Initial proposal is out.

Three brackets: 12, 25, 35 percent.

All pass through at 25%!!!

Estate tax repeal

No state and local deduction

Standard deduction doubled

Mortgage interest remains

Full expensing with limited interest deduction

I don't see anything passing, but I'm always wrong. Should be entertaining!

The UNIFIED FRAMEWORK FOR FIXING OUR BROKEN TAX CODE document is here....

http://www.npr.org/2017/09/27/553860...n-a-generation

More. Fairer. Bigger.

lol, unreal. economy is going so well that we need to cut taxes for rich people! that's worked out really well in the past.

There's a note in the framework about a possible fourth bracket, which is definitely new.

the increase of 10->12% on low income earners to help carve out money for rich people is ****ing disgusting

If Republicans just lowered every rate EXCEPT the top rate, it would fit their "principles", everybody would get a little break and it would be insanely popular. Of course they won't do that because they serve their donors not the people.

Personally, I'm looking forward to the fake news New York Times writing daily articles about how fiscal conservatives are troubled by deficit implications right up to the day they all vote for whatever bull**** finally emerges.

THREE brackets is definitely less than SEVEN

Ergo...

TAX CODE SIMPLIFIED

There's no mention of the EITC in the document linked by NPR. Do they not plan on touching that?

Even with this increase the poor would probably pay substantially lower taxes by doubling the standard deduction. Doubling the standard deduction would also make the mortgage deduction far less valuable and could impact home ownership.

Decreasing the corporate tax rate to 20% is good as it puts the US on par with other nations.

All pass through at 25% is a lol wtf bbq, undoubtedly we will see a dramatic upsurge in small business hedge funds and whatnot.

This plan looks good on the surface as long as it closes loopholes and the like to make it revenue neutral (spoiler: it will not close loopholes at all and will be no where close to revenue neutral).

There is ~zero way this gets 8 Democratic votes in the Senate, so it will need to be either revenue neutral or sunsetted in order to get through under reconciliation.

Not only will it pass, it'll be a great bill.

They will obviously just sunset it. Then they will call the CBO fake news and whine endlessly that the deficit projections don't account for growth.

The 25% for pass through businesses is really bad policy but smart messaging/politics. Expect to hear about "95 percent of small businesses are pass through" right after "nobody should lose the family farm to the estate tax."

this. if they actually cared about 1) the deficit and 2) the working class. you lower taxes for the lower 3-4 tax brackets and call it a day.

Bannon was rumored to have floated a 43% bracket for higher earners, although I'm not sure what the cutoff for high earners was. They're just really lucky that most people don't understand how tax brackets work at all.

Correct me if I'm wrong, but afaict, even the corporatist Democrats have to obstruct regardless of their opinion of the bill, to keep the GOP from passing the tax bill without reconcilliation. The Dems need them to expend reconcilliation to avoid giving them more shots at Obamacare before 2019.

Haven't had time to look through this new proposal, but the proposal floated months ago was pretty simple

*fewer brackets

double standard deduction

you can only be single/married (no Head of household)

Mort Int stays

all other credits, gone (EIC, student loan interest, child tax credit)


Until proven otherwise, I'm going to assume this plan will **** over poor single moms with 4 kids.

They will pay less in taxes because of the doubled SD, but they might lose the EIC, which is straight cash.

So instead of getting 4,000 return because of EIC and CIC, they will have a return of $0, and $0

No way Steve Munchkin is touting a tax bill that helps poor people

so reading through this, the child tax credit is still there, and the phaseout amounts are higher (good for middle and lower class people)

However, later in the doc you see

Other Provisions Affecting Individuals:
Numerous other exemptions, deductions and credits for individuals riddle the tax code. The framework envisions the repeal of many of these provisions to make the system simpler and fairer for all families and individuals, and allow for lower tax rates



So basically, you get a higher SD, loss most credits, and will either be a neutral to small gain (for professionals) or get dick boned if you are a single parent with EIC

where you seeing all the credits/deductions done away with? If they make this revenue neutral by eliminating the EITC and student loan deductions then this is screwing over the poors bigly

Does anyone actually want to discuss tax policy in here?

I actually like discussing tax policy and am pretty good at personal finance and have dozens of excel spreadsheets re: retirement, loan repayment, taxes etc. I figure my taxes out to the dollar at the beginning of the year and adjust withholdings to get an effective zero refund.

I'll try to make this a good thread at least in regards to personal/individual income taxes. Business taxes are above my knowledge.

This white paper is the same stuff Paul Ryan has had published since 2016.
https://abetterway.speaker.gov/_asse...olicyPaper.pdf

Taxes really aren't that complicated. Especially nowadays with tax software, cheap HR Block tax preparatory services, etc. However, one who knows the tax code in and out can change behavior, defer income/capital gains, to legally lower their tax liability. On a personal income level, it's really not too complicated. Reduce taxable income by maxing out retirement accounts, try to deduct as much as possible (however this only reduces taxable income on the amount that is above and beyond the standard deduction), etc.

It's too early to discuss fundamental "who wins and who loses" because in taxes you plainly need the cold hard numbers where the tax brackets are going to fall and on what income.

I have these early thoughts though:

The more you increase the standard deduction, even if you keep certain itemized deductions such as charitable contributions or home mortgage interest, you reduce the value of these deductions because less and less people will be able to deduct enough to overcome the standard deduction.

Example:
On tax year 2016 my itemized deductions were: $19,595
However the standard deduction for MFJ was: $12,600.
So the net of itemizing is only $6995 less in taxable income, at 25% marginal rate which is $1748 less in tax.

Some may look at the new standard deduction of $24,000 for MFJ and think this would be a win for many. However, this GOP Tax White Paper also eliminates the current law of "personal exemptions".

Each person, dependent, taxpayer, or otherwise gets a "personal" exemption of $4050.

So based on current law, not only do you subtract your DEDUCTIONS (standard or itemized) but you also subtract your EXEMPTIONS on your gross income to get to your "taxable income".

Just shooting the numbers on my 2016 taxes:
Itemized Deductions: $19,595
Exemptions: $8100
Total reduction off of income: $27695.

So the larger standard deduction really is less than I currently can write off of my gross income per current law, because it eliminates the personal exemptions. However, it is in the same ballpark, I guess. What would matter is what the tax rates are on the remaining income.

However, if they plan to eliminate the state/local tax deduction, it WILL reduce the value of really everyone's (except states with no income tax) itemized deductions because it means you will have "further to go" before you can overcome the standard deduction and actually "save" any money.

That's really the main point I want to hit here. By increasing the standard deduction, you reduce the value of "all" itemized deductions. But by eliminating even one itemized deduction (whether it's state local income taxes, property taxes, charitable contributions, it doesn't matter, but currently the hot potato is the state/local taxes) you reduce the value of the other ones even if you don't touch them because it's harder to make it up the "hill" of the standard deduction. You don't save one penny in taxes by itemizing until you overcome the standard deduction.

In general, the middle-middle and the upper-middle class that has a mortgage, lives in one of the 43 states with income taxes, currently itemizes their taxes because it's worth more than the standard deduction.

A word on child tax credits. Current law has a $1000 child tax credit. (Phases out >$110k adjusted gross income). Increasing these credits or increasing the phaseouts may very well overcome the loss of personal exemptions. A $1000 child tax credit is worth a $6666 deduction for someone in the 15% tax bracket and a $4000 deduction for someone in the 25% tax bracket.

Anyway....

More to come later during this process.

Cliffs:
Don't let a high standard deduction fool you because the new "standard deduction" is really the old standard deduction plus the old personal exemptions. Frankly the GOP Standard Deduction is old MFJ standard deduction plus 3 exemptions (or the old single standard deduction + 1.5 exemptions).
Cannot tell winners or losers yet until we know where each tax bracket falls.
Larger child tax credits may (or may not) make up the loss of personal exemptions.

Taxes: TOO EARLY TO CALL

there was a link to the tax document on NPR, the paragraph i copied in my post above was straight from that document.

It highlighted a few credits that would remain, but then they put a vague paragraph stating others will be gone.

No way they leave the EIC in there for welfare queens

AV, thats one thing I forgot in my first post.

If they get rid of EIC AND PERSONAL EXEMPTIONS, single mom of 4 gets bent over.

granted, they might have -0- tax liability either way if their income is low enough.


but say you have a professional with a few kids, they aren't going to save much with this plan.

The only winners are the people above the 39+% bracket, and those that have more than 5MM in assets.

No no no no no, the winners are SMALL BUSINESS and FARMERS and JERB CREATORS

josh barro tweeted that a single person with no kids making $19k a year would see a $6 tax cut. SIX DOLLARS.