It’s only the beginning
President Trump has been pushing to make major changes in our country. He is striving to Make America Great Again and He has his sights locked on to MAJOR Tax Reform.
Today the Republican’s Tax Reform Plan has been released. It is not the final version but it lays out the general plan. Much like Trump’s other moves, it is going to simplify things for the better. For example… it replaces the seven tax bracket system with only THREE!
Here’s more from the NY Times:
WASHINGTON — Republican lawmakers are unveiling the most sweeping rewrite of the tax code in decades, outlining a plan to cut taxes for corporations, reduce them for middle-class families and tilt the United States closer, but not entirely, toward the kind of tax system long championed by businesses, according to talking points circulated on Thursday.
The House plan, released after weeks of internal debate, conflict and delay, is far from final and will ignite a legislative and lobbying fight as Democrats, business groups and other special interests tear into the text ahead of a Republican sprint to get the legislation passed and to President Trump’s desk by Christmas.
“This isn’t the last product,” said Representative Carlos Curbelo, Republican of Florida and a member of the House Ways and Means Committee. “This is just the kickoff to this tax reform exercise.”
Individual tax rates will change
The plan establishes three tax brackets, 12, 25 and 35 percent, and also keeps a top rate of 39.6 percent for the highest-earners, collapsing the total number of brackets from seven. The income levels for those brackets have not yet been disclosed, though the higher 39.6 rate is expected to be assessed on those earning at least $1 million.
Changes for the middle class
The proposal roughly doubles the standard deduction for middle-class families, expanding it to $24,000 for married couples, from $12,700, and setting it at $12,000 for individuals, from $6,530 today. Republicans also plan to expand the child tax credit to $1,600 from $1,000 and add a $300 credit for each parent and nonchild dependent, such as older family members.
No Changes to 401(k) retirement plans
After much nail-biting debate, the House will not make any changes to the pretax treatment of 401(k) plans. “Americans will be able to continuing making both traditional, pretax contributions and ‘Roth’ contributions in the way that works best for them,” the talking points say.
Changing the mortgage interest deduction
One of the biggest flash points will be proposed changes to the popular mortgage interest deduction. Under the Republican plan, existing homeowners can keep the deduction, but future purchases will be capped at $500,000.
The National Association of Realtors came out swinging against the bill, suggesting a huge fight awaits over how real estate is treated.
“Eliminating or nullifying the tax incentives for homeownership puts home values and middle-class homeowners at risk, and from a cursory examination this legislation appears to do just that,” said William E. Brown, president of the National Association of Realtors. “We will have additional details upon a more thorough reading of the bill.”
Eliminating the medical expense deduction
A big change may be in store for those who deduct medical expenses. The talking points outlined by Republicans say the deduction will go away but that families will be made whole by the overall lowering of tax rates and doubling the standard deduction. But those who make heavy use of the medical expense deduction — including many middle-class families — may be opposed to that change.
Repealing the estate tax — eventually
The proposal will double the estate tax exemption to roughly $11 million, from $5.49 million, meaning families can avoid paying taxes on large inheritance. And it eventually repeals the estate tax altogether, phasing it out entirely in six years.
Adding limits to the state and local tax deduction
One of the biggest flash points will be how the bill treats the state and local tax deduction, which lawmakers are proposing to limit to property taxes and 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, which currently applies to state and local income taxes and general sales taxes as well as property taxes.
House Republicans had intended to roll out the tax proposal on Wednesday, but ended up delaying its release by a day, providing a signal of the steep challenge they face in making the math work while also assembling the votes they need to get a bill through the chamber.
Representative Dan Donovan, a Republican from New York, said he remained concerned about the impact of the state and local tax deduction as he left a briefing on the bill but said he would assess the proposed changes on their entirety.
“I’m looking for a benefit for the people I represent,” he said. “The people of New York City deserve a tax break.”
Republican leaders are encouraged
Walking into the men’s restroom, Representative Kevin McCarthy, Republican of California, said of his colleagues, “It looks very positive, these people are excited.” He added: “this is why they came to Congress.”
Are you excited for this new tax plan? Comment below…