jerseyhoya wrote:I have no idea why Tom Cotton would give up a safe seat he can probably hold for the next 40 years for a few years as CIA chief.

thephan wrote:McConnell says that he has McCain's yes for tax reform vote.

slugsrbad wrote:

thephan wrote:McConnell says that he has McCain's yes for tax reform vote.

#regularorder

pacino wrote:I can't imagine Bob Brady can possibly last until November 2018; feds just searched his house

be cool to get someone progressive to primary him

pacino wrote:I wonder what's in the bill they're about to pass

The Senate plan cuts the corporate tax rate from 35 percent to 20 percent, but not until 2019.

The House plan does so in 2018. Both plans cut income tax rates, double the standard deduction, and eliminate personal exemptions.

Both tax plans eliminate itemized deductions except for those for charitable contributions, mortgage interest, property taxes, and retirement savings.

Current mortgage-holders aren't affected by either plan. The House plan limits the deduction up to $500,000 for new mortgages. That would affect just 6 percent of mortgages, mostly in large cities. The Senate plan allows the deduction to remain up to $1 million but eliminates it for home equity loans.

The House plan eliminates the deduction for medical expenses. Currently, people can deduct medical expenses that are 10 percent or more of income. It was used by 8.8 million people in 2015. The Senate plan keeps that deduction.

On November 14, 2017, the Senate added a repeal of the Obamacare tax on those who don't get health insurance. The CBO estimates 13 million people would drop health insurance. The federal government would save $338 billion by not having to pay their health insurance subsidies. But health care costs will rise because fewer people will get preventive care. As a result, premiums for everyone else would rise. Trump promised to reinstate subsidies as outlined in the Murray-Alexander health reform bill. They reimburse insurers for decreasing costs for low-income Americans.

Both plans eliminate the deduction for state and local taxes. That would hurt 44 million people, primarily residents in high-tax states like California and New York.

It would add $1.3 trillion to federal revenues. The House plan allows taxpayers to deduct state property tax deductions up to $10,000. Trump supported Senator Susan Collins, R-ME, desire for the Senate plan to include this. The Senate plan allows corporations, but not small businesses, to deduct state and local taxes.

Both eliminate deductions for interest payments on school loans, moving expenses, theft or loss of valuable, and electric vehicles. The New York Times further details every tax cut and increase in the House bill.

Both plans double the standard deduction for everyone. A single filer's deduction increases from $6,350 to $12,000. The deduction for Married and Joint Filers increases from $12,700 to $24,000.

Both plans eliminate personal exemptions. The exemption currently allows taxpayers to subtract $4,050 from income for each person claimed on the tax return.

Families with many children would pay higher taxes despite the increased standard deductions. For example, a married couple with two children making $56,000 a year would pay $68 a year more.

Both plans double the estate tax exemption. Current tax law for 2018 exempts the first $5.6 million for singles and $11.2 million for couples. The House plan repeals the estate tax and the generation-skipping transfer tax as of January 1, 2024. That would help the top 1 percent of the population who pay it. That's 4,918 tax returns, but they contribute $17 billion in taxes.

Both plans eliminate the Alternative Minimum Tax. That helps those who make enough to be subject to it. In 2017, the AMT could affect those with incomes above $54,300 (single) or $84,500 (married filing jointly).

Child and Elder Care Deductions
The Senate plan increases the Child Tax Credit from $1,000 to $2,000. It also increases the income level from $110,000 to $1 million. The House plan raises the Credit to $1,600. Both plans preserve the adoption tax credit. The Senate plan allows parents to set aside money for their unborn child in a tax-advantaged account.

The House plan eliminates the marriage penalty as it relates to the Child Tax Credit. Under the current tax system, two single parents receive the full credit up to a combined income of $150,000. But the credit shrinks for a married couple after they earn $110,000. Research shows that subsidizing child care encourages people to work. That boosts income and economic growth.

The House plan allows a $300 credit for each non-child dependent that sunsets in five years. Trump's 2016 plan gave a permanent $5,000 deduction for elder care.

Business Taxes
Both plans lower the maximum corporate tax rate from 35 percent to 20 percent. The Senate plan delays the change until 2019. It delayed the tax cut to save $100 billion in revenue loss. The United States has one of the highest corporate tax rates in the world. But that doesn't hurt large corporations. Most of them don't pay more than 15 percent. That's because they can afford tax attorneys who help them avoid paying more.

Both plans lower the maximum small business tax rate to 25 percent. The House plan reduces the rate to 9 percent on the first $75,000 in income on businesses that make $150,000 or less. That phases in until 2022. That includes sole proprietorships, partnerships, and S corporations. Many of those are real estate companies, hedge funds, and private equity funds.

The Senate plan's reduced rate doesn't apply to labor-intensive firms like lawyers and financial services that make more than $75,000 a year. It also eliminates the deductions for supplies, home office costs, and legal fees. But it adds a 17.4 percent standard deduction. Senator Ron Johnson, R-Wis., wants to raise that deduction to 20 percent.

Both plans allow businesses to expense the cost of depreciable assets instead of writing them off over the years. It does not apply to structures. This feature expires in five years. The write-off would encourage more investment.

Under the House plan, C corporations lose the ability to deduct interest expense. That makes it more expensive for financial firms to borrow money to lend and invest. Companies would be less likely to issue bonds and buy back their stock. That could cause stock prices to fall. But the repeal would generate $1.5 trillion in revenue to pay for other tax breaks.

On November 6, the House increased taxes on carried interest profits. It's taxed at 23.8 percent instead of the top 39.6 percent income rate. Firms must hold assets for a year to qualify for the lower rate. The House plan extends that requirement to three years. That might hurt hedge funds that tend to trade frequently. It would not affect private equity funds that hold on to assets for around five years. Trump campaigned on making them pay their fair share. The change would raise $1.2 billion in revenue.

Both plans advocate a "territorial" tax system. It doesn't tax income that businesses earn in other countries. But it does impose a 10 percent tax on high-profit foreign subsidiaries. Businesses can repatriate cash stockpiles for a one-time low tax rate. That may encourage companies to put that cash to work. The Senate plan's tax rate is 10 percent on cash and 5 percent on illiquid assets. The House plan charges 7 percent and 14 percent, respectively. Trump's Five-Part tax plan charged 10 percent.

The goal is to encourage companies to repatriate $2.6 trillion in foreign cash. They've hoarded it to avoid paying taxes. But the Congressional Research Service found that a 2004 tax holiday provided little boost to the economy. Companies distributed repatriated cash to shareholders, not employees.

On November 15, 2017, the Senate added a measure to allow oil drilling in the Arctic National Wildlife Refuge. It would add $1.1 billion in revenues over 10 years. But drilling isn't cost effective until oil prices reach $70 a barrel.

The Senate plan also proposes tax cuts on beer, wine, and liquor. The Brookings Institute estimates that will lead to 1,550 more alcohol-related deaths each year. The study found that lower alcohol prices are directly correlated to more purchases and a higher death toll.

Trump's Promises No Longer in the Plan
Trump's 2016 plan allowed up to $2,000 to be deposited tax-free into a Dependent Care Savings Account. That allows earnings to grow tax-free to pay for a child's education at age 18. Taxpayers who were eligible for the Earned Income Tax Credit receive a rebate. They could use that rebate for the DCSA.

Trump had also promised to end the ACA tax on investment income.

How It Affects You
The Senate plan would help businesses more than individuals. Through 2027, business taxes would be lower overall. But individual taxes at every income level would increase by 2027.

Among individuals, it would help higher income families the most. Everyone gets a tax cut in 2019. But in 2021, taxes will increase on those making $30,000 or less. By 2023, costs will rise on everyone who makes less than $40,000 a year. The tax cuts expire in 2025. As a result, all income levels will pay higher taxes in 2017. The tax increases are due to loss of deductions. That's according to the most recent analysis of the Senate plan by the Joint Committee on Taxation.

The Tax Policy Center found that taxpayers earning in the top 1 percent would receive a larger percent tax cut than those in lower income levels. By 2027, those in the lowest 20 percent would pay higher taxes.

The Tax Policy Center estimated the House bill would impose higher taxes on 31 percent of middle-class households in 2027.

Both plans increase in the standard deduction will benefit 6 million taxpayers. That's 47.5 percent of all tax filers, according to Evercore ISI. But that's not enough to offset lost deductions for many income brackets.

Neither plan helps the lowest-income families. That's because more than 70 million Americans don't make enough to pay taxes. The plans also don't help the third of taxpayers who have incomes that fall below current standard deduction and personal exemptions, according to New York University law professor Lily Batchelder.

Both plans increase the deficit by almost $1.5 trillion over the next 10 years. Budget-conscious Republicans have done an about-face. The party fought hard to pass sequestration. In 2011, some members even threatened to default on the debt rather than keep adding to it. Now they say that the tax cuts would boost the economy so much that the additional revenues would offset the tax cuts. They ignore the reasons why Reaganomics would not work today.

Furthermore, some tax breaks, like those for non-child dependents, end in five years. But House leaders admit that a future Congress will probably extend it, thus adding more to the national debt. If it isn't extended, then some middle-income taxpayers will see their taxes rise after 2023.

The Penn Wharton School of Business said the House plan would increase the $20 trillion debt by $2 trillion over its first 10 years. The Wharton estimate includes $500 billion in additional interest on the debt. It said the House plan would boost growth by 0.4 percent and 0.9 percent in its first 10 years. But it might not improve growth at all in the subsequent 10 years.

Increase in sovereign debt dampens economic growth in the long run. When a country's debt-to-GDP-ratio is more than 100 percent, investors get concerned. They demand higher yields on the nation's bonds, increasing interest rates. Those higher rates slow growth.

The administration believes in supply-side economics. It says companies will use tax cuts to create jobs. It worked during the Reagan administration because the highest tax rate was 70 percent. According to the Laffer Curve, that's in the prohibitive range. The range occurs at tax levels so high that cuts boost growth enough to offset revenue loss. But trickle-down economics no longer works because the 2017 tax rates are half what they were in the 1980s.

Many large corporations confirmed they won't use the tax cuts to create jobs. CEOs of Cisco, Pfizer, and Coca-Cola would instead use the extra cash to pay dividends to shareholders. The CEO of Amgen will use the proceeds to buy back shares of stock. In effect, the business tax cut will boost stock prices, but won't create jobs.

The most significant tax cuts should go to the middle class who are more likely to spend every dollar they get. The wealthy use tax cuts to save or invest. It helps the stock market but doesn't drive demand. Once demand is there, then businesses create jobs to meet it. Middle-class tax cuts create more jobs. But the best unemployment solution is government spending to build infrastructure and directly create jobs.