Here is a short summary of the GOP Tax Plan, a plan designed to -
- Transfer a massive amount of the nation’s wealth from the poor and middle class to the top 0.1%
- Balloon the deficit
- Penalize education, students, universities and families with children
- Reward the fossil fuel industry and punish the renewable energy sector
- Hurt residents of blue states
New Tax Rates Compared to 2017 Rates
Single Filers:
Taxable Income |
2017 Tax Rate |
GOP Tax Plan |
0 - 9,325 |
10% |
12% |
9,325 - 37,950 |
15% |
12% |
37,950 - 45,000 |
25% |
12% |
45,000 - 91,900 |
25% |
25% |
91,900 - 191,650 |
28% |
25% |
191,650 - 200,000 |
33% |
25% |
200,000 - 416,700 |
33% |
35% |
416,700 - 418,400 |
35% |
35% |
418,400 - 500,000 |
39.6% |
35% |
500,000+ |
39.6% |
39.6% |
Taxable Income |
2017 Tax Rate |
GOP Tax Plan |
0 - 18,650 |
10% |
12% |
18,650 - 75,900 |
15% |
12% |
75,900 - 90,000 |
25% |
12% |
90,000 - 153,100 |
25% |
25% |
153,100 - 233,350 |
28% |
25% |
233,350 - 260,000 |
33% |
25% |
260,000 - 416,700 |
33% |
35% |
416,700 - 470,700 |
35% |
35% |
470,700 - 1,000,00 |
39.6% |
35% |
1,000,000+ |
39.6% |
39.6% |
Note that some of the tax rate reductions are deceptive, since personal exemptions and a lot of deductions have been eliminated.
Goodies for the Rich
- Estate tax — exemption doubled to $11M per individual ($22M for married couple); tax repealed after six years.
- Step-up cost basis for inherited assets — retained (no capital gains tax on appreciation of assets prior to death)
- Alternative Minimum Tax — repealed.
- Corporate tax rate lowered to 20%; lower 25% rate for pass-through entities (often small businesses that report taxes as individuals).
- Repatriated foreign profits of U.S. companies — one-time tax of 12% rate on cash and a 5% rate on illiquid investments.
- Write-offs of capital expenditures in one year instead of five.
- State and local income tax (SALT) deduction elimination does not apply to pass-through business owners and passive investors (confirmed by the Ways and Means committee spox). medium.com/...
- Carried interest loophole for hedge fund managers — retained.
- Long-term capital gains and qualified dividends - maximum tax rate retained at 20%.
Few Scraps for the Middle Class
- Standard deduction increased from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples.
- Child Tax Credit expanded from $1,000 to $1,600; credit of $300 for each parent and non-child dependent. Not indexed to inflation.
- Family flexibility credit of $300 per person.
- But both the non-child dependent credit and the family-flexibility credit will be repealed after five years.
A partial list of the deductions that will be eliminated or reduced
- Personal exemptions (currently $4,050 per person, this repeal neutralizes most of the benefit of the increased standard deduction)
- State and Local Income Taxes (SALT)
- Medical expenses
- Mortgage interest (interest on up to $500K loan amount will be deductible, excess amount over $500K will not)
- Property taxes (now limited to $10K)
- Classroom costs incurred by teachers ($250)
- Student loan interest
- Tuition waivers of graduate assistantships
- Lifetime Learning Credit, which provides a tax deduction of up to $2,000 for tuition,
- The $5,250 corporate deduction for education-assistance plans
- Flexible spending accounts for child care
- Adoption costs
- Alimony payments (for post-2017 divorces, so doesn't affect Trump)
- Disaster losses
- Moving expenses
- Credit for electric vehicles
- Credits for wind energy industry
- Credits for home solar energy (phased out)
- Parking and transit benefits to employees by businesses
- Tax preparation fees
Other Shenanigans
- A switch to using the chained CPI, which is typically 0.25% below the CPI-U currently used to adjust numbers for inflation.
- College and university endowment income — 1.4% excise tax.
- Churches permitted to make statements relating to political campaign. Would this allow givers to channel campaign money through faith-based organizations, since contributions could be tax-free?
- Unborn child can be treated as a beneficiary or an individual for 529 college savings accounts; “unborn child means a member of the species homo sapiens, at any stage of development, who is carried in the womb.” This is a surreptitious way to define life as beginning at conception in a tax bill.
- Obamacare mandate repeal — not in the bill, but on the table (= tax cut for the wealthy, loss of healthcare for millions)
- Medicaid and Medicare cuts — although not part of this bill, a Democratic analysis of the Senate budget blueprint passed by Republicans last month found that it would cut Medicaid by $1 trillion and Medicare by $473 billion over 10 years. Other social programs may also face cuts to accommodate the massive tax cuts for corporations and the wealthy.
Budget Deficit
Did we mention that this will add 1.5 trillion dollars (1,500,000,000,000) to the budget deficit over the next 10 years, according to GOP estimates? That is without taking interest costs into account. The actual deficit will in all likelihood be much higher.
The Penn Wharton Budget Model, a nonpartisan applied research organization, released a report Monday Nov 6 estimates that the House GOP tax plan would cost $1.75 trillion over the next decade— thehill.com/…
Some Reactions and Analysis
Updated JCT estimates: 22% of households would face a tax increase in 2025. Only 25% will see a tax decrease of $500 or more. The very rich make out like bandits. Deficit increases by $1.75T in 10 years - thehill.com/…
See www.dailykos.com/… for some more reactions and responses.
Why the Cruelty?
Somewhere there is a calculation, that GOP voters can be convinced that this hurts liberals and immigrants much more than conservatives, that jobs (including coal jobs) and wealth will sprout like springtime for conservatives and if they do not, it will be the fault of Democrats.
Call for Action
Visit trumptaxtoolkit.org for info on who to call and how you can help.
Further Reading -
- 15 things in the Republican tax bill's fine print that could affect you — www.usatoday.com/…
- The GOP Tax Bill text — waysandmeansforms.house.gov/…
- Six Charts That Help Explain
the Republican Tax Plan — www.nytimes.com/…
-
Giving, Politicking, Endowments, and CEO Pay All Could Be Affected by Tax Measure — www.philanthropy.com/…
-
Republican Tax Proposal Gets Failing Grade From Higher-Ed Groups — www.chronicle.com/...
Caveat
There might be errors in my understanding of the new tax plan, as well as that of others quoted here. Also, the tax plan is a moving target and will change over the next few weeks.