’re correct
This will FORCE them to lower rates.

MyKillK's picture

Good. It's outrageous that they are making the federal government subsidize their outlandish tax rates and spending. And I live in one of those states (CA). I support it 100%. Thankfully I live in one of the cheapest areas of the state. I'll probably still come out ahead due to the improved tax brackets.

FreeMoney's picture

My state income Tax bill in Oregon is about $15,000, my better half pays an additional $18,000

3 properties we own rent from the government here are about another $8,000 per year in taxes.

Last year we could claim those payments as deductions on our federal return.  If our $41,000 becomes $10,000 we will pay $31,000 at our marginal rate 28% an additional $8,680.

 

This plan is not a tax reduction. 

ElTerco's picture

Of course not. It's another way to squeeze the middle class to further enrich the highest and lowest paid. The highest paid get an 80% cut of the take and the lowest paid get 20% of the take. Same old same old.

Fidel Sarcastro's picture

But you're in a Leftist UTOPIAN state - you should LOVE it.  Higher taxes are good right?  Oh wait, now that you have to pay, not so much then?  

John Kerry-Heinz's picture

repealing the Death Tax after six years. 

that's the big one for the elites.

Peak Finance's picture

Bzzzt try again asshole

This law CRUSHES TOTALLY farmers that have had property in their family for years and other long-running businesses with capital assets, they get totally ass raped when it's time to hand over the business or if they die unexpectedly.

Cash is tied up in property & capital so they don't have 100,000 laying around for proper estate trust planning.

Raymond K Hessel's picture

Also, property prices in urban areas are ridiculously high. People who were barely getting by, bought crappy tenements, and now live in highly valuable neighborhoods. 30 years ago these neighborhoods were referred to as ghettos, warzones, etc. Now the buildings there are worth millions. 

In NYC, Boston, and LA, you can easily pass the $5 million if you bought your house 30 years ago. It's almost all cap gains.

A Likely Story's picture

Fuck them.  Why should failure to plan be subsidized by everybody else?

John Kerry-Heinz's picture

Eyes in one of those farmer families as apparently as are U.  Your snowflake completely melted.  Calm down and go back to finishing the required Dept. of Agriculture paperwork before the end of the year deadline hits.  I am NOT your enemy, just pointing out that this single line is what this tax reform bill is really ALL about, every other line in the bill is just filler to distract from it ....

gatorengineer's picture

Most people wont make it reading that far.  The middle class reads down enough to get to the part where they realize that they are being fucked and quit.

The repukes have changed tactics though they now crush the middle class and give to the Rich and Poor....

FUCK TRUMP and his swamp dwelling minions.............

MyKillK's picture

Lower tax brackets fuck the middle class? Lol you trump haters make up anything and everything.

Chupacabra-322's picture

“Talking Points.”

Does everything need to be a Scripted, False Narrative PsyOp to Gas Light the masses?

NickyGall's picture

Here is an interesting look at how the Trump tax plan will impact the federal debt:

     

                                            

https://viableopposition.blogspot.ca/2017/10/the-trump-tax-plan-kicking-debt-can.html

                                                        

 

Kicking the debt can futher and further down the road.

gatorengineer's picture

Ok so we have to print alot more to pay for this and Bond yields Drop on this news..... explain this one to me.... PLZ.

pods's picture

Looks good. Where's the catch?

pods

NoDebt's picture

Having what passes (if it passes) look anything like these happy-clappy talking points.

 

Fiat Burner's picture

The catch is that they're not cutting government and you're paying for all that government one way or the other.  If not taxes, then debt and inflation. 

synergize's picture

I'll take debt & inflation.  My gold will protect me there and screw the USD

attila404's picture

Me too. Inflation makes everybody pay. Dindus will have skin in the game. No pun

attila404's picture

The catch is you get nuffin

pods's picture

It's okay, I'm used to that.

Well I'm used to getting something, but getting ass pounded isn't something I would miss.

pods

Sky flyer's picture

Surely the couple thousand points added to the Dow on just this tax cut plan won’t be withered away now that the truth hits home that it won’t pass or amount to jack shit. Readying the PPT in 3...2...1.

Cautiously Pessimistic's picture

They love to make it like they are doing us all a solid by allowing us to keep a little more of what we labored for in the first place.  Don't get me wrong, I will take it and continue to prepare for the coming collapse of our Roman Empire.

pods's picture

The two things that irk me like no other are the fact that now wages are synonymous with income and the fact that they have control over the value of what I am paid in.

Sucks ass when you learn that you are a slave.

pods