The GOP tax plan is being unveiled today after weeks of snarling and fighting within the party of what to include and what to kick out. Ultimately, as with every change to tax law, there will be new winners and losers. The chairs at the table will change and some new industry will be pleased with the reforms, while others, like home builders for example, will be adamantly opposed to the measure.
Here are the most salient points as assembled over at Zero Hedge:
- 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
Here’s a more broad overview from Business Insider:
The “Tax Cuts and Jobs Act” will include a broad set of proposed changes to the corporate and individual tax system, building off a nine-page framework the White House and congressional Republican leaders dropped in September.
President Donald Trump reiterated his desire to get the tax bill on his desk by Christmas during a meeting at the White House on Tuesday. The president also concurred with the timeline House Ways and Means Committee Chair Kevin Brady, the author of the tax bill, has laid out. He wants to pass the plan through the House by Thanksgiving.
While the initial plan will be released Thursday, many GOP members are already suggesting that the bill could be substantially rewritten over the weekend before a scheduled markup in the Ways and Means Committee on Monday.
As the story notes, the plan can change further, and may likely be altered significantly from the currently proposed framework. The biggest sticking points are the State and Local Tax deduction (SALT) and the mortgage interested deduction. Those living in high tax states, like New York and California, are voicing severe opposition to eliminating the SALT deduction. As for mortgage interest, various home builders and real estate trade organizations are voicing concern that lowering or removing the mortgage interested deduction could be devastating for the housing market.