Posted on 11/02/2017 7:21:40 AM PDT by GIdget2004
House Republicans will propose limiting the deductions for mortgage interest and state and local taxes in the tax bill they are releasing on Thursday, according to a summary of the legislation obtained by The Hill.
The bill, called the “Tax Cuts and Jobs Act,” largely follows the parameters that GOP leaders and the White House outlined in September. It would reduce the number of individual tax brackets, slash rates for businesses and eliminate a number of tax breaks.
In order to offset the costs of the legislation, Republicans are putting forward some proposals that are sure to be controversial.
The bill would keep the mortgage-interest deduction, but only for newly purchased homes up to $500,000. Homes bought in the past could keep the deduction regardless of price. The housing industry is sure to push back on that cap.
The legislation would also taxpayers to deduct their state and local property taxes, but only up to $10,000. It would not allow people to deduct state and local income or sales taxes.
Blue-state Republicans have fought to preserve that deduction, which is important to their constituents. It’s not clear how receptive they will be to the compromise.
“I’m still analyzing it, but right now, I’m strongly leaning no,” Rep. Pete King (R-N.Y.) said.
Several other controversial ideas that were floated to help pay for the bill, including limits on pre-tax contributions to 401(k) plans and including repeal of ObamaCare’s individual mandate, were apparently not included, according to the summary.
(Excerpt) Read more at thehill.com ...
Bill text for the Tax Cuts and Jobs Act is here: https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf …
Section-by-section summary is here:
https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section.pdf …
So if my itemized deductions and the “new” 24k standard deductions annually for a married family is neck and neck (meaning the reduction in itemizations is a wash to me and my family) but they are eliminating exemptions....where then is my tax cut?
I agree. The summary is filled with bizarre self-contradictory statements. Somebody didn’t proof very carefully.
I figured that in - thank you. The old rule excludes ages 17 on up. Not sure if there’s any changes to that rule.
So that gives me an additional $600 per child (4 out of the 5 anyway) to offset the increase in taxable income (an additional $18+K)
Still don’t know where the brackets fall.
I think you're right. And then there's WI, MI, OH, MO. All high tax states, just not the big 3. I predict a compromise on that issue, or defeat. Likely an issue in the Senate as well.
Drop the individual rates by 5 points. Drop corporate rates to 20%. Reduce all current writes offs by 10% only. ( if you deducted 10k, you can now only deduct 9k). It’s a compromise for blue state republicans. Repatriation of off shore money with no penalty. Leave everything else in place.
Over the next 3 years tweak it as needed.
We should be good to go.
Cut spending and voila, ............!
Just cut spending! How much is spent on the “Ad Council” and other silly programs? CUT THE SPENDING! Rather novel idea!
Thanks to you both. It will be interesting to see what happens for me then. My wife and I are both over 65, so we’ve gotten the 2 personal deductions for each of us. And we do itemize. I now wonder if we will get the “standard deduction of $24,000” if we itemize or if, having lost personal exemptions and possibly not getting the $24,000 deduction, will end up paying more taxes? I’m retiring at the end of this year.
Stupid but sincere question:
Will I have to choose between taking either the standard deduction or the charitable contributions/property tax deductions? Can you take the standard deduction along with any other deduction, or is it strictly one or the other?
It sounds to me like this isn't any great big tax cut for the middle class. It sounds like once again the middle class is paying for all this. I'll wait and see, but right now I'm not impressed as my itemized are quite high which includes high state taxes in NYS and high local taxes over the 10,000 allowable.
Even if you drop the rates but eliminate exemptions you aren’t decreasing the tax burden whatsoever. As a matter of fact I would say I will be dangerously close to the 12%/25% border which would be a NASTY increase. Screw this bill to high heaven.
They’re doubling the exemption to 11 million. Eventually will do away with it!
We need to see the brackets and whether they are rigid 4 rates or if they graduate between rates.
The brackets are the key.
The top 5% were subject to the AMT anyway, so they are probably ok.
It’s the 25% to 6% that worries me. They could be getting screwed depending on brackets and graduation between brackets.
How I long for a simple national sales tax only.
You only pay the higher rate on the differnce(margin) between the top of the lower bracket and your adj gross income. You don’t pay the higher rate on all of your income LOL!
You know? The driver of the economy is the consumer. As you note there are many losers in this plan, mostly upper middle class. That's where spending at the margins comes from. There will be some boost from lower income households who will benefit. Then there's the, imo, absurd distinction between pass through entities, which the administration calls "small business", and individuals who can't get in on the "samll business" tax break. Perhaps some stimulus. But if you look at Kansas which tried this four years ago, no jump in employment or revenue. A lot of tax avoidance. You'll see this in spades.
Well then that’s fair.....and helps immensely...but I must say eliminating exemptions will not decrease the tax burden on middle class families as a whole. Am I wrong?
I have a different view, though it requires being altruistic to the betterment of the nation, not of self.
Certain states (CA and NY for example) have run amok with their own tax and spend policies, and have abused the federal deduction as an excuse for state spending irresponsibility. This is what is meant when you see the claim that the states with lower income taxes are "subsidizing" states with higher income taxes. Coincidently, it is mostly red states subsidizing blue states.
Removing the federal deduction for state income taxes unmasks this bad state behavior. It brings federalism to the front and lets people once again decide if they want to live in one state or move to a better state.
I applaud this, even though I currently live in CA (a situation I am hoping to change soon) and will lose this deduction. I am hoping the doubling of the standard deduction will get me close to the same tax liability as I had previously.
I am reading the summary of the law change and have an overall comment for those panicking about their personal tax situation and those confident they will have less taxes. There are far too many changes to know if you win or lose. Individual analysis will take a fair amount of time to determine your new tax.
Based on those brackets...quick back of the envelope for me as a married joint filer, with 188K gross income, itemizing (but with a 3% mortgage because I refi-ed at exactly the right time), I look to save right about $4,000 per year. So it is not true that everyone between 100K and $260K gets a tax hike. I get a modest cut...but then I live in Nevada and the SALT thing is meaningless to me (my deduction of sales taxes was barely over $1,000 per year).
I got something interesting about the change to the new 529 plans. The change recognizes and unborn child as a child:
“The provision provides that an unborn child may be treated as a designated beneficiary or an
individual under section 529 plans. An unborn child means a child in utero. A child in utero
means a member of the species homo sapiens, at any stage of development, who is carried in the
womb. “
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