GOP Tax Plan "Talking Point" Highlights Released

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:

Comments

NoDebt Max Damage Thu, 11/02/2017 - 10:19 Permalink

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.)

In reply to by Max Damage

Raymond K Hessel RockRiver Thu, 11/02/2017 - 10:58 Permalink

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.

In reply to by RockRiver

JimmyJones Raymond K Hessel Thu, 11/02/2017 - 12:52 Permalink

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.

In reply to by Raymond K Hessel

MoreFreedom synergize Thu, 11/02/2017 - 12:23 Permalink

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? 

In reply to by synergize

FreeMoney gatorengineer Thu, 11/02/2017 - 14:35 Permalink

My state income Tax bill in Oregon is about $15,000, my better half pays an additional $18,0003 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. 

In reply to by gatorengineer

Peak Finance John Kerry-Heinz Thu, 11/02/2017 - 10:49 Permalink

Bzzzt try again assholeThis 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.

In reply to by John Kerry-Heinz

Raymond K Hessel Peak Finance Thu, 11/02/2017 - 11:02 Permalink

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.

In reply to by Peak Finance

John Kerry-Heinz Peak Finance Thu, 11/02/2017 - 14:40 Permalink

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 ....

In reply to by Peak Finance

NickyGall Thu, 11/02/2017 - 10:05 Permalink

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                                                        
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 Kicking the debt can futher and further down the road.

Sky flyer Thu, 11/02/2017 - 10:07 Permalink

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 Pes… Thu, 11/02/2017 - 10:09 Permalink

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.