House, Senate Republicans Reach Tax Deal: Here Are The Initial Details

One day after we reported that "Congressional Republicans reached a tentative tax agreement", the news of which sparked another risk surge into the close of trading, moments ago we got the second tax deal in 24 hours - if only for algo consumption - when the AP reported that House and Senate GOP leaders have reached a "tentative deal" on tax overhaul "in principle."

The AP quoted a "person familiar with the conversations who asked not to be named because the discussions are private" and who is certainly long stocks, as the replica headline was enough to send the S&P to new all time highs. 

The agreement "in principle" paves the way for final votes next week to slash taxes for businesses and give most people tax cuts starting next year. Top GOP aides say the deal was reached on Wednesday. They spoke on condition of anonymity because they were not authorized to speak publicly about the deal. Details still need to be drafted and assessed by congressional scorekeepers but the final House-Senate compromise is on track to be unveiled this week. 

The details, virtually identical to what we reported yesterday: the top individual tax rate would be lowered to 37% as and set the corporate tax rate at 21%, slightly higher than the 20% initially favored by President Trump. The mortgage interest deduction would be capped at $750,000, a mid-point compromise between the Senate and House bills.

The deduction for pass-through companies will be set at 20 percent, somewhat lower than the 23 percent included in the Senate-passed bill. That will be offset by lowering the top individual income rate to 37%. It is now 39.6%.

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Still, lawmakers will need to get a cost analysis of their agreement, so it’s not yet definite, "the person" said, who clearly gets around and was this time quoted by Bloomberg.

And since lawmakers still need to get a cost analysis of their agreement, not only is today's "tentative deal" not yet definite, but it will almost surely be unwound when someone actually brings a calculator into the room.

Curiously, after jumping higher, stocks have since faded the kneejerk reaction higher, perhaps realizing that the more fiscal stimulus that is injected, the more tightening the Fed will have to unleash in the coming months as inflation become red hot.


junction Don Keedik Wed, 12/13/2017 - 12:26 Permalink

So?  The Dow Jones average is made up of 30 blue chip stocks.  Bitcoin hit $19,000 for a few minutes days ago .  What does that prove?  If you have shares in the stock market or bitcoin, you are ahead this year.  But if you have to pay for your family health insurance under Obamacare without subsidies, that could cost you up to $40,000 a year for high deductible health insurance, a skinny plan. 

In reply to by Don Keedik

swmnguy Joe Davola Wed, 12/13/2017 - 14:25 Permalink

That $750k number doesn't sound right to me, either.  Maybe it's meant to say mortgage interest capped to mortgage loans initially valued at $750k?  Because on my mortgage of $126k (I had $100k to put down on the sale of my first home), I'm paying about $5k/yr. in interest.  That figure keeps going down as I'm making accelerated payments; don't want any debt at all, and particularly not on my place of residence, as we head into the looming shitstorm.I think I read one proposal that would have capped mortgage interest AND state/local income tax, combined, at $10k total.  That wouldn't affect most people, really.  I think my totals for those costs are right about $10k annually, and I live in Minneapolis, MN; considered one of the higher-tax states.The reporting on this whole tax plan has been incredibly vague and sloppy.  Not all the blame goes to reporters, though.  Until this comes out of Conference nobody really knows what the hell is in it to begin with, and then the IRS needs to go through it all and figure out how the hell to interpret/enforce it, and then the States themselves; I imagine by necessity a lot of this can't really go into effect until 2018 tax filing season.

In reply to by Joe Davola

Endgame Napoleon junction Wed, 12/13/2017 - 18:42 Permalink

If you are childless and single, first off, you are not in the back-watching parenting-clique job network that secures jobs for fellow parents and makes sure they retain them, even through protracted and frequent absenteeism. So, you are the one far more likely to be in temp jobs or 1099-gig employment, with uncertain pay, zero benefits and a twice-as-high SS tax rate—15.3%, not 7.65% like parent employees, with their spousal income, their subsidized rent and groceries in many cases and their child tax credit checks up to $6,444. In the many states with per capita income at $19k or below, this tax cut will not help you afford rent. Maybe, there will be more jobs, but without a major reduction in illegal and legal immigration, many of those jobs will go to welfare-boosted immigrant parents, including a much bigger tax break or tax-welfare check than single, childless citizens get.

In reply to by junction

junction InDisbelief Wed, 12/13/2017 - 12:18 Permalink

Everyone but the top 1/10 of 1% will lose out.  The two party system is a sham, you just have one party of looters.  Look at how the Democratic crooks framed Senator Franken.  Just stomping him down. 
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It is not enough that Senator Al Franken was forced out of his job by Senator Kirsten Gillibrand, whose lawyer father once collected $100,000 in legal fees from a sex cult that brands its young female members like they were cattle.  Today, on the first day of the Jewish holiday Hanukkah, Minnesota Governor Dayton announced Sen. Franken's replacement before Franken even resigned.  Hanukkah celebrates the Maccabean Revolt in Jewish history.  But Franken is not a fighter, it seems.  So Governor Andrew Cuomo, who orchestrated Franken's ouster on sex charges, wins.  Just as Cuomo won when he worked in 2008 with U.S Attorney Michael Garcia to force then-Governor Spitzer to resign, clearing Cuomo's path to being New York State governor.  Once in, Governor Cuomo appointed Garcia as a judge on New York's highest court, the Court of Appeals.  Payback for services rendered. Leeann Tweeden Grinding and Groping at USO in 2006…

In reply to by InDisbelief

CHIIEFHANGMAN Wed, 12/13/2017 - 12:18 Permalink

Everything the Swampsters do, merely delay the inevitable.A continued downward spiral of the moral/financial fabric of USA, until we are so weak, takeover a breeze.Freemasons/one world gooberment behind it all.

Peacefulwarrior CHIIEFHANGMAN Wed, 12/13/2017 - 12:23 Permalink

Trump, I believe stated that Recession will not happen on his watch... Let's face it... the disaster we could face with little growth and this type of Debt to monetize MEANS these guys will bring more gasoline to the fire until it all burns down as they are not willingto have it happen on their watch! The monster has its own life and agenda to survive.

In reply to by CHIIEFHANGMAN

economessed Wed, 12/13/2017 - 12:22 Permalink

With all the real problems this country faces, the last thing it needs is a few more trillion dollars of IOU's to be manufactured to help our "oppressed" corporations.  This is so stupid, it just hurts.  If some tax cuts are good, then more tax cuts are better, and complete tax cuts are best.  Why are we pretending anymore?  Let's just let the Federal Reserve print all the tax money the federal government needs, and stop asking people to pay for this bullshit.  I'm done.  

NoWayJose Wed, 12/13/2017 - 12:24 Permalink

Moore losing may actually stimulate the lazy GOP Congress to actually doing something before losing control of one of the three branches they now control.

warsev Wed, 12/13/2017 - 12:25 Permalink

I'd much rather see a cut in spending to balance the budget. This bill is nothing but a continuation of inter-generational theft.

Endgame Napoleon Peacefulwarrior Wed, 12/13/2017 - 18:54 Permalink

If they are going to spend—and I am not saying they should with the ballooning deficit—infrastructure is probably better than this, particularly THE WALL that we voted for, but also bridge and building repair. For one thing, they need to secure schools against these mass shootings, with more protection at the doors. etc. It would cost much less. It would employ some people, but as with the business tax cuts, it would probably be immigrants who were hired unless they actually do what we elected Trump and a Republican congress to do.

In reply to by Peacefulwarrior